CASES FOR RULE 58, 59, 60 AND 62
[G.R. No. L-28454. May 18, 1978.] AGAINST. — The supersedeas bond may be proceeded against on motion
EMILIO APACHECHA and ROSITA OTERO, Petitioners, v. HONORABLE
VALERIO V. ROVIRA, as Judge of the Court of First Instance of Iloilo
(Branch IV); EUSTAQUIO AGOS, MARIA BALAJADIA and PACIFICO
LUMAUAG, Respondents.
Glicerio G. Gimotea, for Petitioners.
Nicanor D. Sorongon for respondents Eustaquio Agos and Maria Balajadia.
Gellada & Gellada for respondent Pacifico Lumauag.
SYNOPSIS
Pending appeal, respondents filed a supersedeas bond to secure the stay of the
immediate execution of a judgment in favor of petitioners. After the appeal was
dismissed and the records remanded to respondent court, petitioners moved to
enforce the supersedeas bond when the execution against the judgment debtors
was returned unsatisfied. Respondent court denied petitioners motion stating that
under Section 9 of Rule 58 in connection with Section 20 of Rule 57, in order that
a surety may be bound under a bond for damages, the application for damages
must be filed before the entry of final judgment and a hearing must be had with
notice to surety. Petitioners contended that theirs was not a claim for damages
resulting from an improper injunction but a motion to enforce the supersedeas
bond filed by respondents to secure the stay of immediate execution which was
governed by Section 30 of Rule 39.
The Supreme Court upheld the petitioners and granted the petition.
SYLLABUS
1. JUDGMENT; STAY OF EXECUTION PENDING APPEAL; FILING OF
SUPERSEDEAS BOND. — Execution issued before the expiration of the time to
appeal may be stayed upon the approval by the court of a sufficient supersedeas
bond filed by the appellant, conditioned upon the performance of the judgment or
order appealed from in case it be affirmed wholly or in part.
2. ID.; ID.; ID.; WHEN SUPERSEDEAS BOND MAY BE PROCEEDED
before the trial court, with notice to the surety, after the case is remanded to it by
the appellate court.
3. BONDS; BOND REFERRED TO IN SECTION 9 OF RULE 58 IN
CONNECTION WITH SECTION 20 OF RULE 57 IS NOT SUPERSEDEAS
BOND. — The bond referred to in Section 9 of Rule 58 in connection with
Section 20 of Rule 57 refers to a claim for damages resulting from an improper
preliminary injunction which requires the filing of an application for damages
before the entry of final judgment and a hearing thereon with notice to surety
before it can be proceeded against. It is not identical with the supersedeas bond.
4. APPEAL; JURISDICTION; FACTUAL ISSUES SHOULD BE THRESHED OUT
IN THE TRIAL COURT. — Where a claim by one litigant that the parties have
already amicably settled their case is denied by the other party, the issue
becomes a factual issue which should be threshed out in the trial court.
5. EXECUTION; EXTENT OF LIABILITY OF SUPERSEDEAS BOND. — Before
execution may issue against a person who files a supersedeas bond, the exact
amount of the liability of the judgment debtor, which may not necessarily be the
full amount of the bond filed, must be clarified in the lower court.
DECISION
BARREDO, J.:
Petitioner for certiorari impugning as a grave abuse of discretion the order of
respondent judge of September 16, 1967 in Civil Case No. 5911 of the Court of
First Instance of Iloilo, entitled Emilio Apachecha and Rosita Otero v. Eustaquio
Agos and Maria Balajadia, which denied petitioners’ motion praying that private
respondent Pacifico Lumauag be made to pay, as surety on the supersedeas
bond filed to stay the execution pending appeal of the judgment that petitioners
had secured against Agos and Balajadia in the same Civil Case No. 5911, said
appeal having been dismissed by the Court of Appeals, ultimately affirmed by the
Supreme Court, for failure of the appellants to submit the printed record on
appeal on time and after the record had been remanded to the trial court and the
execution against the judgment debtors had been returned unsatisfied.cralawnad
1

In denying petitioners’ motion in question, respondent judge sustained the
contention of Lumauag that under Section 9 of Rule 58 in connection with
Section 20 of Rule 57, and the rulings of the Supreme Court thereunder, in order
that a surety may be bound under a bond for damages, the application for
damages must be filed before the entry of final judgment and there must be a
hearing with notice to the surety. Respondent judge paid no heed to the
contention of petitioners that the matter on hand is not a claim for damages in a
case of preliminary injunction governed by the rules just referred to but a motion
to enforce the supersedeas bond filed by Lumauag and two other persons to
secure the stay of the immediate execution of a judgment in favor of petitioners,
which is specifically governed by Section 3 of Rule 39 providing
thus:jgc:chanrobles.com.ph
"SEC. 3. Stay of execution. — Execution issued before the expiration of the time
to appeal may be stayed upon the approval by the court of a sufficient
supersedeas bond filed by the appellant, conditioned upon the performance of
the judgment or order appealed from in case it be affirmed wholly or in part. The
bond thus given may be proceeded against on motion before the trial court, with
notice to the surety, after the case is remanded to it by the appellate
court."cralaw virtua1aw library
The petition must be granted. Petitioners are correct that what they seek is not
damages resulting from an improper preliminary injunction. Rather, they are after
the execution of a judgment in their favor which was stayed on the strength of the
supersedeas bond filed by Lumauag. And it appearing that the appeal in question
has been finally dismissed and the record of the case has already been
remanded to respondent court, the filing of petitioners’ motion seeking relief
against private respondent Lumauag was perfectly in order.
Anent Lumauag’s contention in his answer here that apparently, his principals,
the judgment debtors, have amicably settled with petitioners, the same was not
raised by him in the court below. Besides, it is denied by petitioners and,
therefore, becomes a factual issue not appropriate for Us to resolve here. It
should be threshed out in the trial court.
Before concluding, however, We deem it opportune to draw attention of the
respondent court to the terms of the judgment in issue which reads
thus:jgc:chanrobles.com.ph
CASES FOR RULE 58, 59, 60 AND 62
"PREMISES CONSIDERED, the Court hereby renders judgment in favor of the
plaintiffs and against the defendants, hereby ordering the defendants to resell to
the plaintiffs the land described in paragraph 2 of the complaint in consideration
of the sum of P3,000.00; the defendants shall execute in favor or, sign and
deliver to the plaintiffs, the corresponding deed of sale, otherwise, the Clerk of
Court shall execute the same once this decision becomes final and after the
plaintiffs shall have deposited with him the sum of P3,000.00 representing the
repurchase price of the land; the defendants shall immediately vacate the land
and deliver its possession to the plaintiffs; they shall also reimburse the plaintiffs
the sum of P8,123.30 for the produce of the land which the defendants received
and which the plaintiffs could have received for the period from January, 1961 up
to October 27, 1964; to pay a monthly damage of P278.33 beginning November
1, 1964 until possession of the land shall have been delivered to the plaintiffs;
pay the plaintiffs attorney’s fees in the amount of P1,000.00, plus the costs."
(Page 37, Record.)
Although the questioned order here has already resolved the matter of the
execution of the instrument of resale ordered in the above judgment, what needs
to be clarified before execution may issue against Lumauag is the exact amount
of the liability of the judgment debtors, which does not seem to be necessarily the
full amount of the P10,000-supersedeas bond he had filed.
ACCORDINGLY, the petition is granted and the impugned orders of respondent
judge of April 22, 1967 and October 21, 1967 are hereby set aside, and said
respondent is directed to proceed to act on petitioners’ motion of April 22, 1967
pursuant to the above opinion. Costs against private respondent
Lumauag.chanrobles law library
2

G.R. No. 98118 December 6, 1991
HON. PETE NICOMEDES PRADO, in his capacity as Officer-in-Charge of the
Department of Transportation and Communications, ATTY. JUAN C. STA.
ANA, in his capacity as Manager of the Philippine Ports Authority, Port
District of Manila, and the PHILIPPINE PORTS AUTHORITY, petitioners,
vs.
HON REGINO T. VERIDIANO II, in his capacity as the Presiding Judge of
Branch 31 of the Regional Trial Court of Manila, PORT AREA REALTY, INC.,
EVERETT STEAMSHIP CORPORATION, HARBOR IMPORT SHOPPING
CENTER, ORIENTAL MEDIA, INC. and ESTER CALING LIM, respondents.
Amante T. Bandayrel for respondents.
DAVIDE, JR., J.:
On the basis of an unverified motion, may a court validly issue ex-parte a so-
called "status quo order" which could operate either as a temporary restraining
order or writ of preliminary injunction?
This is the main issue in this case which the following and procedural
antecedents have generated:
On 11 September 1920, the Smith Bell and Company leased from the
Government, through the Bureau of Lands, Blocks 144 and 145, containing an
area of 9,023.36 square meters, located at the Port Area, Manila. The lessee
transferred all its leasehold rights to the Philippine Building Corporation on 27
May 1946, which the Secretary of Agriculture and Natural Resources approved.
The assignee was able to renew the lease contract, but transferred in 1952 all its
rights under the lease agreement to S. Villanueva Enterprises, Inc. (SVEI), which
secured on 1 September 1969 a renewal of the contract for another 25 years. On
26 November 1986, the then Minister of General Services ordered the
cancellation of the contract for violation by SVEI of its provisions. SVEI appealed
the order to the Office of the President which affirmed it in its Order of 29
September 1987. SVEI's several motions for reconsideration were denied. The
last denial, which affirmed with finality the 29 September 1987 Order, was issued
on 29 January 1990.
CASES FOR RULE 58, 59, 60 AND 62
Earlier, on 17 March 1988, the President issued Executive Order No. 321
expanding the territorial area of the South Harbor Zone of the Port of Manila and
placing the whole area under the jurisdiction of the Philippine Ports Authority
(PPA).
On 16 March 1989, the PPA wrote SVEI informing the latter of PPA's intention to
take possession of the leased premises and demanding payment of P728,861.38
representing accrued rentals and interests. On 30 June 1989, SVEI offered to
restructure its obligations provided that the PPA assured it in writing that the
contract of lease will not be terminated. In its letter of 22 August 1989, the PPA
rejected the proposal and instead demanded that SVEI vacate the premises
within thirty (30) days from receipt of the letter.
Thereafter, the PPA caused to be published a notice of bidding of Blocks 144
and 145 to be held on 28 November 1989. SVEI, however, filed on 23 November
1989 a complaint for Specific Performance with prayer for preliminary injunction
and/or restraining order against the PPA with Branch 38 of the Regional Trial
Court of Manila. The complaint sought to enjoin the PPA from conducting the
scheduled bidding. The case was docketed as Civil Case No. 89-51192. SVEI
invoked its right to remain in the premises until 1994 by virtue of its 25-year
renewed contract of lease. The court issued a writ of preliminary injunction
enjoining the PPA from proceeding with the bidding.
In the meantime, on 22 March 1990, the PPA filed with the Metropolitan Trial
Court of Manila an ejectment case against SVEI. The case was docketed as
Special Action 131889-CV and was assigned to Branch 5 of said court. 1
Upon the PPA's motion to dismiss Civil Case No. 89-51192, on the ground that the lease contract had already been
cancelled, and such cancellation was affirmed by the Office of the President, and that there is a pending ejectment case,
Branch 38 of the Regional Trial Court of Manila, through Judge Arturo Barias, Jr., issued on 30 August 1990 an Order
dismissing the case. It held that the Government had sufficient ground to cancel the contract of lease in view of the violations
of its terms by SVEI and that:
Secondly, the mere fact that there is an ejectment case filed with the Metropolitan Trial Court of Manila, the Court
is of the opinion and so holds that all the issues raised herein, more specifically that of possession, should better
3

be threshed out in the metropolitan trial court involving as they do (sic) the same parties and the same subject
matter. 2
SVEI appealed the order to the Court of Appeals where it is still pending resolution.
In line with its plan to fully maximize the utility of Block 145, the PPA decided to improve and renovate it. Pursuant thereto, it
caused to be published in the issues of the Manila Bulletin of 17, 22 and 29 October 1990 an Invitation to Prequalify and Bid
for the lease and rehabilitation-development of Block 145. Per the published notice, the opening of sealed bids was set for
28 November 1990 at 2:00 P.M.
On 27 November 1990, herein private respondents Port Area Realty, Inc., Everett Steamship Corporation, Harbor Import
Shopping Center, Oriental Media, Inc., and Ester Caling Lim, on her behalf and on behalf of others similarly situated,
claiming to be actual occupants of the building located in Block 145, filed a petition 3
with the Regional Trial
Court of Manila for Specific Performance with preliminary injunction and/or
restraining order against the Philippine Ports Authority, the Department of
Transportation and Communication, Atty. Juan C. Sta. Ana, in his capacity as
Chairman of the Bidding Committee and the members thereof. They claim to be
sublessees of Block 145, which is now a commercial complex. Private
respondents Port Area Realty, Inc. and Harbor Import Shopping Center allege
that they developed their respective areas into shopping stalls which they leased
to interested parties. Private respondent Oriental Media alleges that it is using a
portion of its premises for its printing machines but had the rest developed into
stalls which are leased to other parties. Private respondent Everett Steamship
claims that it is using the premises for its offices while private respondent Lim
avers that she is one of the stallholders.
They attached to the petition a copy of the Order of Judge Barias.
The petition was docketed as Civil Case No. 90-55248 and was assigned to
Branch 31 of the Regional Trial Court of Manila which is presided over by
respondent Judge.
As their cause of action, private respondents allege in their petition that the offer
to bid Block 145 is patently discriminatory and deprives them of their property
rights without due process of law as there was no notice to them, much less a
call for a meeting, despite the knowledge of the PPA-Port District of Manila that
CASES FOR RULE 58, 59, 60 AND 62
they developed, improved and spent for the establishment of the complex. They
are "small-time" and struggling businessmen who "could not afford and easily win
in such bidding," and that in order to prevent such discrimination and deprivation
of their property rights, they should be allowed to negotiate with the Government
on such terms and conditions that are appropriate, reasonable and just. They
then pray that the court issue an order restraining the defendants from continuing
with the bidding of Block 145 and that if it is already auctioned off, to annul the
sale and direct the defendants to negotiate with them for a contract of lease,
rehabilitate, operate and/or manage Block 145 under such terms as are
reasonable, just and proper and that after trial, render judgment making the
preliminary injunction permanent.
The respondent Judge issued on 28 November 1990 a temporary restraining
order (TRO) which was, however, served after the bidding; the bidding itself was
declared a failure because only two (2) bidders participated.
Defendants, petitioners herein, filed an opposition to the application for
preliminary injunction. This was later followed by their Answer wherein they plead
the following special an affirmative defenses:
1) Plaintiffs are mere sublessees of S. Villanueva Enterprise Inc. (SVEI);
the contract in favor of the latter was cancelled, validity of which
cancellation was upheld in the Order of 30 August 1990 in Civil Case No.
89-51192.
2) An ejectment case against SVEI is pending; considering a judgment in
an ejectment case is binding not only upon the defendant but also against
the latter's sublessees, privies, agents and/or successors-in-interest, then
the complaint should be dismissed on ground (sic) of litis pendencia,
moreover, plaintiffs are guilty of forum shopping.
3) Plaintiffs do not have better rights than SVEI; are bidder and/or
possessors in bad faith; their possession of Block 145 does not create any
vested right; have not availed of appropriate administrative remedies.
4) A negotiated contract, as suggested by plaintiffs, is never mode to
ensure any party the award of a contract.
and interpose a counterclaim for temperate and exemplary damages. 4
4
 CASES FOR RULE 58, 59, 60 AND 62
This motion does not contain any notice of hearing to counsel for the defendants (petitioners herein). There is a notice of
hearing but it is addressed to the Clerk of Court and reads:
The application for injunction was heard on 7 January 1991 with the private respondents presenting their first witness, Mr.
Catalino Luzano, president of the Port Area Realty, Inc. The hearing was ordered set for continuation on 15, 17 and 22 The Clerk of Court
January 1991. On 1 5 January 1991, counsel for private respondents moved for postponement and the hearing was reset for RTC-Manila
29 January 1991. On said date, the parties manifested to the court that they had agreed to consider the injunction incident Branch 31
moot and academic because the act sought to be enjoined had already been accomplished. Respondent Judge dictated in
open court an order declaring the application for injunction as "deemed abandoned." By agreement of the parties, the pre- Greetings:
trial conference was set for 28 February 1991.
Kindly set the afore-stated Motion for resolution and approval of the Honorable Court on April 15, 1991 at 9:00
Thereafter, the PPA caused to be published in the 7, 14 and 21 February 1991 issues of the Manila Bulletin another A.M. or as soon thereafter at the convenience of the Court.
Invitation to Prequahfy and Bid for the "lease, renovation and operations of Block 145," setting the pre-bid conference on 16
April 1991 and the submission and opening of sealed bids on 25 April 1991. Above this notice is an entry reading:

On 28 February 1991, private respondents moved for the postponement of the pre-trial on the ground that they had not yet
received the notice of pre-trial. The pre-trial was reset for 16 April 1991.

Copy Furnished:

On 15 April 1991, a day before the pre-trial conference, private respondents filed in Civil Case No. 90-55248 an unverified Solicitor Roman G. Del Rosario
Urgent Motion for the Issuance of a Status Quo Order 5alleging therein as follows: Office of the Solicitor General
Salcedo Street, Legaspi Village

1. That the Restraining Order issued by this Honorable Court has already Makati, Metro Manila

lapsed;
Acting on the aforesaid urgent motion on the day it was filed, the respondent Judge dictated in open court an

2. That the hearing on Plaintiffs' motion for the issuance of a writ of Order wherein he stated that:

preliminary injunction was then in progress before it was abandoned

because of Defendants' assurance that there would be no public bidding ... The motion alleges among other things the Prayer for Writ of Preliminary Injunction was abandoned
to be conducted during the pendency of this case; because of Defendants' assurance that there would be no public bidding to be conducted during the
pendency of this case.

3. That Defendants, in violation of this agreement, are intending and

threatening to conduct a-s in fact, a public bidding of the premises was The movants pointed that in violation of this agreement, the defendants are intending to conduct a

(sic) scheduled to be conducted on April 25,1991 which, if completed, public bidding on April 25,1991 which will render the issues in this case moot and academic.
would render the issues in this case moot and academic.
It is the observation of this court that plaintiffs have insisted in this action their vested rights to enter
and praying that "a status quo order be issued enjoining the Defendants and their into negotiations in lieu of public bidding, and in order that the same will not become moot and

agents from continuing the scheduled public bidding on April 25, 1991 until after academic, the Motion is hereby granted.

the issues shall have been resolved by the Honorable Court." 6

and ruled as follows:

5

WHEREFORE, both parties are hereby ordered to maintain a status quo condition, that is defendants
and their agents are enjoined from continuing the public bidding on April 25, 1991 or any bidding
thereafter until the issues shall have been resolved by this Court. 7
When the case was called for pre-trial on 16 April 1991, as earlier agreed upon by the parties, counsel for private
respondents asked for a postponement on the ground that one of them, Atty. Bandayrel, had not yet prepared his
Pre-Trial Brief, while the other, Atty. Jurado, claimed that his client, Oriental Media, Inc., had not received its
notice of hearing. Despite the objection by counsel for herein petitioners, respondent Judge reset the pre-trial for
16, 23 and 30 May 1991.
Petitioners then filed on 22 April 1991 the instant petition without even moving for a reconsideration of the status
quo order in view of the urgent necessity for relief pleaded by the government 8
and because such a
move would be inadequate.
In Our Resolution of 24 April 1991, We required the respondents to
comment on the petition and issued a Temporary Restraining Order
enjoining the respondent Judge, his agents, representatives and/or any
person acting upon his orders or in his place or stead from enforcing
and/or carrying out the above Order of 15 April 1991.
Petitioners herein assert that respondent Judge committed grave abuse of
discretion in issuing the challenged status quo order since private
respondents' unverified urgent motion for its issuance does not allege any
fact or show any clear legal right to justify it and that it was heard without
notice to petitioners; additionally, it was issued without requiring private
respondents to put up a bond.
In their Comment filed on 6 May 1991, respondents allege that they did
not pursue their prayer for a preliminary mandatory injunction because of
the assurance of petitioners that the public bidding shall not be held while
the resolution of the issues in the case remain pending. However, since
petitioners disregarded that commitment, private respondents had to rush
to the court a quo for the issuance of a restraining order. The latter
argue, inter alia, that what the respondent judge issued was not a
CASES FOR RULE 58, 59, 60 AND 62
preliminary injunction but merely a temporary restraining order, which, as
mandated by law, lapses ipso vigore after twenty (20) days from its
issuance. Hence, the legal basis for its issuance, that is, without hearing
and without requiring the putting up of a bond, should not be under
question." 9
In their Reply filed on 26 June 1991, petitioners insist that the status quo order of 15 April 1991 is a "writ of
preliminary injunction, but whether it is a temporary restraining order or a writ of preliminary injunction, the same
was issued despotically and without the least legal basis." If it is to be considered a temporary restraining order, it
is, in effect, an extension of the 28 November 1990 TRO, which would be irregular and unlawful per Defalobos vs.
Aquilizan. 10
Moreover, private respondents are not entitled to the writ since
the complaint fails to show a cause of action. Finally, there was no
agreement whatsoever that no bidding would be conducted; the claim is a
blatant lie, for, at the hearing on 7 January, when Atty. Bandayrel for the
private respondents sought to make a misrepresentation on this point, his
scheme was immediately aborted, thus:
Atty. Bandayrel:
But there is already an admission of the defendant that
there will be no more bidding with respect to the Block 145,
Your Honor.
Solicitor Del Rosario:
There was no admission, Your Honor. There was merely a
bidding which was declared a failure. As to whether we will
hold another bidding, Your Honor, that depends upon the
discretion of the management of the Philippine Ports
Authority.
Atty. Bandayrel:
I withdraw that manifestation, Your Honor. 11
In the Resolution of 3 July 1991, this Court gave due course to the petition
and required both parties to file their respective memoranda, which
petitioners complied with on 14 August 1991 and the respondents on 6
6

November 1991. In their Memorandum, respondents come forward with a
new theory, namely: The questioned status quo order "was (sic) a mere
reinstatement of the previous temporary restraining order already issued
which was recalled because of Petitioner's assurance." 12
We do not hesitate to grant the petition. It is impressed with merit. There
is no doubt at all that respondent Judge had acted with palpable abuse of
discretion, so grave that it amounts to lack of jurisdiction, in issuing
the status quo order of 15 April 1991. His conduct can vividly be described
as despotic, arbitrary and capricious. The following suffice to support this
conclusion:
1. Respondent Judge knew, or should have known because it was his
duty to read the pleading, that the urgent motion for the issuance of
a status quo order does not contain a notice of hearing addressed to the
counsel of the adverse parties (defendants, herein petitioners). The notice
incorporated therein is a notice addressed to the Clerk of Court. This does
not comply with Sections 4 and 5, Rule 15 of the Rules of Court which
explicitly provide that the notice shall be served by the applicant to all
parties concerned at least three (3) days before the hearing thereof and
"shall be directed to the parties concerned, and shall state the time and
place for the hearing of the motion." A notice of hearing addressed to the
Clerk of Court and not to the parties is no notice at all.
CASES FOR RULE 58, 59, 60 AND 62
In Philippine Advertising Counselors, Inc. vs. Revilla, 13
this Court, citing
prior relevant cases, held:
Finally, Section 4, Rule 15 of the Rules of Court provides that
notice of a motion shall be served by the applicant to all parties
concerned, at least three (3) days before the hearing thereof,
together with a copy of the motion, and of any affidavits and other
papers accompanying it; and Section 5 of the same Rule requires
the notice to be directed to the parties concerned and to state the
time and place for the hearing of the motion. A motion which fails
to comply with these requirements is nothing but a useless piece of
paper [Manila Surety and Fidelity Co., Inc. v. Bath Construction
Company, et al., L-16636, June 24, 1965, 14 SCRA 435, 437,
citing PNB v. Donasco, L-18638, February 28, 1963; Manakil v.
Revilla, Phil. 81; Roman Catholic Bishop of Lipa v. Municipality of
Unisan, 44 Phil. 866; and Director of Lands v. Sanz, 45 Phil. 117.
Sebastian v. Cabal, etc., et al., L-25699, April 30, 1970, 32 SCRA
453, 454-55. Cledera, etc., et al., v. Sarmiento, etc., et al., L-
32450-54, June 10, 1971, 39 SCRA 552, 562-576]. In the instant
case, there was, according to the trial court in its Order of April 7,
1969, "no proof that plaintiff was duly served with a copy of the
motion for reconsideration." Moreover, the motion did not contain a
notice of hearing directed to petitioner stating the time and place of
the hearing. The notice was addressed to the Clerk of Court
requesting the latter to "set the foregoing motion for the
consideration and approval of this Honorable Court immediately
upon receipt hereof." The notice of hearing caused to be issued by
the trial court did not cure the defect of lack of notice, for the duty
to give such notice devolves upon the movant, not upon the court
[Magno v. Ortiz, etc., et al., L-22670, January 31, 1969, 26 SCRA
692, 695, citing Fulton Insurance Company v. Manila Railroad Co.,
et al., L-24263, Nov. 18, 1967, 21 SCRA 974. Cledera, etc., et al.
v. Sarmiento, etc., et al., Ibid.]." (emphasis supplied).
We reiterated the above rule in Sacdalan vs. Bautista, et al., 14 and,
recently, in Bank of the Philippine Islands vs. Far East Molasses Corp. 15
7

A motion that does not contain a notice of hearing is but a mere scrap of
paper; it presents no question which merits the attention and
consideration of the Court. It is not even a motion for it does not comply
with the rules and, hence, the clerk has no right to receive it. 16
In
Filipinas Fabricators and Sales, Inc., et al. vs. Hon. Magsino, et al., 17 this
Court was more emphatic:
... a motion without notice of hearing is nothing but a piece of
paper filed in court, which should be disregarded and ignored. ...
(emphasis supplied).
The motion in question does not also show that a copy thereof was
actually served on counsel for the defendants (petitioners herein). It
merely states, copy furnished: without indicating how a copy was so
furnished. The respondent Judge could not have failed to notice that the
motion was filed only on 15 April 1991 and that there was no sufficient
proof of service thereof to counsel for the adverse parties. Section 6, Rule
15 of the Rules of Court provides that "no motion shall be acted upon by
the court, without proof of service of the notice thereof, except when the
court is satisfied that the rights of the adverse party or parties are not
affected." Respondent Judge knew very well that Government rights and
interests were involved and that its appropriate agencies have been
resisting not only the claims of private respondents as sublessees but also
those of the lessee (SVEI) whose contract of lease had in fact been
cancelled and against whom an ejectment suit is presently pending.
No compelling reason existed for acting on the motion on shorter notice. It
sought to restrain the holding of a public bidding scheduled on 25 April
1991, a full ten (10) days from its filing. The pre-trial conference had
earlier been reset to 16 April 1991. If private respondents had some
respect for fairness and were motivated by good faith, they could have
very well set the hearing of the motion on 16 April 1991. That there was in
fact an absence of urgency is best borne out by the date the motion was
prepared. It is dated APRIL 10, 1991. 18If the movants had actually
intended to have had it heard on 15 April, they clearly had sufficient time
to comply with the rules without using the cover of "Urgency." Besides, the
notice of bidding was last published in the 21 February 1991 issue of the
Manila Bulletin. There is no indication at all that private respondents came
CASES FOR RULE 58, 59, 60 AND 62
to know of the publication only on or shortly before 10 April to justify their
sense of urgency in preparing the said motion.
Obviously, respondent Judge deliberately defied and ignored the above
solemn pronouncements of this Court and disregarded the basic rules on
notice if only to grant special favor to movants. To quote a line
from Manila Surety and Fidelity Co., Inc. vs. Batu Construction Co., et al.,
supra, what he did is "intolerable in a well-ordered judicial system."
What We stated in Cledera vs. Sarmiento, supra, bears repeating if only
to express the Court's condemnation of callous and defiant disregard of
simple rules and settled doctrines:
To emphasize once more, the directives in Section 2 of Rule 37
and Sections 4, 5, and 6 of Rule of the Revised Rules of Court are
as mandatory as they are clear and simple; and non-compliance
therewith is fatal to the cause of the movant, because the mere
filing of the motion for reconsideration, without the requisite notice
of hearing, does not toll the running of the period for appeal.
Unless the movant sets the time and place of hearing in the notice
and serves the adverse party with the same, the court would have
no way to determine whether the party agrees to or objects to the
motion, and if he objects, to hear him on his objection, since the
rules themselves do not fix any period within which to file his reply
or opposition. The rules commanding the movant to serve on the
adverse party a written notice of the motion (Section 2, Rule 37)
and that the notice of hearing "shall be directed to the parties
concerned, and shall state the time and place for the hearing of the
motion" (Section 5, Rule 15), do not provide for any qualifications,
much less exceptions. To deviate from the peremptory principle
thus uniformly reaffirmed in the latest cases aforecited in, and to
exempt from the rigor of the operation of said principle, the case at
bar would be one step in the emasculation of the revised rules and
would be subversive of the stability of the rules and jurisprudence
thereon — all to the consternation of the Bench and Bar and other
interested persons as well as the general public who would thereby
be subjected to such an irritating uncertainty as to when to render
obedience to the rules and when their requirements may be
ignored. We had to draw a line somewhere and WE did when we
promulgated on January 1, 1964 the Revised Rules of Court,
8

wherein WE delineated in a language matchless in simplicity and
clarity the essential requirements for a valid notice of hearing on
any motion, to eliminate all possibilities of equivocation or
misunderstanding.
2. The urgent motion for a status quo order is unverified. Whether it be
considered as one for a temporary restraining order or for a preliminary
injunction, it is still patently insufficient in form and in substance. What is
sought to be enjoined is "the scheduled public bidding on April 25, 1991,"
an event which is not pleaded in or covered by the original petition in Civil
Case No. 90-55248 filed on 27 November 1990. It is, therefore, a
subsequent event or occurrence which could properly be the subject of a
supplemental pleading pursuant to Section 6, Rule 10 of the Rules of
Court. But even conceding for the moment that a motion may be allowed
for the purpose, such must be verified. This is the conclusion which
necessarily flows from the mandatory preconditions for the issuance of
either a preliminary injunction or a temporary restraining order. Section 4,
Rule 58 of the Rules of Court provides that a preliminary injunction may
be granted only if: (a) the complaint is verified and (b) the plaintiff files with
the clerk of court in which the action is pending the requisite bond; and the
pertinent portion of Section 5 thereof, as amended by B.P. Blg. 224,
reads:
SECTION 5. Preliminary injunction not granted without notice;
issuance of restraining order. — No preliminary injunction shall be
granted without notice to the defendant. If it shall appear from the
facts shown by affidavits or by the verified complaint that great or
irreparable injury would result to the applicant before the matter
can be heard on notice, the judge to whom the application for
preliminary injunction was made, may issue a restraining order to
be effective only for a period of twenty days from date of its
issuance. Within the said twenty-day period, the judge must cause
an order to be served on the defendant requiring him to show
cause, at a specified time and place, why the injunction should not
be granted, and determine within the same period whether or not
the preliminary injunction shall be granted, and shall accordingly
issue the corresponding order. In the event that the application for
preliminary injunction is denied, the restraining order is deemed
automatically vacated. ... (emphasis supplied).
CASES FOR RULE 58, 59, 60 AND 62
Thus, if in a pending case, a mere motion for the issuance of a writ of
preliminary injunction or temporary restraining order may be allowed in
connection with a supervening act, event or occurrence, the motion must
also be verified. That said motion is only an incident to a verified petition
does not provide an exception to what is stated above since the event
against which it is directed is not covered by or within the contemplation of
the petition.
In an apparent attempt to be clever, respondent Judge sought to
circumvent the above rule by carefully avoiding the use of the
term preliminary injunction or temporary restraining order. He just directed
the parties to maintain a status quo condition. Unfortunately, such move
displayed neither wisdom nor wit, but rather defiance of the rule.
3. The status quo order is in fact a preliminary injunction which enjoins the
defendants (petitioners) and their agents from continuing not only the
public bidding on 25 April 1991, but also "any bidding thereafter until the
issues shall have been resolved by the court a quo." Even if We set aside
the requirement of verification for the motion, respondent court cannot
validly and lawfully issue it without notice to the defendants and without
the compliance of the bond requirement, which is mandatory. 19
Worse, considering the allegations in the motion and the petition itself, to which is attached as Annex "A" the
Order of Judge Barias of 30 August 1990, it is obvious that private respondents have not shown any clear and
positive right to be entitled to the protection by the ancillary relief of preliminary injunction. They are mere
sublessees. As indisputably shown in the Order of Judge Barias, which dismissed Civil Case No. 89-51192 filed
by SVEI, the contract of lease over Blocks 144 and 145 in favor of SVEI had been cancelled and such
cancellation was affirmed with finality by the Office of the President on 29 January 1990. Respondent Judge is
presumed to have read the petition and this Annex "A", as well as the Answer of the defendants which makes
reference to it and attaches as part thereof a copy of the complaint for ejectment against SVEI. Such admissions
and pleadings provide enough basis for a denial of the application for preliminary injunction since, in the absence
of any further evidence, it is quite obvious that the applicants had failed to show any clear and positive right to the
premises. As mere sublessees, they cannot invoke any right superior to that of the lessee, their sublessor. The
moment the sublessor (SVEI in this case) is ousted from the premises, the sublessees would have no legs to
stand on. 20
In an ejectment case, sublessees need even be impleaded as
co-defendants with the lessee (sublessor and a judgment of eviction
against the lessee binds sublessees. 21 As such, they cannot likewise
claim any right to a negotiated contract, especially one on their terms
because according to them, they are merely "small-time" or "struggling"
9
 CASES FOR RULE 58, 59, 60 AND 62
businessmen. This would clearly be against public policy and public cured [Footnote, Banque De L'Indochine Et De Suez, et al. vs.
interest. Torres, et al., G.R. Nos. 82405-06, July 10, 1989].

For a writ of injunction to issue, the existence of a clear and positive right By no stretch of the imagination then may the earlier TRO, issued on 28
especially calling for judicial protection must be shown; injunction is not to November 1990, be deemed to have been reinstated, revived or
protect contingent or future rights; nor is it a remedy to enforce an abstract resurrected.
right. 22 An injunction will not issue to protect a right not in esse and which
may never arise or to restrain an act which does not give rise to a cause Finally, We find to be unsubstantiated the claim of private respondents
of action. There must exist an actual right. 23 that petitioners violated the "gentleman's agreement" that no bidding shall
be conducted until the issues are resolved. On the contrary, as shown
4. Finally, respondents submit that the status quo order "was a above, the crude attempt of Atty. Bandayrel in the court below to hold the
petitioners to an alleged admission was immediately rebuffed by Solicitor
mere reiteration of the previous temporary restraining order De Rosario and Atty. Bandayrel was compelled to withdraw his
manifestation.
already issued which was recalled because of petitioners'
assurance." This compounds the arbitrariness of respondent WHEREFORE, the instant petition is GRANTED. The challenged status
quo order dated 15 April 1991 issued by respondent Judge in Civil Case
Judge's action and his inexplicable propensity to disregard No. 90-55248 is hereby SET ASIDE and declared NULL AND VOID.
doctrines laid down by this Court. We ruled in Dionisio, et al. vs. Costs against private respondents.
CFI of South Cotabato 24
that if before the expiration of the 20 day IT IS SO ORDERED.
period the application for preliminary injunction is denied, the temporary
restraining order would thereby be deemed automatically vacated. But if
no action is taken by the judge on the application within said 20-day
period, the temporary restraining order would automatically expire on the
20th day by the sheer force of law. 25 By the terms of B.P. Blg. 224, a
temporary restraining order can no longer exist indefinitely. This rule was
reiterated in Board of Transportation vs. Castro; 26 whoever, to emphasize
the automatic expiration, this Court further stated that no judicial
declaration to that effect is necessary. In the recent case of Aquino, et al.
vs. Luntok, et al., 27 We further made the following pronouncement:

The 20-day period of effectivity of a TRO is non-extendible; the

restraining order automatically terminates at the end of such period
without the need of any judicial declaration to that effect. [Golden
Gate Realty Corp. vs. IAC, 152 SCRA 684]. Any extension would,
therefore, ordinarily, be disallowed. But, when injunction is
subsequently granted, as in the case at bar, any defect in the order
brought about by the extension of its enforceability is deemed

10

G.R. No. 88705 June 11, 1992
JOY MART CONSOLIDATED CORPORATION, petitioners,
vs.
HON. COURT OF APPEALS, PHOENIX OMEGA DEVELOPMENT AND
MANAGEMENT CORPORATION and LIGHT RAIL TRANSIT
AUTHORITY, respondents.
GRIÑO-AQUINO, J.:
Does a trial court possess jurisdiction to dissolve a writ of preliminary injunction
which is pending review on certiorariin the Court of Appeals?
In 1978-79, the government planned the Light Rail Transit (LRT) system to
service the transportation requirements of the commuting public from Baclaran to
Balintawak Monument and vice versa. The property of Joy Mart at Carriedo
Street, Sta. Cruz, Manila, where the Isetann Department Store is located, and
three (3) other adjoining parcels of land (with a total area of 1,611 sq. m., on
which stands the Presidente Hotel leased by Joy Mart) was among the properties
that would be needed for the LRT system and were being considered for
expropriation should negotiations for their acquisition fail. As a gesture of
cooperation with the government, Joy Mart consented to sell the property and
give up its leasehold rights over the adjacent properties, provided, it would be
given the first option to redevelop the entire area denominated as
the consolidated block of the LRT Carriedo station encompassing Joy Mart's
properties.
On September 8, 1982, while negotiations for the purchase of the properties
were ongoing between Joy Mart and the Special Committee on Land and
Property Acquisition of the Light Rail Transit Authority (LRTA), the latter entered
into a contract with the Philippine General Hospital Foundation Inc. which had
been granted the right, authority, and license to develop the areas adjacent to the
LRT stations and to manage and operate the concessions to be established in
Caloocan, Manila, and Pasay, with the right to sublease, assign, and transfer any
of its rights and interests therein.
CASES FOR RULE 58, 59, 60 AND 62
On February 22, 1983, Joy Mart conveyed its property and waived its leasehold
rights on the adjacent lots in favor of the government, through the LRTA, under a
Deed of Absolute Sale. The Deed provided, among other things, that "upon
recommendation of the special panel created by the LRTA Committee on Land
and Property Acquisition. LRTA agreed that Joy Mart, the owner of Isetann and
lessee of the Presidente Hotel, should be given the first option in the
redevelopment of the consolidated block, notwithstanding their compensation for
the property."
As partial compliance with the aforestated first option, the PGH Foundation
subleased to Joy Mart the LRT Carriedo station covering the consolidated block
for the purpose of constructing a multi-storey building of first class materials.
Subsequently, Joy Mart submitted to LRTA its plans for the construction of the
building occupying the consolidated block. However, LRTA informed Joy Mart
that the proposed building should occupy only an area of 1,141.20 square meters
as the rest of the areas within the consolidated block would be used by the LRT
station and as set-back area or open space for the benefit of the commuting
public.
When Joy Mart reminded LRTA of the contract provisions over the consolidated
block, the former was assured that, in the event any area in the consolidated
block was to be released for redevelopment, the first option of Joy Mart would be
respected and implemented.
On August 30, 1984, an Addendum to the Sublease Agreement was executed
between Joy Mart and the PGH Foundation increasing the area to be used and
occupied by Joy Mart. Aside from the increase of monthly rental and provision for
an escalation clause, Joy Mart was made to pay "goodwill" in the sum of P3.0
Million.
Pursuant to its understanding with, and the assurances of, LRTA, Joy Mart
constructed an eight-storey building with ten levels fully airconditioned in the
subject area. Joy Mart had to borrow P50.0 Million for this project. The feasibility
study on the viability of this project was conditioned upon Joy Mart serving the
business requirements in the LRT Carriedo station and maintaining its first option
to redevelop and occupy any available area therein.
On November 28, 1986, LRTA entered into Commercial Stalls Concession
Contract with the Phoenix Omega Development and Management Corporation
11

("Phoenix" for brevity) awarding to it all the areas and commercial spaces within
the three LRT terminals and the fifteen (15) on-line stations.
In the third quarter of 1987, Joy Mart learned of the contract between LRTA and
Phoenix when construction activities commenced within the consolidated block of
the LRT Carriedo station.
Joy Mart made representations with the LRTA and reiterated its first option to
redevelop the subject area, but to no avail.
Joy Mart filed a complaint for specific performance of contract and damages for
breach of contract with injunction against the LRTA and Phoenix on August 21,
1987. The case entitled "Joy Mart vs. LRTA and Phoenix," was docketed as Civil
Case No. 87-41731 in the Regional Trial Court of Manila. Branch XXXII. Joy Mart
asked that LRTA be ordered to award to it, either by sale, or lease, the
redevelopment of the area known as the consolidated block of the LRT Carriedo
station which is part of the area subject of the Deed of Absolute Sale dated
February 22, 1983, executed by Joy Mart in favor of the Government or LRTA.
Joy Mart also asked the court to issue a writ of preliminary injunction and/or
restraining order "commanding the respondents (LRTA and Phoenix) individually
and collectively, their officers and employees, to cease and desist from the
construction being had in the property adjacent to the leased premises."
On September 25, 1987, the trial court, presided by Judge (now Court of Appeals
Justice) Artemon D. Luna, after hearing the parties and considering their
respective memorandums in amplification of oral arguments, issued a writ of
preliminary injunction "commanding the defendant Phoenix to cease and desist
from continuing with the construction going on adjacent to the property on lease
to the plaintiff by LRTA, until further orders from this court, upon posting by the
plaintiff of a P10,000.00 bond approved by the court, which may answer for any
damages that the defendants may sustain by reason of the issuance of this writ"
(p. 41. Rollo).
Phoenix sought relief in the Court of Appeals by filing a Petition for Certiorari and
Prohibition (CA-G.R. SP No. 12998) praying the appellate court: (1) to require the
trial court to immediately lift the writ of injunction and/or to refrain from further
carrying out or implementing it; and (2) after due hearing: (a) reverse and set
aside the order granting the writ of preliminary injunction; (b) dissolve the writ of
injunction dated September 23, 1987; and (c) prohibit the trial judge from taking
cognizance of the case and to remand it to Branch IX of the Regional Trial Court
CASES FOR RULE 58, 59, 60 AND 62
of Manila which had first taken cognizance of the case. The petition was
docketed as CA-G.R. SP No. 12998 and raffled to the Sixteenth Division of the
Court of Appeals which gave due course to the petition but did not issue a
restraining order against the trial court.
Meanwhile, in the trial court, the LRTA and Phoenix filed separate answers to
Joy Mart's complaint in Civil Case No. 87-41731. The pre-trial of the case was
set on November 13, 1987. As Phoenix and Joy Mart were, exploring avenues
for an amicable settlement, the pre-trial conference was re-set on December 11,
1987, January 14, 1988, and lastly on March 2, 1988 when it was declared
terminated.
On May 30, 1988, while their certiorari petition to review the writ of preliminary
injunction issued by Judge Luna (CA-G.R. SP No. 12998) was still pending in the
Court of Appeals, the LRTA and Phoenix filed in the trial court a joint petition to
dissolve the said Writ of Preliminary Injunction, offering to post a counterbond for
that purpose. They alleged that the writ of preliminary injunction was causing
tremendous losses to LRTA and Phoenix because they have been unable to use
the commercial stalls in the consolidated block while Joy Mart could be
compensated for any loss it may suffer if the injunction were lifted; "that at a rate
of P1,000.00 monthly rental per square meter, the 28 stalls would earn
P305,800.00 a month (tsn, idem), that since September 21, 1987 when the
injunction was issued up to the present, Phoenix should have earned
P2,752.200.00 and suffered as much in damages which it will continue to suffer if
the injunction is not lifted" (p. 80. Rollo). They pleaded that they "are as much
entitled to the protection of their rights as plaintiff, that if fair play gives the
plaintiff a right to prolong the litigation, fairness also demands that defendants be
relieved of the thousands of pesos in damages that they suffer for every day of
delay in this case occasioned by the imposition of the injunction" (p. 69. Rollo).
Joy Mart opposed the petition to dissolve the injunction. The petition was heard
on June 17, 1988 with the parties orally arguing their respective sides of the
question.
On July 6, 1988, the trial court dissolved the writ of preliminary injunction on the
ground that its continuance would cause great damage to the respondents, while
the petitioner's claim for damages, which was yet to be proven, can be fully
compensated. Joy Mart filed a motion for reconsideration. LRTA and Phoenix
opposed it. The trial court denied Joy Mart's Motion for Reconsideration on
August 9, 1988, stating thus:
12

The petition for dissolution is based on pertinent portion of Section
6, Rule 58 of the Rules of Court, that the continuance of the
injunction would cause great and irreparable damage to
defendants while plaintiff can be fully compensated for whatever
damages that it may suffer. The evidence adduced during the
hearing of the petition for dissolution of the writ showed that the
continuance of the writ would cause great damages to defendants
and plaintiff's claim for damages, if any and which it has yet to
prove, can be fully compensated.
The order of dissolution expressed in no uncertain terms that this
Court may not be ascribed as having pre-empted the authority and
jurisdiction of the Court of Appeals over the certiorari proceedings.
The authority of this Court to dissolve the writ is inferable in
Section 6, Rule 58, Rules of Court that it may dissolve the writ if it
appears during the hearing that although plaintiff is entitled to the
injunction, its continuance would cause great damage to the
defendants while the plaintiff can be fully compensated for such
damages as it may suffer (Cf. Tiaoqui and Imperial vs. Horilleno,
63 Phil. 116, 120). (pp. 70-71, Rollo.)
On August 17, 1988, the Sixteenth Division of the Court of Appeals upon being
apprised by Phoenix of the trial court's action, dismissed Phoenix's petition
for certiorari (CA-G.R. SP No. 12998) for having become moot and academic.
On September 14, 1989, Joy Mart sought relief in the Court of Appeals from
Judge Luna's order lifting the writ of preliminary injunction. In its petition
for certiorari with preliminary injunction and restraining order (CA-G.R. SP No.
15618, assigned to the Ninth Division of the Court of Appeals), Joy Mart prayed
that:
. . . a temporary restraining order be forthwith issued commanding
the Honorable respondent Court to refrain from further proceeding
in the matter sought to be reviewed . . . ; (c) the application for a
writ of preliminary injunction be granted restraining respondent
Phoenix from continuing its subleasing and construction activities
adjacent to the premises leased to petitioner by respondent LRTA
until the main case is finally decided; and (d) a judgment be
rendered declaring the order of 6 July 1988, as well as the order of
9 August 1988, of the Honorable respondent Court to be null and
CASES FOR RULE 58, 59, 60 AND 62
void, and upholding the order of 21 September 1987 to be valid
and binding. (pp. 39-40, Rollo.)
The Court of Appeals, Ninth Division, gave due course to the petition and
required the respondents to answer within ten (10) days from notice. The Court
temporarily restrained the respondents "from implementing the questioned orders
of 6 July 1988 and 9 August 1988, and for private respondent Phoenix to refrain
from engaging in subleasing and construction activities in the questioned
premises, and from implementing the sublease contracts if already signed, or the
occupancy of the commercial stalls if already constructed, until further orders
from this court" (pp. 17-18, Rollo). It set the hearing of the application for a writ of
preliminary injunction on September 29, 1988.
Despite the temporary restraining order which it received on September 19,
1988, Phoenix continued its construction activities and allowed its tenants to
occupy the finished stalls. Whereupon Joy Mart filed a motion praying the Court
of Appeals to declare Phoenix in contempt of court.
After hearing the application for a writ of preliminary injunction, the opposition
and answers of the LRTA and Phoenix, and the memoranda of the parties, the
Court of Appeals, Ninth Division, on February 28, 1989, dismissed Joy Mart's
petition.
Hence, this petition for review in which Joy Mart alleges that the Court of Appeals
erred:
1. in not finding that the trial court lost jurisdiction to act on the
motion to dissolve the writ of preliminary injunction, after the said
writ had been elevated to the Court of Appeals, Sixteenth Division,
for review;
2. in not finding that Phoenix is guilty of forum-shopping; and
3. in not finding Phoenix guilty of contempt, of court, and in not
issuing a writ of preliminary mandatory injunction.
These assignments of error are reducible to the lone issue of whether the trial
court continued to have control of the writ of preliminary injunction even after the
same had been raised to the Court of Appeals for review.
13

The answer is no. After the LRTA and Phoenix had elevated the writ of
preliminary injunction even after the same had been raised to the Court of
Appeals for review.
The answer is no. After the LRTA and Phoenix had elevated the writ of
preliminary injunction to the Court of Appeals for determination of the propriety of
its issuance (CA-G.R. SP No. 12998), the trial court (notwithstanding the
absence of a temporary restraining order from the appellate court) could not
interfere with or preempt the action or decision of the Court of Appeals on the writ
of preliminary injunction whose annulment was sought therein by Phoenix and
the LRTA.
In petitioning the trial court to lift the writ of preliminary injunction which they
themselves had brought up to the Court of Appeals for review, Phoenix and the
LRTA engaged in forum-shopping. After the question of whether the writ of
preliminary injunction should be annulled or continued had been elevated to the
Court of Appeals for determination, the trial court lost jurisdiction or authority to
act on the same matter. By seeking from the trial court an order lifting the writ of
preliminary injunction, Phoenix and LRTA sought to divest the Court of Appeals
of its jurisdiction to review the writ. They improperly tried to moot their own
petition in the Court of Appeals — a clear case of trifling with the proceedings in
the appellate court or of disrespect for said court.
In Prudential Bank vs. Castro, 142 SCRA 223, 231 where the trial judge issued
an order changing or correcting his previous order which had been elevated to
the Supreme Court for review, the judge's actuation was deemed to be
"disrespectful of this Court."
(e) Respondent Judge, in his Order of March 13, 1985, gave
course to the appeal of Complainant Bank although he had already
ruled that the latter had lost the right of appeal. That Order of
March 13, 1985 was issued after Complainant Bank had instituted
G.R. No. 69907 on February 19, 1985, asking that Respondent
Judge be ordered to allow its appeal from the summary judgment.
The order of March 13, 1985 was clearly intended to render G.R.
No. 69907 moot and academic. Said Order was disrespectful of
this Court. If at all, Respondent Judge should have come to this
Court in said G.R. No. 69907, to ask for leave to allow the appeal
of Complainant Bank with admission that he had realized that his
previous denial of the appeal was erroneous.
CASES FOR RULE 58, 59, 60 AND 62
The actuation of Judge Luna in Civil Case No. 87-41731 can be categorized as
such. It is not excused by the fact that Phoenix and LRTA were presenting
evidence of losses and damages in support of their motion to lift the writ of
preliminary injunction, for that could as easily have been done by them in the
Court of Appeals which possesses "the power to try cases and conduct hearing,
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" (Sec.
9, par. [3], 2nd par.. B.P. Blg. 129).
The trial judge played into the hands of Phoenix and the LRTA, and acted with
grave abuse of discretion amounting to excess of jurisdiction in granting their
motion to dissolve the writ of injunction. Judicial courtesy behooved the trial court
to keep its hands off the writ of preliminary injunction and defer to the better
judgment of the Court of Appeals the determination of whether the writ should be
continued or discontinued.
The non-issuance of a temporary restraining order by the Court of Appeals upon
receipt of the petition in CA-G.R. SP No. 12998 simply meant that the trial court
could proceed to hear and decide the main complaint of Joy Mart for specific
performance of contract and damages against the LRTA and Phoenix. It did not
give the lower court a license to interfere with the appellate court's disposition of
the writ of preliminary injunction.
By simply "noting" that the trial court's order lifting the writ of preliminary
injunction had mooted the case before it, the Court of Appeals displayed
regrettable indifference toward the lower court's interference with the exercise of
the appellate court's jurisdiction to decide and dispose of the petition
for certiorari pending before it. Instead of being jealous of its jurisdiction, the
Appellate Court was simply glad to be rid of the case.
The Court of Appeals' reasoning that the trial court did not overlap or encroach
upon its (the Court of Appeals') jurisdiction because the trial court "was actually
delving into a new matter — the propriety of the continuance of the writ of
preliminary injunction in view of developments and circumstances
occurring after the issuance of the injunction" (pp. 51-52, Rollo), is unconvincing,
for the issue of the impropriety of issuing the writ of preliminary injunction was
inseparable from the issue of whether the writ should be maintained or not. By
lifting the writ of injunction before the Court of Appeals could rule on whether or
14

not it was properly issued, the trial court in effect preempted the Court of
Appeals' jurisdiction and flouted its authority.
The private respondents' application to the trial court for the dissolution of the writ
of preliminary injunction that was pending review in the Court of Appeals was a
form of forum shopping which this Court views with extreme disapproval. The
lower court's proceeding being void for lack of jurisdiction, the writ of preliminary
injunction should be reinstated, and the petition to annul the writ (CA-G.R. SP
No. 12998) should be dismissed on the ground of forum shopping as provided in
Rule No. 17 of the Interim Rules and Guidelines, Rules of Court.
CASES FOR RULE 58, 59, 60 AND 62
private respondents' commercial stalls sought to be stopped by the injunction
have been completed, the rentals received by the private respondents after the
finality of this decision shall be deposited by them, or the lessees, in the Regional
Trial Court to await the final judgment in Civil Case No. 87-41731. Costs against
the private respondents.
The Court of Appeals, Ninth Division, is ordered to hear and decide Joy Mart's
petition to declare Phoenix in contempt of court for having allegedly defied and
disobeyed the Court's temporary restraining order of September 15, 1988 in CA-
G.R. SP No. 115618.

17. Petitions for writs of certiorari, etc. — No petition SO ORDERED.

for certiorari, mandamus, prohibition, habeas corpus or quo
warranto may be filed in the Intermediate Appellate Court if another
similar petition has been filed or is still pending in the Supreme
Court. Nor may such petition be filed in the Supreme Court if a
similar petition has been filed or is still pending in the Intermediate
Appellate Court, unless it be to review the action taken by the
Intermediate Appellate Court on the petition filed with it. A violation
of this rule shall constitute contempt of court and shall be a cause
for the summary dismissal of both petitions, without prejudice to
the taking of appropriate action against the counsel or party
concerned.

The dismissal of Phoenix and LRTA's petition in G.R. No. SP 12998 by the Court
of Appeals (Sixteenth Division) was correct, but it should be for violation of Rule
17 of the Interim Rules and Guidelines (forum-shopping), not because the
petition had become moot and academic.

The dismissal of Joy Mart's petition for certiorari in. CA-G.R. SP No. 15618 by
the Court of Appeals (Ninth Division) is annulled and set aside for grave abuse of
discretion.

WHEREFORE, the petition for review is GRANTED. The Court of Appeals'

decision dated February 28, 1989 in CA G.R. SP No. 115618, dismissing Joy
Mart's petition for certiorari and upholding the dissolution by the Regional Trial
Court of Manila, Branch 32, of the preliminary writ of injunction in Civil Case No.
87-41731, is hereby annulled and set aside and the preliminary writ of injunction
issued by the trial court on September 23, 1987 in Civil Case No. 87-41731 is
reinstated. However, if in the meantime the construction and occupancy of the

15

G.R. No. 167976 January 20, 2010
ROSARIO T. FLORENDO, FOR HERSELF AND THE OTHER HEIRS OF THE
LATE DR. REGALADO FLORENDO, Petitioner,
vs.
PARAMOUNT INSURANCE CORP. (NOW RENAMED AS MAA GENERAL
ASSURANCE, INC.), Respondent.
DECISION
ABAD, J.:
This case is about what a trial court may consider "good reasons" for allowing the
execution of its judgment pending appeal.
The Facts and the Case
On March 11, 1999 petitioner Rosario Florendo (Rosario) and the other heirs of
her late husband, Regalado Florendo, (collectively, the Florendos) filed before
the Regional Trial Court (RTC) of Imus, Cavite, an action against respondent
Paramount Insurance Corp. (Paramount) for annulment of its liens over their
lands.
The Florendos claimed that on February 26, 1980 Rosario and her husband
bought five agricultural lots, consisting of about 9.5 hectares, in Dasmariñas,
Cavite, from Adolfo C. Aguirre (Aguirre). The five lots were covered by Transfer
Certificates of Title T-80998, T-80999,1 T-81000 and T-81001, in Aguirre’s name.
Unfortunately, although the Florendos religiously paid the real estate taxes on the
properties from then on, they did not cause the titles to be transferred in their
names.2
Eighteen years later, in 1998, after the Municipal Treasurer of Dasmariñas
refused to receive their tax payments, the Florendos discovered that respondent
Paramount had earlier caused the attachment of the lots and, after judgment had
been rendered in its favor by the Court of First Instance of Manila in Civil Case
134374, also caused the sheriff’s sale in its favor to be annotated on the titles. 3
In its defense, respondent Paramount claimed that, when it caused the
annotations of its notices of lis pendens, attachment, and execution and the
CASES FOR RULE 58, 59, 60 AND 62
sheriff’s certificate of sale on Aguirre’s registered titles, the same were free of
any adverse claim.
On November 15, 2002 the RTC rendered judgment in favor of the
Florendos,4 upholding their right over the subject lots. The RTC also ordered
Aguirre to pay the Florendos ₱500,000.00 in actual damages and ₱200,000.00 in
attorney’s fees. The court, however, ordered the Florendos to reimburse
Paramount its bid of ₱1,750,000.00 with 6% interest as well as the sum that it
paid in real estate taxes also with 6% interest. Finally, the RTC granted the
Florendos the right to be reimbursed by Aguirre the full amount of what they
would have paid Paramount under the decision, with 6% interest.
On December 20, 2002 Paramount appealed the RTC decision to the Court of
Appeals5 (CA) in CA-G.R. CV 85397. On the same day, however, the Florendos
filed a motion with the RTC for execution pending appeal, citing the following as
"good and special reasons" for it:6
1. Rosario T. Florendo’s advanced age and illness;
2. Paramount’s dilatory and frivolous appeal and strong likelihood of
becoming insolvent during the pendency of the appeal; and
3. The Florendos’ readiness and willingness to post a bond to answer for
whatever damage Paramount might suffer on account of such execution.
Respondent Paramount opposed the motion,7 pointing out that with the filing of
its notice of appeal, the RTC already lost jurisdiction to act on the motion.
Paramount also said that execution pending appeal might render its appeal moot
and academic. And it is not true, it said, that it might become insolvent while the
case is on appeal. In reply,8the Florendos submitted Rosario’s medical certificate
and medical abstract showing her various life-threatening ailments and
Paramount’s corporate papers showing recent changes in its corporate name
and capital structure.9
On February 11, 2003 the trial court issued a "Special Order," directing the
execution of its judgment pending appeal upon the posting of a bond of ₱4
million.10 The RTC explained the special and good reasons it had for ordering
execution pending appeal, thus:
16

As to the existence or non-existence of good reasons for the issuance of a writ of
execution pending appeal, the court finds that there are special and good
reasons to justify the grant of the motion under consideration, namely:
I. That the principal plaintiff (Rosario T. Florendo), although admittedly 62
years old, is presently suffering from various ailments which in the words
of the attending physician, are life-threatening medical conditions.
Because of this fact, she may not be able to live long enough or survive to
enjoy the reliefs and rights granted to her under the decision sought to be
executed pending appeal (De Leon, et al. vs. Soriano, L-7648, September
17, 1954; PBC vs. CA, 279 SCRA 364; and Ma-ao Sugar Central vs.
Canete, 19 SCRA 646);
II. That apparently there are indications of dilatory tactics and frivolous
legal moves undertaken by defendant Paramount existing in the records
of this case, numerous postponements and tactics that prolonged the
pendency of this case. It would also appear that the tactics it had taken
brought forth the fact that defendant Paramount has not only changed its
corporate name from Paramount Insurance Corporation to MAA General
Assurance (Phils.), Inc. but has also assigned its ownership and capital
structure way back September 2001 (Exhs. "B" and "C" of the plaintiff’s
instant motion, and "N", "O", "P" and "R" offered in the main case) without
even divulging the same to the Court. "The insolvency of a defeated party,
as a ground for immediate execution of a decision, may be inferred from a
number of circumstances appearing on the record" (Astraquillo vs. Javier,
13 SCRA 125);
III. The offer may be made by the plaintiffs to put up a bond to guarantee
or secure the payments of whatever amounts are due defendant
Paramount under the decision under consideration may also be
considered as another special or good reason for execution pending
appeal (Lu vs. Valeriano, 111 SCRA 87; PVTA vs. Lucero, et al., 125
SCRA 337).11
On February 14, 2003 the RTC issued the corresponding writ of execution
pending appeal.12 Feeling aggrieved, on May 13, 2003 respondent Paramount
filed with the CA in CA-G.R. SP 77213 a special civil action of certiorari with
application for a temporary restraining order and preliminary injunction, assailing
the RTC order.13 On August 31, 2004 the CA rendered judgment, granting
respondent Paramount’s petition.14 While conceding that the RTC still had
CASES FOR RULE 58, 59, 60 AND 62
jurisdiction to act on the Florendos’ motion for execution pending appeal, the CA
found no special reasons to warrant such execution. The Florendos moved for
the reconsideration of the decision15 but the CA denied the same on February 8,
2005,16 hence, the Florendos’ present recourse.
Parenthetically, in the appeal from the main case in CA-G.R. CV 85397, the CA
meantime rendered judgment in respondent Paramount’s favor and ordered the
issuance of titles over the subject properties in its name. Nothing in the record
indicates whether such judgment has already become final.
The Issues Presented
At any rate, the Florendos present the following issues in this case:
1) Whether or not the CA erred in giving due course to the petition
considering Paramount’s failure to file a motion for reconsideration of the
RTC’s special order granting execution pending appeal;
2) Whether or not the CA erred in taking cognizance of the present action
(re: execution pending appeal) considering how Paramount addressed the
same matters in its appeal to the CA in the main case; and
3) Whether or not the CA erred in reversing the RTC’s special order for
lack of good reasons to justify the issuance of a writ of execution pending
appeal.
The Court’s Rulings
One. The Florendos argue that the CA should not have taken cognizance of
respondent Paramount’s special civil action of certiorari considering its failure to
first seek the RTC’s reconsideration of its questioned special order.
The general rule is of course that a motion for reconsideration of the challenged
order is a prerequisite to the filing of a special civil action of certiorari in a higher
court to annul such order. This gives the lower court a chance to correct the
errors imputed to it. But one of the exceptions to such requirement is where the
matter involved is urgent. Here, the CA correctly dispensed with the requirement
since the RTC had already issued a writ of execution and so its enforcement was
imminent. Besides, the issue of the validity of the execution pending appeal in
this case was a pure question of law.17
17

Two. The Florendos also point out that a special civil action of certiorari can no
longer be resorted to when, as in this case, the matter raised in such action may
be deemed already covered by the appeal that respondent Paramount had taken
from the RTC decision. These two remedies, they argue, are mutually exclusive
and, when instituted, the second constitutes forum shopping.1avvphi1
There is no forum shopping in this case. What respondent Paramount imputes in
the certiorari action is the RTC’s grave abuse of discretion in allowing the
execution pending appeal of its decision. In the ordinary appeal from the main
case, what Paramount challenges is the merit of the trial court’s decision.18
>Three. The Florendos insist that the CA erred in rejecting as reasonable basis
for execution pending appeal a) Rosario’s old age, given that precedents exist for
such justification; b) respondent Paramount’s delaying tactics and its possible
insolvency; and c) the ₱4 million bond that the Florendos posted.
Normally, execution will issue as a matter of right only (a) when the judgment has
become final and executory; (b) when the judgment debtor has renounced or
waived his right of appeal; (c) when the period for appeal has lapsed without an
appeal having been filed; or (d) when, having been filed, the appeal has been
resolved and the records of the case have been returned to the court of origin.
Execution pending appeal is the exception to the general rule. 19
As such exception, the court’s discretion in allowing it must be strictly construed
and firmly grounded on the existence of good reasons. "Good reasons," it has
been held, consist of compelling circumstances that justify immediate execution
lest the judgment becomes illusory. The circumstances must be superior,
outweighing the injury or damages that might result should the losing party
secure a reversal of the judgment.20 Lesser reasons would make of execution
pending appeal, instead of an instrument of solicitude and justice, a tool of
oppression and inequity.21
The Florendos point out that Rosario is already in her old age and suffers from
life threatening ailments. But the trial court has allowed execution pending appeal
for all of the Florendos, not just for Rosario whose share in the subject lands had
not been established. No claim is made that the rest of the Florendos are old and
ailing. Consequently, the execution pending appeal was indiscreet and too
sweeping. All the lands could be sold for ₱42 million, the value mentioned in the
petition, and distributed to all the Florendos for their enjoyment with no sufficient
assurance that they all will and can return such sum in case the CA reverses, as
CASES FOR RULE 58, 59, 60 AND 62
it has in fact done, the RTC decision. Moreover, it is unclear how much of the
proceeds of the sale of the lands Rosario needed for her old age.
The RTC also justified the execution pending appeal on respondent Paramount’s
delaying tactics and the possibility that it could become insolvent during the
appeal. But these justifications are purely speculative. The RTC has already
decided the case and whether the proceedings on appeal will be delayed is not in
the hands of Paramount. The CA has control of the time elements in appealed
cases. As for the Florendos’ fear of Paramount’s insolvency, such is wholly
irrelevant since the judgment did not require it to pay them any form of damages.
Indeed, the Florendos are the ones required by the RTC to reimburse Paramount
the value of its bid and the amounts of real estate taxes that it had paid on the
properties.
Lastly, the Florendos’ posting of a ₱4 million bond to answer for the damages
that respondent Paramount might suffer in case the RTC decision is reversed on
appeal is quite insufficient.22 The lands had a market value of ₱42 million in
2001.23
What is more, on October 28, 2008 the CA decided in the main case 24 to reverse
and set aside the decision of the RTC, dismiss the Florendos’ complaint, and
order the issuance of new titles to the lands in the name of respondent
Paramount. Assuming that such decision has not yet become final, the RTC
decision subject of execution pending appeal has nonetheless already lost its
presumptive validity. This development gives the Court all the more reason to
affirm the CA decision subject of the present petition.
ACCORDINGLY, the Court DENIES the petition and AFFIRMS the decision of
the Court of Appeals in CA-G.R. SP 77213 dated August 31, 2004.
SO ORDERED.
18
 CASES FOR RULE 58, 59, 60 AND 62
NERWIN INDUSTRIES G.R. No. 167057
CORPORATION, rescinding any such contract or project; and (e) undertaking or authorizing any
Petitioner, Present:
other lawful activity necessary for such contract or project.
CORONA,C.J., Chairperson,
- versus - LEONARDO-DE CASTRO,
* BRION,

BERSAMIN, and Accordingly, a Regional Trial Court (RTC) that ignores the statutory
PNOC-ENERGY DEVELOPMENT VILLARAMA, JR., JJ.
prohibition and issues a TRO or a writ of preliminary injunction or preliminary
CORPORATION, and
ESTER R. GUERZON, Chairman, Promulgated:
mandatory injunction against a government contract or project acts contrary to
Bids and Awards Committee,
Respondents.
law.
April 11, 2012
x-----------------------------------------------------------------------------------------x

DECISION Antecedents

BERSAMIN, J.:

The following antecedents are culled from the assailed decision of the

Republic Act No. 8975[1] expressly prohibits any court, except the Court of Appeals (CA) promulgated on October 22, 2004,[2] viz:

Supreme Court, from issuing any temporary restraining order (TRO), preliminary
injunction, or preliminary mandatory injunction to restrain, prohibit or compel the
Government, or any of its subdivisions or officials, or any person or entity,
whether public or private, acting under the Governments direction, from: (a)
acquiring, clearing, and developing the right-of-way, site or location of any
National Government project; (b) bidding or awarding of a contract or project of
the National Government; (c) commencing, prosecuting,
implementing, or operating any such contract or project; (d) terminating or
In 1999, the National Electrification Administration (NEA)
published an invitation to pre-qualify and to bid for a contract,
otherwise known as IPB No. 80, for the supply and delivery of
about sixty thousand (60,000) pieces of woodpoles and twenty
thousand (20,000) pieces of crossarms needed in the countrys
Rural Electrification Project. The said contract consisted of four (4)
components, namely: PIA, PIB and PIC or woodpoles and P3 or
crossarms, necessary for NEAs projected allocation for Luzon,
Visayas and Mindanao. In response to the said invitation, bidders,
such as private respondent [Nerwin], were required to submit their
application for eligibility together with their technical proposals. At
executing, the same time, they were informed that only those who would pass
the standard pre-qualification would be invited to submit their
financial bids.

19

Following a thorough review of the bidders qualifications and
eligibility, only four (4) bidders, including private respondent
[Nerwin], qualified to participate in the bidding for the IPB-80
contract. Thereafter, the qualified bidders submitted their financial
bids where private respondent [Nerwin] emerged as the lowest
bidder for all schedules/components of the contract. NEA then
conducted a pre-award inspection of private respondents [Nerwins]
manufacturing plants and facilities, including its identified supplier
in Malaysia, to determine its capability to supply and deliver NEAs
requirements.
In the Recommendation of Award for Schedules PIA, PIB,
PIC and P3 - IBP No. 80 [for the] Supply and Delivery of
Woodpoles and Crossarms dated October 4, 2000, NEA
administrator Conrado M. Estrella III recommended to NEAs Board
of Directors the approval of award to private respondent [Nerwin] of
all schedules for IBP No. 80 on account of the following:
a. Nerwin is the lowest complying and responsive bidder;
b. The price difference for the four (4) schedules between
the bid of Nerwin Industries (lowest responsive and
complying bidder) and the second lowest bidder in the
amount of $1.47 million for the poles and $0.475 million
for the crossarms, is deemed substantial and extremely
advantageous to the government. The price difference is
equivalent to 7,948 pcs. of poles and 20.967 pcs. of
crossarms;
c. The price difference for the three (3) schedules
between the bids of Nerwin and the Tri-State Pole and
Piling, Inc. approximately in the amount of $2.36 million
for the poles and $0.475 million for the crossarms are
equivalent to additional 12.872 pcs. of poles and 20.967
pcs. of crossarms; and
d. The bidder and manufacturer are capable of supplying
the woodpoles and specified in the bid documents and as
based on the pre-award inspection conducted.
ILAW Project, Nerwin filed a civil action in the RTC in Manila, docketed as Civil
CASES FOR RULE 58, 59, 60 AND 62
However, on December 19, 2000, NEAs Board of Directors
passed Resolution No. 32 reducing by 50% the material
requirements for IBP No. 80 given the time limitations for the
delivery of the materials, xxx, and with the loan closing date of
October 2001 fast approaching. In turn, it resolved to award the
four (4) schedules of IBP No. 80 at a reduced number to private
respondent [Nerwin]. Private respondent [Nerwin] protested the
said 50% reduction, alleging that the same was a ploy to
accommodate a losing bidder.
On the other hand, the losing bidders Tri State and Pacific
Synnergy appeared to have filed a complaint, citing alleged false
or falsified documents submitted during the pre-qualification stage
which led to the award of the IBP-80 project to private respondent
[Nerwin].
Thus, finding a way to nullify the result of the previous bidding,
NEA officials sought the opinion of the Government Corporate
Counsel who, among others, upheld the eligibility and qualification
of private respondent [Nerwin]. Dissatisfied, the said officials
attempted to seek a revision of the earlier opinion but the
Government Corporate Counsel declared anew that there was no
legal impediment to prevent the award of IPB-80 contract to private
respondent [Nerwin]. Notwithstanding, NEA allegedly held
negotiations with other bidders relative to the IPB-80 contract,
prompting private respondent [Nerwin] to file a complaint for
specific performance with prayer for the issuance of an injunction,
which injunctive application was granted by Branch 36 of RTC-
Manila in Civil Case No. 01102000.
In the interim, PNOC-Energy Development Corporation purporting
to be under the Department of Energy, issued Requisition No. FGJ
30904R1 or an invitation to pre-qualify and to bid for wooden poles
needed for its Samar Rural Electrification Project (O-ILAW project).
Upon learning of the issuance of Requisition No. FGJ 30904R1 for the O-
20

Case No. 03106921 entitled Nerwin Industries Corporation v. PNOC-Energy
Development Corporation and Ester R. Guerzon, as Chairman, Bids and Awards
Committee, alleging that Requisition No. FGJ 30904R1 was an attempt to subject
a portion of the items covered by IPB No. 80 to another bidding; and praying that
a TRO issue to enjoin respondents proposed bidding for the wooden poles.
Respondents sought the dismissal of Civil Case No. 03106921, stating
that the complaint averred no cause of action, violated the rule that government
infrastructure projects were not to be subjected to TROs, contravened the
mandatory prohibition against non-forum shopping, and the corporate president
had no authority to sign and file the complaint.[3]
On June 27, 2003, after Nerwin had filed its rejoinder to respondents
reply, the RTC granted a TRO in Civil Case No. 03106921.[4]
On July 30, 2003, the RTC issued an order,[5] as follows:
WHEREFORE, for the foregoing considerations, an order is hereby
issued by this Court:
1. DENYING the motion to consolidate;
2. DENYING the urgent motion for reconsideration;
CASES FOR RULE 58, 59, 60 AND 62
3. DISQUALIFYING Attys. Michael A. Medado, Datu Omar
S. Sinsuat and Mariano H. Paps from appearing as
counsel for the defendants;
4. DECLARING defendants in default;
5. GRANTING the motion for issuance of writ of
preliminary injunction.
Accordingly, let a writ of preliminary injunction issue enjoining
the defendant PNOC-EDC and its Chairman of Bids and Awards
Committee Esther R. Guerzon from continuing the holding of the
subject bidding upon the plaintiffs filing of a bond in the amount
of P200,000.00 to answer for any damage or damages which the
defendants may suffer should it be finally adjudged that petitioner
is not entitled thereto, until final determination of the issue in this
case by this Court.
This order shall become effective only upon the posting of a
bond by the plaintiffs in the amount of P200,000.00.
Let a copy of this order be immediately served on the
defendants and strict compliance herein is enjoined. Furnish the
Office of the Government Corporate Counsel copy of this order.
SO ORDERED.
Respondents moved for the reconsideration of the order of July 30, 2003,
and also to set aside the order of default and to admit their answer to the
complaint.
On January 13, 2004, the RTC denied respondents motions for
reconsideration, to set aside order of default, and to admit answer. [6]
21

Thence, respondents commenced in the Court of Appeals (CA) a special
civil action for certiorari (CA-GR SP No. 83144), alleging that the RTC had
thereby committed grave abuse of discretion amounting to lack or excess of
jurisdiction in holding that Nerwin had been entitled to the issuance of the writ of
preliminary injunction despite the express prohibition from the law and from the
Supreme Court; in issuing the TRO in blatant violation of the Rules of Court and
established jurisprudence; in declaring respondents in default; and in
disqualifying respondents counsel from representing them.[7]
On October 22, 2004, the CA promulgated its decision,[8] to wit:
WHEREFORE, the petition is GRANTED. The assailed Orders
dated July 30 and December 29, 2003 are hereby ANNULED and
SET ASIDE. Accordingly, Civil Case No. 03106921, private
respondents complaint for issuance of temporary restraining
order/writ of preliminary injunction before Branch 37 of the
Regional Trial Court of Manila, is DISMISSED for lack of merit.
SO ORDERED.
set aside the assailed orders of the RTC issued on July 20, 2003 and December
29, 2003, and why it altogether dismissed Civil Case No. 03106921, as follows:
Nerwin filed a motion for reconsideration, but the CA denied the motion
on February 9, 2005.[9]
CASES FOR RULE 58, 59, 60 AND 62
Issues
Hence, Nerwin appeals, raising the following issues:
I. Whether or not the CA erred in dismissing the case on the
basis of Rep. Act 8975 prohibiting the issuance of temporary
restraining orders and preliminary injunctions, except if issued
by the Supreme Court, on government projects.
II. Whether or not the CA erred in ordering the dismissal of the
entire case on the basis of Rep. Act 8975 which prohibits the
issuance only of a preliminary injunction but not injunction as a
final remedy.
III. Whether or not the CA erred in dismissing the case considering
that it is also one for damages.
Ruling
The petition fails.
In its decision of October 22, 2004, the CA explained why it annulled and
It is beyond dispute that the crux of the instant case is the propriety
of respondent Judges issuance of a preliminary injunction, or the
earlier TRO, for that matter.
22

Respondent Judge gravely abused his discretion in entertaining an
application for TRO/preliminary injunction, and worse, in issuing a
preliminary injunction through the assailed order enjoining
petitioners sought bidding for its O-ILAW Project. The same is a
palpable violation of RA 8975 which was approved on November
7, 2000, thus, already existing at the time respondent Judge issued
the assailed Orders dated July 20 and December 29, 2003.
Section 3 of RA 8975 states in no uncertain terms, thus:
Prohibition on the Issuance of temporary Restraining
Order, Preliminary Injunctions and Preliminary Mandatory
Injunctions. No court, except the Supreme Court, shall
issue any temporary restraining order, preliminary
injunction or preliminary mandatory injunction against the
government, or any of its subdivisions, officials, or any
person or entity, whether public or private, acting under
the governments direction, to restrain, prohibit or compel
the following acts:
xxx
(b) Bidding or awarding of contract/project of the
national government as defined under Section 2
hereof;
xxx
This prohibition shall apply in all cases, disputes or
controversies instituted by a private party, including but
not limited to cases filed by bidders or those claiming to
have rights through such bidders involving such
contract/project. This prohibition shall not apply when the
matter is of extreme urgency involving a constitutional
issue, such that unless a temporary restraining order is
issued, grave injustice and irreparable injury will arise. xxx
The said proscription is not entirely new. RA 8975 merely
supersedes PD 1818 which earlier underscored the prohibition to
courts from issuing restraining orders or preliminary injunctions in
cases involving infrastructure or National Resources Development
projects of, and public utilities operated by, the government. This
law was, in fact, earlier upheld to have such a mandatory nature by
the Supreme Court in an administrative case against a Judge.
CASES FOR RULE 58, 59, 60 AND 62
Moreover, to bolster the significance of the said prohibition, the
Supreme Court had the same embodied in its Administrative
Circular No. 11-2000 which reiterates the ban on issuance of TRO
or writs of Preliminary Prohibitory or Mandatory Injunction in cases
involving Government Infrastructure Projects. Pertinent is the ruling
in National Housing Authority vs. Allarde As regards the definition
of infrastructure projects, the Court stressed in Republic of the Phil.
vs. Salvador Silverio and Big Bertha Construction: The term
infrastructure projects means construction, improvement and
rehabilitation of roads, and bridges, railways, airports, seaports,
communication facilities, irrigation, flood control and drainage,
water supply and sewerage systems, shore protection, power
facilities, national buildings, school buildings, hospital buildings
and other related construction projects that form part of the
government capital investment.
Thus, there is nothing from the law or jurisprudence, or even from
the facts of the case, that would justify respondent Judges blatant
disregard of a simple, comprehensible and unequivocal mandate
(of PD 1818) prohibiting the issuance of injunctive writs relative to
government infrastructure projects. Respondent Judge did not
even endeavor, although expectedly, to show that the instant case
falls under the single exception where the said proscription may
not apply, i.e., when the matter is of extreme urgency involving a
constitutional issue, such that unless a temporary restraining order
is issued, grave injustice and irreparable injury will arise.
Respondent Judge could not have legally declared petitioner in
default because, in the first place, he should not have given due
course to private respondents complaint for injunction.Indubitably,
the assailed orders were issued with grave abuse of discretion
amounting to lack or excess of jurisdiction.
Perforce, this Court no longer sees the need to resolve the other
grounds proffered by petitioners.[10]
23

The CAs decision was absolutely correct. The RTC gravely abused its
discretion, firstly, when it entertained the complaint of Nerwin against
respondents notwithstanding that Nerwin was thereby contravening the express
provisions of Section 3 and Section 4 of Republic Act No. 8975 for its seeking to
enjoin the bidding out by respondents of the O-ILAW Project; and, secondly,
when it issued the TRO and the writ of preliminary prohibitory injunction.
Section 3 and Section 4 of Republic Act No. 8975 provide:
Section 3. Prohibition on the Issuance of Temporary
Restraining Orders, Preliminary Injunctions and Preliminary
Mandatory Injunctions. No court, except the Supreme Court, shall
issue any temporary restraining order, preliminary injunction or
preliminary mandatory injunction against the government, or any of
its subdivisions, officials or any person or entity, whether public or
private, acting under the governments direction, to restrain, prohibit
or compel the following acts:
(a) Acquisition, clearance and development of the right-of-
way and/or site or location of any national government project;
(b) Bidding or awarding of contract/project of the national
government as defined under Section 2 hereof;
(c) Commencement, prosecution, execution, implementation,
operation of any such contract or project;
(d) Termination or rescission of any such contract/project;
and
(e) The undertaking or authorization of any other lawful
activity necessary for such contract/project.
CASES FOR RULE 58, 59, 60 AND 62
This prohibition shall apply in all cases, disputes or
controversies instituted by a private party, including but not limited
to cases filed by bidders or those claiming to have rights through
such bidders involving such contract/project. This prohibition shall
not apply when the matter is of extreme urgency involving a
constitutional issue, such that unless a temporary restraining order
is issued, grave injustice and irreparable injury will arise. The
applicant shall file a bond, in an amount to be fixed by the court,
which bond shall accrue in favor of the government if the court
should finally decide that the applicant was not entitled to the relief
sought.
If after due hearing the court finds that the award of the
contract is null and void, the court may, if appropriate under the
circumstances, award the contract to the qualified and winning
bidder or order a rebidding of the same, without prejudice to any
liability that the guilty party may incur under existing laws.
Section 4. Nullity of Writs and Orders. - Any temporary
restraining order, preliminary injunction or preliminary
mandatory injunction issued in violation of Section 3 hereof is
void and of no force and effect.
The text and tenor of the provisions being clear and unambiguous, nothing was
left for the RTC to do except to enforce them and to exact upon Nerwin
obedience to them. The RTC could not have been unaware of the prohibition
under Republic Act No. 8975 considering that the Court had itself instructed all
judges and justices of the lower courts, through Administrative Circular No. 11-
2000, to comply with and respect the prohibition against the issuance of TROs or
writs of preliminary prohibitory or mandatory injunction involving contracts and
projects of the Government.
24

It is of great relevance to mention at this juncture that Judge Vicente A. Hidalgo,
the Presiding Judge of Branch 37 of the RTC, the branch to which Civil Case
No. 03106921 had been raffled, was in fact already found administratively liable
for gross misconduct and gross ignorance of the law as the result of his issuance
of the assailed TRO and writ of preliminary prohibitory injunction. The Court
could only fine him in the amount of P40,000.00 last August 6, 2008 in view of his
intervening retirement from the service. That sanction was meted on him in A.M.
No. RTJ-08-2133 entitled Sinsuat v. Hidalgo,[11] where this Court stated:
The Court finds that, indeed, respondent is liable for gross
misconduct. As the CA explained in its above-stated Decision in
the petition for certiorari, respondent failed to heed the mandatory
ban imposed by P.D. No. 1818 and R.A. No. 8975 against a
government infrastructure project, which the rural electrification
project certainly was. He thereby likewise obstinately disregarded
this Courts various circulars enjoining courts from issuing TROs
and injunctions against government infrastructure projects in line
with the proscription under R.A. No. 8975. Apropos are Gov.
Garcia v. Hon. Burgos and National Housing Authority v. Hon.
Allarde wherein this Court stressed that P.D. No. 1818 expressly
deprives courts of jurisdiction to issue injunctive writs against the
implementation or execution of a government infrastructure project.
Reiterating the prohibitory mandate of P.D. No. 1818, the
Court in Atty. Caguioa v. Judge Lavia faulted a judge for grave
misconduct for issuing a TRO against a government infrastructure
project thus:
xxx It appears that respondent is either feigning a
misunderstanding of the law or openly manifesting a
contumacious indifference thereto. In any case, his
CASES FOR RULE 58, 59, 60 AND 62
disregard of the clear mandate of PD 1818, as well as of
the Supreme Court Circulars enjoining strict compliance
therewith, constitutes grave misconduct and conduct
prejudicial to the proper administration of justice. His claim
that the said statute is inapplicable to his January 21,
1997 Order extending the dubious TRO is but a contrived
subterfuge to evade administrative liability.
In resolving matters in litigation, judges should
endeavor assiduously to ascertain the facts and the
applicable laws. Moreover, they should exhibit more
than just a cursory acquaintance with statutes and
procedural rules. Also, they are expected to keep
abreast of and be conversant with the rules and the
circulars which the Supreme Court has adopted and
which affect the disposition of cases before them.
Although judges have in their favor the presumption of
regularity and good faith in the performance of their
judicial functions, a blatant disregard of the clear and
unmistakable terms of the law obviates this
presumption and renders them susceptible to
administrative sanctions. (Emphasis and underscoring
supplied)
The pronouncements in Caguioa apply as well to
respondent.
The questioned acts of respondent also constitute gross
ignorance of the law for being patently in disregard of simple,
elementary and well-known rules which judges are expected to
know and apply properly.
IN FINE, respondent is guilty of gross
misconduct and gross ignorance of the law, which are serious
charges under Section 8 of Rule 140 of the Rules of Court. He
having retired from the service, a fine in the amount of P40,000 is
imposed upon him, the maximum amount fixed under Section 11 of
Rule 140 as an alternative sanction to dismissal or suspension.[12]
25

Even as the foregoing outcome has rendered any further treatment and
discussion of Nerwins other submissions superfluous and unnecessary, the
Court notes that the RTC did not properly appreciate the real nature and true
purpose of the injunctive remedy. This failing of the RTC presses the Court to
use this decision to reiterate the norms and parameters long standing
jurisprudence has set to control the issuance of TROs and writs of injunction, and
to now insist on conformity to them by all litigants and lower courts. Only thereby
may the grave misconduct committed in Civil Case No. 03106921 be avoided.
A preliminary injunction is an order granted at any stage of an action or
proceeding prior to the judgment or final order, requiring a party or a court,
agency or person, to refrain from a particular act or acts.[13] It is an ancillary or
preventive remedy resorted to by a litigant to protect or preserve his rights or
interests during the pendency of the case. As such, it is issued only when it is
established that:
(a) The applicant is entitled to the relief demanded, and the whole or
part of such relief consists in restraining the commission or
continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or
perpetually; or
(b) The commission, continuance or non-performance of the act or
acts complained of during the litigation would probably work
injustice to the applicant; or
(c) A party, court, agency or a person is doing, threatening, or is
attempting to do, or is procuring or suffering to be done, some
CASES FOR RULE 58, 59, 60 AND 62
act or acts probably in violation of the rights of the applicant
respecting the subject of the action or proceeding, and tending to
render the judgment ineffectual.[14]
The existence of a right to be protected by the injunctive relief is indispensable.
In City Government of Butuan v. Consolidated Broadcasting System (CBS),
Inc.,[15] the Court elaborated on this requirement, viz:
As with all equitable remedies, injunction must be issued only
at the instance of a party who possesses sufficient interest in or
title to the right or the property sought to be protected. It is proper
only when the applicant appears to be entitled to the relief
demanded in the complaint, which must aver the existence of the
right and the violation of the right, or whose averments must in the
minimum constitute a prima facie showing of a right to the final
relief sought. Accordingly, the conditions for the issuance of the
injunctive writ are: (a) that the right to be protected exists prima
facie; (b) that the act sought to be enjoined is violative of that right;
and (c) that there is an urgent and paramount necessity for the writ
to prevent serious damage. An injunction will not issue to
protect a right not in esse, or a right which is merely
contingent and may never arise; or to restrain an act which
does not give rise to a cause of action; or to prevent the
perpetration of an act prohibited by statute. Indeed, a right, to
be protected by injunction, means a right clearly founded on
or granted by law or is enforceable as a matter of law. [16]
Conclusive proof of the existence of the right to be protected is not demanded,
however, for, as the Court has held in Saulog v. Court of Appeals,[17] it is enough
that:
26
 CASES FOR RULE 58, 59, 60 AND 62
xxx for the court to act, there must be an existing basis of
facts affording a present right which is directly threatened by an case,[23] or to decide controverted facts.[24] It is but a preventive remedy whose
act sought to be enjoined. And while a clear showing of the
right claimed is necessary, its existence need not be only mission is to prevent threatened wrong,[25] further injury,[26] and irreparable
conclusively established. In fact, the evidence to be submitted to
justify preliminary injunction at the hearing thereon need not be harm[27] or injustice[28] until the rights of the parties can be settled. Judges should
conclusive or complete but need only be a sampling intended merely
to give the court an idea of the justification for the preliminary thus look at such relief only as a means to protect the ability of their courts to
injunction pending the decision of the case on the merits. This
should really be so since our concern here involves only the render a meaningful decision.[29] Foremost in their minds should be to guard
propriety of the preliminary injunction and not the merits of the
case still pending with the trial court. against a change of circumstances that will hamper or prevent the granting of

Thus, to be entitled to the writ of preliminary injunction, the proper reliefs after a trial on the merits.[30] It is well worth remembering that the
private respondent needs only to show that it has the ostensible
right to the final relief prayed for in its complaint xxx.[18] writ of preliminary injunction should issue only to prevent the threatened

continuous and irremediable injury to the applicant before the claim can be justly
In this regard, the Rules of Court grants a broad latitude to the trial courts and thoroughly studied and adjudicated.[31]
considering that conflicting claims in an application for a provisional writ more
often than not involve and require a factual determination that is not the function
of the appellate courts.[19] Nonetheless, the exercise of such discretion must be WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals;
sound, that is, the issuance of the writ, though discretionary, should be upon the
grounds and in the manner provided by law.[20] When that is done, the exercise of and ORDERS petitioner to pay the costs of suit.
sound discretion by the issuing court in injunctive matters must not be interfered
with except when there is manifest abuse.[21]
The Court Administrator shall disseminate this decision to the lower courts

Moreover, judges dealing with applications for the injunctive relief ought to be for their guidance.

wary of improvidently or unwarrantedly issuing TROs or writs of injunction that

tend to disposeof the merits without or before trial. Granting an application for SO ORDERED.

the relief in disregard of that tendency is judicially impermissible,[22] for it is never

the function of a TRO or preliminary injunction to determine the merits of a

27

.M. No. P-91-549 July 5, 1993
REYNALDO SEBASTIAN, complainant,
vs.
SHERIFF ALBERTO A. VALINO, respondent.
Bautista, Picaso, Buyco, Tan & Fider Law Offices for complainant.
Teresita G. Oledan for respondent.
QUIASON, J.:
Marblecraft, Inc., represented by its Assistant General Manager, Reynaldo
Sebastian, charges Alberto A. Valino, Senior Deputy Sheriff, Office of the
Regional Sheriff, Pasig, Metro Manila, with (1) gross abuse of authority
committed in connection with the implementation of the writ issued by the
Regional Trial Court, Makati, Metro Manila, in Civil Case No. 89-3368, and (2)
refusal to enforce the trial court's for the return of the seized items.
Complainant alleges that:
1. On March 3, 1989, Private Development Corporation of the Philippines
(PDCP) filed a replevin suit against Marblecraft, Inc., in Civil Case No. 89-3368,
in order to foreclose the chattels mortgaged by Marblecraft. On March 30, 1989,
the Regional Trial Court, Makati, issued a writ of seizure directed against
Marblecraft covering the chattels sought to be replevied.
2. The enforcement of the writ of seizure was delayed because of the writ of
preliminary injunction enjoining PDCP from proceeding with the foreclosure sale
issued by the Regional Trial Court, Pasig, Metro Manila in Civil Case No. 58006,
It was only on October 31,1990, when the Regional Trial Court, Pasig, dissolved
the writ of preliminary injunction.
3. On November 9, 1990, at around 10:37 A.M., respondent, accompanied by
several policemen and PDCP employees, went to the office of Marblecraft at
Barrio Santolan, Pasig, to implement the writ of seizure. Respondent and his
companions forcibly opened the lockers and desk drawers of the employees of
complainant and took their personal belongings, as well as some office
CASES FOR RULE 58, 59, 60 AND 62
equipment issued to them. The employees filed with the Office of the Provincial
Prosecutor of Rizal two criminal complaints for robbery against respondent and
his companions.
4. Respondent only showed to complainant's counsel a copy of the writ but did
not furnish him with a copy of the application for the writ, the supporting affidavit
and the bond.
5. In the course of the implementation of the writ, which lasted for four days,
several pieces of machinery and equipment were destroyed or taken away by
respondent.
6. Respondent turned over the seized articles to the counsel of PDCP and
allowed these items to be stored in PDCP's warehouse in Taguig, Metro Manila.
7. On November 14, 1990, complainant posted a counterbond. In an order issued
on the same day, the Regional Trial Court, Makati, approved the bond and
directed the immediate return of the seized items. After denying PDCP's motion
to set aside the November 14 Order, the trial court reiterated the directive for the
return of the seized items in its November 26 Order. Respondent did not
implement the orders.
8. PDCP filed a motion for reconsideration of the November 26 Order, which was
denied in an Order dated December 11, 1990.
In his comment, respondent branded the administrative complaint against him as
pure harassment filed by Marblecraft after he had refused to defer the
implementation of the writ of seizure. He said that if he did not implement the
writ, he would have been accused by PDCP of non-performance of his duties as
a sheriff. He pointed out that the criminal complaints for theft filed against him by
the employees of complainant were dismissed by the Provincial Prosecutor of
Rizal.
The administrative complaint was referred to Judge Martin S. Villarama Jr. of the
Regional Trial Court, Pasig, for investigation, report and recommendation.
In his report, Judge Villarama, found respondent guilty of partiality when he
immediately turned over the seized items to PDCP, and of willful refusal to
enforce the November 14, 26 and December 11, 1990 Orders of the Regional
Trial Court, Makati.
28

Under the Revised Rules of Court, the property seized under a writ of replevin is
not to be delivered immediately to the plaintiff. The sheriff must retain it in his
custody for five days and shall return it to the defendant, If the latter, as in the
case, requires its return and files a counterbond (Sec. 4, Rule 60, Revised Rules
of Court). In violation of said Rule, respondent immediately turned over the
seized articles to PDCP. His claim that the Office of the Regional Sheriff did not
have a place to store the seized items, cannot justify his violation of the Rule. As
aptly noted by the Investigating Judge, the articles could have been deposited in
a bonded warehouse.
Respondent must serve on Marblecraft not only a copy of the order of seizure but
also a copy of the application, affidavit and bond (Sec. 4, Rule 60, Revised Rules
of Court). Respondent did not furnish defendant with a copy of the application,
affidavit and bond. By his own admission, he only served it with a copy of the
order of seizure (Rollo, p. 37).
The more serious infraction of respondent is his refusal to implement the order of
the Regional Trial Court, Makati for him to return to complainant the articles
seized pursuant to the writ of seizure dated March 30, 1990.
The Order dated November 14, 1990 directed him "to immediately return to
defendant all its properties seized and taken from its premises pursuant to the
writ of seizure of March 30, 1989, from receipt of this Order (sic)" (Rollo,
p. 42)
The Order dated November 26, 1990 directed him "to implement the Order of this
Court dated November 14, 1990 and to immediately return to defendant all its
properties seized and taken from its premises pursuant to the writ of seizure
dated March 30, 1989 from receipt of this Order (sic)" (Rollo,
p. 44).
The Order dated December 11, 1990 directed him "to implement the Order of this
Court dated November 26, 1990, within three (3) days from the receipt hereof,
otherwise this Court will be constrained to appoint and deputize another sheriff to
implement the order dated November 26, 1990" (Rollo, p. 47).
The only action taken by respondent to implement the Order dated December 11,
1990 was to write a letter on December 12, 1990, addressed to the counsel of
PDCP, requesting the turnover of seized articles. As expected, PDCP's counsel
refused to part with the possession of the seized articles and to issue a letter of
CASES FOR RULE 58, 59, 60 AND 62
authorization to withdraw the same from the warehouse. Instead of taking
possession of the articles, respondent merely reported to the Regional Trial
Court that "[i]t is now clear that the undersigned cannot implement the Court
order dated December 11, 1990 by reason of the refusal of PDCP to accept or to
honor said Court order" (Rollo, p.48).
The petition for certiorari of PDCP to question the orders of the Regional Trial
Court, Makati, was filed with the Court of Appeals only on December 17, 1990.
The Court of Appeals issued a temporary restraining order only on December 21,
1990. Respondent therefore had more than seven days within which to enforce
the orders of the trial court if he was minded to do so.
Respondent could have avoided getting into his present predicament had he not
turned over the possession of the seized goods prematurely to the PDCP.
The complainant cannot be blamed if it harbored the suspicion that respondent
was beholden to PDCP. The zeal with which respondent enforced the order of
seizure in favor of PDCP was in sharp contrast with his inaction in enforcing the
three orders of the trial court directing him to return the seized items to
complainant.
It is not for respondent to question the validity of the orders of the trial court. It is
for him to execute them. As observed by the Investigating Judge, "[t]here is
therefore no excuse for respondent's wilfull refusal to implement the Order of the
Court" (Report and Recommendation, p. 10). Disobedience by court employees
of orders of the court is not conducive to the orderly administration of justice. The
display of partially in favor of a party as against the other party erodes public
confidence in the integrity of the courts.
IN VIEW OF THE FOREGOING, the Court finds respondent guilty of serious
misconduct and RESOLVED to impose upon him the penalty of FOUR (4)
MONTHS SUSPENSION without pay, the period of which should not be charged
to his accumulated leave, with a WARNING that a repetition of the same or of
acts calling for disciplinary action will be dealt with more severely. This resolution
is IMMEDIATELY EXECUTORY, and respondent is hereby ordered to forthwith
desist from performing any further official functions appertaining to said office.
SO ORDERED.
29

G.R. No. 88938 June 8, 1992
LA TONDEÑA DISTILLERS, INC., petitioner,
vs.
COURT OF APPEALS, NATIVIDAD ADDURU SANTILLAN, Judge, Branch 38,
RTC, Manila, DEPUTY SHERIFF REGIO RUEFA and TEE CHIN
HO, respondents.
NARVASA, J.:
The appellate proceedings at bar originated from an action of "replevin with
damages" instituted in the Regional Trial Court of Manila by La Tondeña
Distillers, Inc. against a person named "Te Tien Ho," described in the complaint
as a "junk dealer" or owner of a "second hand store" with "office bodega at 1005
Estrada St., Singalong, Manila." The action was docketed as Civil Case No. 89-
47768 and assigned to Branch 38 of the Manila RTC, presided over by Hon.
Natividad G. Adduru-Santillan.
In its verified complaint, 1 La Tondeña Distillers, Inc. (hereafter, simply La
Tondeña) set out the following facts, to wit:
1) that "it manufactures and sells . . . a gin popularly known as
"Ginebra San Miguel," which is contained in 350 c.c. white flint
bottles with the marks of ownership "LA TONDEÑA, INC." and
"GINEBRA SAN MIGUEL" stamped or blown-in to the bottles
which . . . (it [La Tondeña]) specially ordered from the bottle
manufactures for its exclusive use;"
2) that said white flint bottles were registered with the Philippine
Patent Office by La Tondeña's predecessor-in-interest in
accordance with Republic Act No. 623, 2 as amended, 3 the
registration having thereafter been renewed and being valid and
subsisting;
3) that use of the registered bottles by any one without written
permission of the owner is declared unlawful by Section 2 of R.A.
623, as amended, pertinently reading as follows:
CASES FOR RULE 58, 59, 60 AND 62
SEC. 2. It shall be unlawful for any person, without
the written consent, of the manufacturer, bottler, or
seller, who has successfully registered the marks of
ownership in accordance with the provisions of the
next preceding section, to fill such bottles . . . for the
purpose of sale or to sell, dispose of, buy or traffic in
or wantonly destroy the same, whether filled or not . .
.
4) that, the sale of the gin in the registered white flint, bottles does
not include the sale of the bottles themselves; in fact, La
Tondeña's "sales invoices never specified that the sale of the
beverage includes the sale of the container;" and
5) that the defendant "Te Tien Ho" has in his possession a quantity
of the registered bottles worth P20,000.00,
and on the basis of these facts, prayed that:
(a) Upon the filling and approval of a bond in the amount of
P40,000.00, . . . (the) Court, issue an order directing the, Sheriff or
other proper officer . . . to take into his custody all the 350 c.c.
bottles of the plaintiff in the possession of the defendant . . . and to
dispose of the same in accordance with the rules of court;
(b) After trial plaintiff be adjudged the lawful owner possessor of
the said bottles and . . . judgment (be rendered) in the alternative
against the defendant for the delivery thereof to plaintiff, or for the
payment . . . of the value thereof in case delivery, cannot be
made;" and
(c) Defendant, be made to pay, actual, nominal and temperate and
exemplary damages in specific stated amounts (aggregating
P75,400.00), as well as attorney's fees in the amount of
P50,000.00.
Judge Santillan issued the writ of delivery prayed for on February 13, 1989 upon
La Tondeña's posting of a bond in the amount of P40,000.00. In implementation
of the writ, Deputy Sheriff Regio Ruefa seized on February 22, 1989 20,250
bottles with the blown-in marks, "La Tondeña Inc." and "Ginebra San Miguel"
30

from No. 1105 Estrada St. Singalong. 4 On that occasion Mr. Ruefa executed a
handwritten "Receipt" of the following tenor: 5
RECEIVED FROM MR. TE TIEN HO 405 BOXES/50 . . . (20,250)
bottles, pieces 350 c.c. bottles, marks BLOWN-IN "LA TONDEÑA
INC. and GINEBRA San Miguel" subject of the Order of seizure in
Civil Case No. 89-47768 entitled "LA TONDEÑA INC. vs. TE TIEN
HO located at 1105 Estrada St. Singalong, Manila.
. . . . . Feb. 22, 1989.
FOR: THE SHERIFF OF MANILA
Note:
(405 boxes/50 OK EMPTY
20,250 bottles)
WITNESS BY:
(s) ALEXANDER ELLEVE 6
Plaintiff
(s) TEE CHIN HO 7
Defendant
It is noteworthy that Tee Chin Ho, denominated "defendant," signed Sheriff
Ruefa's receipt as a witness. He does not deny his intervention in the receipt and
in fact, as will shortly be narrated, insists that it was from him that the bottles
were seized. Furthermore, Sheriff Ruefa's return dated March 3, 1989 attests that
prior to seizing the bottles, he served summons, copy of the complaint and its
annexes, copy of the bond, and the writ of seizure personally on defendant Te
Tien Ho, 8 who requested his wife Perla Diolesa to sign his name on the original
copy of the summons and the writ of seizure for and in his own behalf, such
service and implementation of the writ of seizure having been effected "at 1105
Estrada St., Singalong, Manila and not at 1005 Estrada St., Singalong, Manila,
as evidence(d) by the signature appearing on the original summons and writ." 9
The five-day period prescribed by law within which the sufficiency of
the replevin bond might be objected to or the return of the property seized
CASES FOR RULE 58, 59, 60 AND 62
required 10 expired without any person objecting to the bond or seeking the return
of the bottles. Instead an individual identifying himself as "Tee Chin Ho" filed on
March 1, 1989 a pleading denominated "ANSWER (with preliminary injunction
and compulsory counterclaim)," 11 which opened with a plea that he be given
"leave to intervene as party who has legal interest in the matter in litigation" such
that he would be adversely affected by a distribution or disposition of the property
in litigation and a declaration that he was submitting the answer "as party-
intervenor." The answer asserted that —
1) all purchases of La Tondeña's gin necessarily included the bottles containing
the gin; hence ownership of the bottles did not remain in La Tondeña but was
transferred to the purchasers;
2) it was from him, Tee Chin Ho, and not from Te Tien Ho, that the bottles in
question had been taken by Sheriff Ruefa, and the taking had occurred at 1105
Estrada Street (his [Tee Chin Ho's] place of business) and not at 1005 Estrada
Street the address given in the complaint; and
3) La Tondeña had "masterminded and caused two instances of seizure against
intervenor, first through and by the Manila City, police, and second through the
Court's sheriff (copies of the receipts of seizures . . . (being attached to and made
parts of the answer) as Annexes "5" and "6" 12)". 13 Parenthetically, the text of the
receipt, Annex 6, has already been set out herein, supra 14 The other receipt,
drawn up on October 6, 1988 — about four months earlier — and referred to as
Annex 5 — reads as follows:
OCT. 6, 1988
TIME 9:50 AM
FROM: TEE CHIN HO JUNK SHOP
ITEMS: QUANTITY:
432 x 50 (pcs. 21,600)
GMS ROUND 350 ml
GMS FRASCO 700 ml
GMS . . . 350 ml
AÑEJO FLAT 375 ml
AÑEJO OVAL 750 ml
31

ISSUED BY: (s) PAT. BENITO DE LEON
RECEIVED BY: (s) F. LAZARO 10/6/88
and, on the basis of the foregoing allegations, prayed "for the issuance
forthwith of a writ of preliminary investigation and prohibitory injunction . . .
and, after due proceedings, that said writs be made permanent and that
judgment be issued dismissing the complaint and, with respect to
intervenor's compulsory counterclaim, that awards be made for actual
damages in the sum of P300,000.00, moral damages in the sum of
P1,000,000.00, exemplary damages in the sum of P2,000,000.00, and
P100,000.00 to cover attorney's fees and litigation expenses . . ."
On March 3, 1989 the Sheriff delivered the 20,250 empty bottles seized by him to
La Tondeña. 15
The Court set Tee Chin Ho's application for injunction for hearing on March 17,
1989 but by Order of the same date, reset the hearing to April 3, 1989 to give La
Tondeña time to file a reply. It however issued on the same day, April 3, 1989, a
temporary restraining order "to preserve the status quo and to prevent further
damages, . . . (enjoining) the plaintiff, or other reasons acting for and in its behalf,
from seizing or otherwise confiscating any bottles subject of the writ of seizure
dated February 20, 1989 from the movant Tee Chin Ho of 1105 Estrada Street,
Singalong, Manila, until further orders . . . 16
La Tondeña filed its Reply on March 1, 1989 and its opposition to the application
for injunction on April 3, 1989 17 —which latter date, as aforestated, was the date
to which Tee Chin Ho's application for injunction was reset. La Tondeña also
filed, under date of April 5, 1989, a "Motion to Admit Attached Amended
Complaint with Motion to Dismiss Motion for Intervention and Petition for
Preliminary Injunction," which it set for hearing on April 10, 1989 at 8:30
A.M. 18 In this motion La Tondeña alleged inter alia that Tee Chin Ho's answer-in-
intervention had not yet been admitted (the implication clearly being that it still
could amend its complaint as a matter of right 19 ); that the amendment it wished
to make in its complaint consisted merely in correcting the "spelling in the name
of the defendant as well as his address," considering that as shown by the
receipts annexed to the answer-in- intervention, "Tee Chin Ho with address at
1105 Estrada St., Singalong, Manila and Te Tien Ho with address at 1005
Estrada St., Singalong, Manila, . . . (are) one and the same person;" and that Tee
Chin Ho had "waived his right to question the incorrect spelling of the name . . .
CASES FOR RULE 58, 59, 60 AND 62
and . . . address when he voluntarily signed the sheriffs receipt dated February
22, 1989 through his wife . . ."
On April 7, 1989, Judge Adduru-Santillan promulgated an Order ruling "for
intervenor Tee Chin Ho" and directing issuance of "a writ of preliminary
prohibitory injunction and a writ of preliminary mandatory injunction . . . as prayed
for in the answer in intervention, upon intervenor's filing a bond in the amount of
Forty-Five Thousand Pesos (P45,000.00)." The Order was made to rest on the
following findings, to wit:
. . . that the seizure authorized by the Court's writ of replevin is only
against the person whose name and address is pleaded in the
complaint namely TE TIEN HO at No. 1005 Estrada St., Singalong,
Manila; the two truckloads empty bottles seized by the Manila
Police (Exhibit "4") and by the Sheriff of Manila (Exhibit "5") from
intervenor Tee Chin Ho, is improper and unlawful; intervenor Tee
Chin Ho possessor of the two truckloads of empty bottles is
presumed under the civil law as the owner thereof (Article 433 and
541, Civil Code); that even under Republic Act 623, as amended
by Republic Act 5700, the fact that the law provides that the sale of
the bottled products does not ipso jure carry with it the sale of the
bottle yet the same law negates any right of action of plaintiff
manufacturer and seller to recover the empty bottles from "any
person to whom the registered manufacturer . . . seller has
transferred . . . any of the containers (Section 5) and, moreover,
the statute expressly exempts from its coverage the use of bottles
as containers for "sisi," "bagoong," "patis," and similar native
products" (Section 6); and that the due process clause protects
intervenor in his right to earn his livelihood through engagement in
his junk shop business (Quisumbing and Fernando, Philippine
Constitutional Law, p. 80).
Then Judge Adduru-Santillan issued the "writ, of mandatory and prohibitory
injunction" on April 11, 1989 —
1) "ordering plaintiff La Tondeña Distillers, Inc., its agents, duly
authorized representatives or other persons acting for and in its
behalf to return and restore unto intervenor Tee Chin Ho at his
address at 1105 Estrada St., Singalong, Manila, all 41,850 empty
bottles/containers with blown up mark "La Tondeña Inc." and
32

"Ginebra San Miguel" seized from intervenor mentioned in
Annexes "4" and "5" of the answer-in-intervention;" and
2) enjoining plaintiff from using, employing, inducing, corrupting or
otherwise causing members of the Manila Police Force and/or
other persons for the purpose of seizing bottles/containers bearing
the mark; "La Tondeña Inc." or "Ginebra San Miguel" found in
intervenor's possession at his address at 1105 Estrada St.,
Singalong, Manila, until further orders . . .
Earlier, on April 10, 1989, at the hearing of La Tondeña 's motions (a) to
dismiss application for injunction and (b) to amend its complaint Judge
Adduru-Santillan informed the parties that the motion to amend complaint
was deemed "submitted for resolution but that (s)he had already granted
the petition for the issuance of preliminary mandatory and prohibitory
injunction, . . . (and that) effective April 26, 1989, she will not be holding
trial due to her application for retirement." 20 La Tondeña learned on the
same day that by Order dated April 7, 1989, the Judge had admitted Tee
Chin Ho's answer in intervention. 21
This Order La Tondeña assailed in the Court of Appeals. On April 19, 1989, it
filed with that Court a petition "for Certiorari, Prohibition and Mandamus with
Preliminary Prohibitory and mandatory Injunction and/or Temporary Restraining
Order." 22 In its petition, it alleged that Judge Santillan had in effect adjudicated
the case on the merits without trial; she has ignored and failed to apply, or
grossly misconstrued, the relevant provisions of R.A. 623, as amended; she had
disregard circumstances on record showing that Te Tien Ho and Tee Chin Ho
are one and the same person; she had, albeit utterly without authority, taken
cognizance of and passed upon the alleged seizure by the Manila Police of
bottles from Tee Chin Ho on another, earlier occasion; and she "should have
disqualified herself from acting on the petition or at least requested that it be
transferred to her pairing judge." La Tondeña thus prayed for judgment "declaring
null and void and of no effect and force the order dated April 7, 1989 . . .
including the writ of prohibitory, mandatory injunction dated April 11, 1989 and
directing respondent sheriff Rufio 23 Ruefa to refrain from enforcing the said writ,
commanding the respondent judge to desist from conducting any further
proceedings in civil case no. 89-47768 . . ." It also prayed for a temporary
restraining order, which the Court of Appeals granted by Resolution dated April
21, 1989 "in order not to render moot and academic the issue/issues raised . .
."24
CASES FOR RULE 58, 59, 60 AND 62
The Court of Appeals promulgated its judgment on these case on May 18,
1989. 25 It dismissed La Tondeña's petition. It declared that the petition did
"not prima facie" reveal such sufficiency in substance as would merit its being
given due course;" that even "granting arguendo that the errors pointed out by
petitioner had indeed attended respondent Judge's issuance of the assailed
Order, these errors cannot be corrected by means of certiorari, . . . the
appropriate remedy . . . being a timely appeal from the judgment on the merits;"
and that the "solidly grounded and well-reasoned discussion of respondent Judge
(in her challenged order) . . . cannot be consistent with a finding . . . that she
indulged in a whimsical and capricious or arbitrary and despotic exercise of
judgment, characteristic of the grave abuse of discretion calling for
certiorari," 26
La Tondeña filed a motion for reconsideration of the decision 27 which was
denied by Resolution dated June 29, 1989. 28 It then seasonably appealed to this
Court in certiorari; and here it ascribes several errors to the Court of
Appeals, i.e., in not finding that —
1.) . . . the Respondent Judge acted without jurisdiction and with grave abuse of
discretion in including in . . . (her) order the return of 21,600 registered bottles
allegedly seized by the Manila Police on October 6, 1988, which were not the
subject of the case and not within the jurisdiction of the trial court;
2) the respondent Judge had violated fundamental rules on injunctions, viz.:
a) that, a mandatory injunction shall not issue in favor of a party
whose rights are not clear;
b) that no advantage may be given (by an injunction to one (party)
to the prejudice of the other;"
c) that, (an injunction's) primary purpose is to preserve the status
quo;
3) . . . the Respondent Judge violated a rule on Replevin that the disposition of a
property seized under a replevinorder upon the defendant shall be done only
within 5 days from date of seizure;
4) . . . the Respondent Judge utterly failed to apply the law in question, RA 623
as amended by RA 5700;
33

5) . . . the act of Respondent Judge in . . . granting the preliminary injunction was
tainted with procedural infirmities;" and
6) Tee Chin Ho and Te Tien Ho are one and the same person.
I or of the surety or sureties thereon;" but if he does so, "he cannot require the
A defendant or other party in a replevin proceeding against whom a writ of
seizure has the following alternative remedies set forth in Section 5, Rule 60 of
the Rules of Court, viz.:
SEC. 5. Return, of property. — If the defendant objects to the
sufficiency of the plaintiff's 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 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 plaintiff affidavit, for the delivery of the property to the
plaintiff, if such delivery be adjudged, 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.
The defendant may avail of these alternative options only within five (5) days
after the taking of the property by the officer. This was made plain albeit impliedly
by Section 6 of the same Rule, providing as follows: 29
SEC. 6 Disposition of property by officer. — If within five (5) days
after the taking of the property by the officer, the defendant does
not object to the sufficiency of the bond, or of the surety or sureties
thereon, or require the return of the property as provided in the last
preceding section; or if the defendant so objects, and the plaintiff's
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.
Thus if a defendant in a replevin action wishes to have the property taken by the
sheriff restored to him, he should within five days from such taking, (1) post a
CASES FOR RULE 58, 59, 60 AND 62
counter-bond in double the value of said property, 30 and (2) serve plaintiff with a
copy thereof both requirements — as well as compliance therewith within the
five-day period mentioned — being mandatory. 31
Alternatively, "the defendant may object to the sufficiency of the plaintiff's bond,
return of the property" by posting a counter-bond pursuant to Sections 5 and 6.
In other words, the law does not allow the defendant to file a motion to dissolve
or discharge the writ of seizure (or delivery) — on the ground of insufficiency of
the complaint or of the grounds relied upon therefor, as in proceedings on
preliminary attachment or injunction 32 and thereby put at issue the matter of the
title or right, of possession over the specific chattel being replevied, the policy
apparently being that said matter should be ventilated and determined only at the
trial on the merits.
On the other hand, a stranger to the action, i.e., a person not a party to the
action, or as the law puts it, "any other person than the defendant or his agent,"
whose property is seized pursuant to the writ of delivery, is accorded the remedy
known as terceria, a third party claim, to wit:
SEC. 7. Third-party claim. — If the property taken be claimed by
any other person then the defendant or his agent, and such person
makes an affidavit of his title thereto or right to the possession
thereof, stating the grounds of such right or title, and serves the
same upon the officer while he has possession of the property, and
a copy thereof upon the plaintiff, unless the plaintiff or his agent, on
demand of the officer, indemnifies him against such claim by a
bond in a sum not greater than the value of the property, and in
case disagreement as to such value the same shall be decided by
the court issuing the order. The officer is not liable for damages for
taking or keeping of such property, to any other person than the
defendant or his agent, unless such claim is so made and the
action upon the bond brought within one hundred and twenty (120)
days from the date of filing of the said bond. But nothing herein
contained shall prevent such third person from vindicating his claim
to the property by any proper action. However, when the plaintiff,
or the person in whose behalf the order of delivery was issued, is
the Republic of the Philippines, or any officer duly representing it,
the filing of bond shall not be required, and in case the sheriff or
34

the officer executing the order is sued for damages as a result of
such execution, he shall be represented by the Solicitor General,
and if held liable therefor, the actual damages adjudged by the
court shall be paid by the National Treasurer out of the funds to be
appropriated for the purpose.
The remedy is identical to that granted to strangers in a proceeding on
preliminary attachment or execution of judgments. 33
In lieu of, or in addition to the filing of a terceria, the third party may, as Section 7
points out, vindicate "his claim to the property by any proper action." This effort at
vindication may take the form of a separate action for recovery of the property, or
intervention in the replevin action itself. 34
It was thus imperative for the Trial Judge, before ultimately resolving the motion
for leave to intervene as party defendant of the person identifying himself as "Tee
Chin Ho," to determine the precise status of said "Tee Chin Ho:" whether he was
indeed a stranger to the action, as he claims, and could therefore avail of the
remedy of intervention as a party defendant, or he was in truth a proper party
defendant, who had been mistakenly and inadvertently referred to as "Te Tien
Ho", and who therefore only had the alternative remedies aforementioned of
either (a) objecting to the replevin bond or the surety or sureties thereof or (b)
posting a counter-bond to compel return of the property.
As of April 11, 1989, when the Trial Judge issued the "writ of mandatory and
prohibitory injunction," she was aware, or should have known, of certain facts in
the record bearing strongly on the identity of "Tee Chin Ho," namely: —
1) that "Tee Chin Ho" was actually served with summons at his junk shop at
Estrada Street;
2) that the bottles described in La Tondeña's complaint and the writ of delivery
were actually found at his establishment, and were there seized;
3) that Tee Chin Ho's shop is the only junk shop on Estrada Street;
4) that "Tee Chin Ho" did not then protest to the sheriff he was not the defendant
named in the summons, "Te Tien Ho," or that his address was different from that
indicated in the process; instead he asked his wife to sign his name on the
CASES FOR RULE 58, 59, 60 AND 62
sheriff's receipt wherein he was described as "defendant," as well "on the original
copy of the summons and the writ of seizure for and in his own behalf;" 35
5) that "Tee Chin Ho" is not phonetically all that different from "Tee Tien Ho;"
6) that "Tee Chin Ho" admitted that earlier, he had been found in possession of
empty bottles marked "La Tondeña, Inc.," and "Ginebra San Miguel," which had
been seized by Manila police officers; and
7) that La Tondeña had filed a "motion to admit attached amended complaint with
motion to dismiss motion for intervention and petition for preliminary injunction"
dated April 5, 1989, in which it alleged inter alia, in relation to the amendment of
its complaint, that —
a) the "name of defendant Tee Chin Ho and his address at 1105
Estrada St., Singalong, Manila . . . (had been) inadvertently
indicated as Te Tien Ho with address at 1005 Estrada St.,
Singalong, Manila in the complaint;"
b) the amendment consisted merely in the correction of "the
spelling in the name of the defendant as well as his address . . ;"
c) the error in La Tondeña's identification of the defendant was not
a fatal one since the principal object of the replevin suit was the
recovery of identifiable bottles in the wrongful possession of
another; and
d) in any case, Tee Chin Ho had waived his right to object such an
error.
There were thus circumstances of record, of which Her Honor was charged with
knowledge, that tended to show that La Tondeña's proffered thesis was not
entirely far-fetched: that the real target of its replevin suit was a junk dealer at
Estrada Street, Singalong, Manila, who was in unlawful possession of a large
number of its empty bottles, whose name and address had been mistakenly
stated in the original complaint but could nonetheless be ascertained. At the very
least, therefore, it was a matter of preferential priority for the Judge to determine
whether "Tee Chin Ho" is in fact "Te Tien Ho," and thus enable her to know in
turn, whether or not the remedy of intervention was proper in the premises,
instead of that provided in Section 5 of Rule 60, supra. In other words, unless
35

there were a prior determination by Her Honor of whether or not "Tee Chin Ho"
was a proper party defendant or a stranger to the action, she was in no position
to adjudge that this intervention as party defendant was correct. But this is what
respondent Judge did. Without first making that prior determination, she
proceeded to pass upon the motion for intervention; she just simply assumed and
declared that Tee Chin Ho was not Te Tien Ho. She thus appears to have acted
without foundation, rashly, whimsically, oppressively.
II
Also overlooked by respondent Judge was that the amendment sought by La
Tondeña was one of those explicitly mentioned, and could, in the premises, be
made as a matter of right, in accordance with Section 1 and 2, Rule 10 of the
Rules of Court, viz.: 36
Sec. 1. Amendments in general. — Pleadings may be amended by
adding or striking out an allegation or the name of any party, or
by correcting a mistake in the name of a party or a mistaken or
inadequate or description in any other respect, so that the actual
merits of the controversy may speedily be determined, without
regard to technicalities, and in the most expeditious and
inexpensive manner.
Sec. 2. When amendments allowed as a matter of right. — A party
may amend his pleading once as a matter of course at any time
before a responsive pleading is served or, if the pleading is one to
which no responsive pleading is permitted and the action has not
been placed upon the trial calendar, he may so amend it at any
time within ten (10) days after it is served.
It is plain from the record that at the time that La Tondeña moved to amend its
complaint to correct "a mistake in the name of a party" and "a mistaken or
inadequate allegation or description" of that party's place of residence or
business, no effective "responsive pleading" (i.e., the answer) had been served
on it by the person impleaded in the action as defendant; for the admission of
Tee Chin Ho's answer-in-intervention (with permissive counterclaim) was yet
hanging fire and no notice of the Court's action thereon had been served on La
Tondeña. Clearly, then, the amendment which La Tondeña wished to make was
a matter of right in accordance with Section 2, Rule 10. Being directed at a
"defect in the designation of the parties," it was in truth a correction that could be
CASES FOR RULE 58, 59, 60 AND 62
summarily made at any stage of the action provided no prejudice is caused
thereby to the adverse party," as Section 4 of the same Rule 10 further provides.
It is simply amazing why in light of all these factual and legal consideration,
respondent Judge did not quickly admit the amendment in question to correct the
mistaken reference to Tee Chin Ho as Te Tien Ho, but what is worse, first
granted leave to Tee Chin Ho's intervention, and then indefinitely deferred the
matter of the amendment of the complaint by simply declaring it" submitted for
resolution" and commending it to the attention of the Judge who would succeed
her in her sala in view of her impending retirement. The Judge thus appears to
have acted in disregard of the plain provisions of the Rules, whimsically,
oppressively.
III
It is amazing, too, why Tee Chin Ho — who was already actually
a defendant because he had been served with summons and had implicitly
acknowledged his status as such by signing or causing the signing of his name to
certain papers in which he was described as defendant — should thereafter still
have moved to intervene in the action as defendant in intervention. The more
direct step indicated under the circumstances, since he had already been
brought into the action as defendant, although against his will, was merely to
draw the court's attention, by some appropriate motion or pleading, to the lack of
any cause of action against him because he was not the person impleaded as
defendant in the complaint and, of course, seek relief from the writ of seizure and
recovery as such damages as might have been cause to him by the enforcement
thereof. However, Tee Chin Ho chose the more circuitous path: although already
technically a defendant, he still filed a motion to intervene as defendant, and also
with the same basic objective: to tell the Court he was not the person named in
the complaint, and to recover the property seized from him as well as damages.
By this maneuver, Tee Chin Ho was able to evade the legal consequences of the
expiration of the five-day period prescribed by Section 5 (in relations to Section
6) of Rule 10, supra; he succeeded in recovering the bottles in question even
after the expiry of said period, and what is more, as defendant in intervention, he
was able to put at issue the propriety of the ground relied upon for a writ of
delivery, — which he would have been disqualified to do as defendant. It was
seriously wrong: for the Court to have sanctioned such a maneuver.
IV
36

Again, the subject of La Tondeña's replevin suit, as already stated, are
the 20,250 bottles seized from Tee Chin Ho on February 22, 1989 on the
strength of the writ of delivery of February 13, 1989.
But the Trial Court's Order of April 7, 1989, directed La Tondeña to "return and
restore unto intervenor Tee Chin Ho . . . all 41,850 empty bottles/containers with
blown up mark "La Tondeña Inc." and "Ginebra San Miguel" seized from
intervenor mentioned in Annexes "4" and "5" of the answer-in-intervention" —
more particularly, in the permissive counterclaim set out in said answer-in-
intervention. In other words, the Court ordered the return not only of the 20,250
bottles seized pursuant to its writ of delivery on February 13, 1989, but, also the
quantity of bottles claimed by Tee Chin Ho to have been seized from him by
Manila Police officers at an earlier date.
Now, as regards these bottles earlier taken into custody by the Manila Police,
certain circumstances are germane, namely:
1) the claim therefor was made in a permissive counterclaim, it not appearing
that said claim "arises out of or is necessarily connected with, the transaction or
occurrence that is the subject matter of the opposing party's . . . claim and does
not require for its adjudication the presence of third parties of whom the court
cannot acquire jurisdiction;" 37 and
2) the only evidence on record is the receipt issued by the officers involved in the
seizure (Annex 5, answer-in-intervention); the police officers were not impleaded
as parties defendant on Tee Chin Ho's counterclaim nor required to appear and
give evidence of said seizure; no proof was ever adduced by Tee Chin Ho of the
reason for the confiscation of the bottles, or whether or not the bottles had been
turned over to La Tondeña.
It does not appear that any docketing fees were paid by Tee Chin Ho for his
permissive counterclaim. At no point has Tee Chin Ho ever stated that he had
indeed paid any filing or other fees thereon. The Trial Court, therefore, should not
have admitted the permissive counterclaim, much less issued preliminary
mandatory and prohibitory injunctions founded on the averments thereof. 38
The Trial Court also required La Tondeña to return to Tee Chin Ho the bottles
seized from the latter by Manila police officers notwithstanding the absence of
any showing whatever that the confiscation of those bottles had been had at La
Tondeña's instance or, more importantly, that the bottles had been turned over to
CASES FOR RULE 58, 59, 60 AND 62
La Tondeña, and without requiring the police officers concerned to give evidence
of the facts surrounding the seizure of those bottles.
It being presumed that "official duty has been regularly performed" and "the law
has been obeyed," 39 the act of seizure of the police officers cannot initially be
deemed unlawful upon its face, in the absence of evidence of the circumstances
under which they effected the seizure. Indeed, since regularity may be assumed
in the act of the police officers in question, it may not unreasonably be supposed
that they acted in virtue of a search warrant or some order of a competent Court
— a court other than respondent Judge's, which would consequently have
jurisdiction, to the exclusion of the Court a quo, to release the bottles. Prudence
thus dictated that the respondent Judge at the very least require evidence on this
matter: as to why seizure was made and whether or not, the bottles had been
surrendered to La Tondeña — so that it could be ordered to return them to Tee
Chin Ho But this the respondent Judge did not do. Without knowing if jurisdiction
over the bottles seized by the Manila Police was in another court, without
requiring the officers concerned to appear and shed light on the issue, without
knowing, if the bottles were indeed, in possession of La Tondeña , she required
La Tondeña to restore possession. thereof to Tee Chin Ho. In doing so, Her
Honored acted quite imprudently, recklessly, capriciously, oppressively.
V
Finally, it would appear that respondent Judge, in resolving an application for a
provisional remedy, in the process already disposed of the case on the merits.
The basic issue in the action at bar is whether or not La Tondeña has a right of
action to prevent the use by Tee Chin Ho (or as he was mistakenly named in the
complaint: Te Tien Ho) of the bottles especially manufactured for it pursuant to its
specifications. This issue was resolved by respondent Judge in her challenged
Order of April 7, 1989 in the following manner:
. . . even under Republic Act 623, as amended by Republic Act
5700, the fact that the law provides that the sale of the bottled
products does not ipso jure carry with it the sale of the bottle, yet
the same law negates any right of action of plaintiff manufacturer
and seller to recover the empty bottles from "any person to whom
the registered manufacturer . . . seller it has transferred . . . any of
the containers (Section 5) and, moreover, the statute expressly,
exempts from its coverage the use of bottles as containers for
"sisi," "bagoong," "patis," and similar native products" (Section 6);
37
 CASES FOR RULE 58, 59, 60 AND 62
and that the due process clause protects intervenor in his right to "bagoong," or similar products, no argument can be made for extending to him
earn his livelihood through engagement in his junk shop business the exemptive provisions of Section 5 and 6 of the same Act cited in the
(Quisumbing and Fernando, Philippine Constitutional Law, p, 80). questioned Order of the Regional Trial Court.

It is of public knowledge that when a person purchase a drink, VI

whatever it may be the buyer is required to deposit an amount for
the bottles and if the empty bottles, after consuming its contents, is
not returned, then the buyer is answerable for the empty bottle,
thereby converting the transaction to one of a sale to include the
bottle thereof and the seller would not and shall not be permitted to
complaint and recover the said bottles until and unless the
corresponding deposit is returned to the buyer in exchange of the
bottle.
Such a ruling having been handed down, what else, it may be asked,
would still have to be resolved at the trial, and stated in its final judgment,
as regards the merits of the action?
Said ruling moreover, does not seem to correct, being in conflict with Section 3 of
Republic Act No. 623, which reads: 40
All the foregoing considered; the Court is satisfied that the grave errors ascribed
to the Regional Trial Court were in fact committed; and that it was quite wrong for
the Court of Appeals to have failed to declare those errors as constituting grave
abuse of discretion, and to have upheld the Order assailed in these proceedings.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals
complained of is REVERSED. The Order of April 7, 1989 of the Regional Trial
Court of Manila in Civil Case No. 89-47768 and the Writ of Mandatory and
Prohibitory Injunction of April 11, 1989 issued pursuant thereto are NULLED and
SET ASIDE. The status quo obtaining prior to the issuance of said Order and
Writ is ORDERED RESTORED, and the proceedings in said case shall continue
as if they had never been issued. Costs against the private respondent.
SO ORDERED.

Sec. 3. The use by any person other then the registered

manufacturer, bottler or seller, without written permission of the
latter of any such bottle, cask, barrel, keg, box, steel cylinders,
tanks, flasks, accumulators, or other similar containers, or the
possession thereof without any written permission of the
manufacturer, by any junk dealer or dealer in casks, barrels, kegs,
boxes, steel cylinders, tanks, flasks, accumulators, or other similar
containers, the same being duly marked or stamped and registered
as herein provided, shall give rise to a prima facie presumption that
such use of possession is unlawful.

Since Tee Chin Ho never denied being a junk dealer — indeed, his registered
business name describes him as one such 41 — or that he did not have La
Tondena's written permission to possess the bottles in question, a correct
application of the law called for invoking the presumption created by the
confluence of these twin circumstances to deny said respondent any right to the
possession or use of the bottles, instead of ordering their return to him,
howsoever provisionally. And lacking any showing that La Tondeña conveyed the
bottles, sans contents, to Tee Chin Ho, or that the latter is a bottler of "sisi,"

38

G.R. No. 89020 May 5, 1992
STRONGHOLD INSURANCE CO., INC., petitioner,
vs.
COURT OF APPEALS, respondent.
Gascon, Garcia & Associates for petitioner.
Castillo, Laman, Tan & Pantaleon for Northern Motors, Inc.
PARAS, J.:
In this petition for review on certiorari, petitioner Stronghold Insurance Co., Inc.
assails the decision * of the Court of Appeals in CA-G.R. CV No. 16154 affirming
the order of the Regional Trial Court, Branch 167, Pasig, Metro Manila in its Civil
Case No. 52177. The dispositive portion of this order of the Trial court reads:
WHEREFORE, in view of the foregoing consideration, the claim of
the defendant against SICI Bond No. 11652 of the Stronghold
Insurance Company, Inc. is found to have been established and
said surety company is adjudged liable for damages suffered by
the defendant as found by this Court in its decision dated June 9,
1986, to the extent of the amount of the replevin bond, which is
P42,000.00 (p. 20, Rollo)
The factual antecedents are not disputed.
On March 21, 1985, Leisure Club, Inc. filed Civil Case No. 52177 against
Northern Motors Inc. for replevin and damages. It sought the recovery of certain
office furnitures and equipments. In an order dated March 22, 1985, the lower
court ordered the delivery of subject properties to Leisure Club Inc. subject to the
posting of the requisite bond under Section 2, Rule 60 of the Rules of Court.
Accordingly, Leisure Club Inc. posted a replevin bond (SICI Bond No. 11652)
dated March 25, 1985 in the amount of P42,000.00 issued by Stronghold
Insurance Co., Inc. In due course, the lower court issued the writ of replevin,
thereby enabling Leisure Club Inc. to take possession of the disputed properties.
CASES FOR RULE 58, 59, 60 AND 62
Northern Motors Inc. filed a counterbond for the release of the disputed
properties. However, efforts to recover these properties proved futile as Leisure
Club Inc. was never heard of again.
For failure to appear in the pre-trial of the case, Leisure Club, Inc. was declared
non-suited. Northern Motors Inc. presented its evidence ex-parte and on June 9,
1986, the lower court rendered its decision in favor of Northern Motors Inc., the
dispositive portion of which reads —
PREMISE CONSIDERED, the instant petition is hereby dismissed
and on the counterclaim, plaintiff is ordered to pay defendant the
following:
a) the actual value of the property sold at public auction by
defendant, and repossessed by plaintiff, of P20,900.00;
b) exemplary damages of P10,000.00;
c) attorney's fees in the amount of P10,000.00; and
d) costs of suit.
SO ORDERED. (p. 21, Rollo)
In the said decision, the lower court ruled that:
1. Northern Motors Inc. had rightful ownership and right of
possession over the subject properties.
2. Leisure Club Inc. is a sister company of Macronics Inc., a debtor
of Northern Motors Inc., and former owner of these properties.
3) Under the circumstances, Leisure Club Inc. instituted the action
for replevin as part of a scheme to spirit away these properties and
pave the way for the evasion of lawful obligations by its sister
company. (Decision dated June 4, 1986, p. 4).
On July 3, 1986, Northern Motors Inc. filed a "Motion for Issuance of Writ of
Execution Against Bond of Plaintiff's Surety", pursuant to Section 10, Rule 20 of
39

the Rules of Court, which was treated by the lower court as an application for
damages against the replevin bond.
At the hearing of the said motion as well as the opposition thereto filed by
Stronghold Insurance Co., Inc., Northern Motors Inc. presented one witness in
the person of its former manager Clarissa G. Ocampo, whose testimony proved
that:
(a) Northern Motors Inc., and Macronics Marketing entered into a
leased agreement wherein the latter leased certain premises from
the former.
(b) Macronics failed to pay its bills to Northern Motors Inc., so the
latter was forced to terminate the lease.
(c) Because of Macronics' unpaid liabilities to Northern Motors Inc.,
the latter was forced to sell off the former's properties in an auction
sale wherein Northern Motors Inc. was the buyer. Macronics was
duly notified of the sale.
(d) These properties sold were the sole means available by which
Northern Motors Inc. could enforce its claim against Macronics.
(TSN dated January 30, 1987; pp. 94-95, Rollo)
Stronghold Insurance Co., Inc. did not cross-examine the said witness. Instead it
asked for continuance in order to present its own witness. Stronghold, however,
never presented any witness.
On July 21, 1987, the lower court issued its now disputed Order finding
Stronghold liable under its surety bond for the damages awarded to Northern
Motors Inc. in the June 8, 1986 Decision. In the said Order, the lower court held:
Submitted for resolution is the "Motion for Issuance of Writ of
Execution Against Bond of Plaintiff's Surety" filed by the defendant
and the opposition thereto filed by the Stronghold Insurance
Company, Inc.
In the decision rendered by the Court on June 9, 1977, the
defendant Northern Motors, Inc. was the prevailling party and the
judgment in its favor ordered the plaintiff to pay the actual value of
CASES FOR RULE 58, 59, 60 AND 62
the property sold at public auction by the defendant and
repossessed by plaintiff in the amount of P20,900.00, which is in
favor of the plaintiff if the latter is found not entitled to the writ of
replevin earlier issued against the defendant.
The thrust of the opposition of the bonding company is to the effect
that the motion for a writ of execution is not the proper remedy but
an application against the bond should have been the remedy
pursued. The surety company contends that it is not a party to the
case and that the decision clearly became final and executory and,
therefore, is no longer liable on the bond. The surety company
likewise raised the issue as to when the decision became final and
executory. Moreover, the surety company avers that the defendant
failed to prove any damage by reason of the insurance of replevin
bond.
Sec. 20 of Rule 57, in relation to Sec. 10 of Rule 60, provides that
the party against whom the bond was issued may recover on the
bond for any damage resulting from the issuance of the bond upon
application and hearing. The application must be filed either:
before trial; before appeal is perfected; before judgment becomes
final and executory.
Being the prevailing party, it is undeniable that the defendant is
entitled to recover against the bond. The application for that
propose was made before the decision became final and before
the appeal was perfected. Both the prevailing and losing parties
may appeal the decision. In the case of the plaintiff appears that its
counsel did not claim the decision which was sent by registered
mail on June 20, 1986 and filed the motion for execution against
the bond on July 3, 1986. Hence, with respect to the defendant the
motion against the bond was filed before any appeal was instituted
and definitely on or before the judgment became final.
Although the claim against the bond was denominated as a motion
for issuance of a writ of execution, the allegations are to the effect
that the defendant is applying for damages against the bond. In
fact, the defendant invokes Sec. 10, Rule 60, in relation to Sec. 20,
Rule 57, Rules of Court. Evidently, therefore, the defendant is in
reality claiming damages against the bond.
40

It is undisputed that the replevin bond was obtained by the plaintiff
to answer for whatever damages the defendant may suffer for the
wrongful issuance of the writ. By virtue of the writ, the plaintiff took
possession of the auctioned properties. Despite a redelivery bond
issued by the defendant, the plaintiff refused to return the
properties and in the fact repossessed the same. Clearly,
defendant suffered damages by reason of the wrongful replevin, in
that it has been deprived of the properties upon which it was
entitled to enforce its claim. Moreover, the extent of the damages
has been qualified in the decision dated June 9, 1986.
(pp. 21-23, Rollo)
This Order was appealed by Stronghold to the Court of Appeals. In a decision
dated July 7, 1989, the Court of Appeals affirmed the order of the lower court.
This decision is now the subject of the instant petition.
Petitioner raises the following assignment of error:
1. The lower court erred in awarding damages against herein
petitioner despite complete absence of evidence in support of the
application.
2. The lower court erred in just adopting the dispositive portion of
the decision dated June 7, 1986 as basis for the award of
damages against herein petitioner.
3. The lower court erred in awarding exemplary damages in favor
of Northern Motors, Inc. and against petitioner Stronghold
Insurance Co., Inc.
4. The lower court erred in awarding the attorney's fees of
P10,000.00 as damages against the bond.
(pp. 10-11, Rollo)
We find no merit in the petition.
CASES FOR RULE 58, 59, 60 AND 62
In the case of Visayan Surety & Insurance Corp. vs. Pascual, 85 Phil. 779, the
Court explained the nature of the proceedings to recover damages against a
surety, in this wise:
In such case, upon application of the prevailing party, the court
must order the surety to show cause why the bond should not
respond for the judgment of damages. If the surety should contest
the reality or reasonableness of the damages claimed by the
prevailing party, the court must set the application and answer for
hearing. The hearing will be summary and will be limited to such
new defense, not previously set up by the principal, as the surety
may allege and offer to prove. (Id. at 785; emphasis supplied) (p.
96, Rollo)
Stronghold Insurance Co., Inc., never denied that it issued a replevin bond.
Under the terms of the said bond, Stronghold Insurance together with Leisure
Club Inc. solidarily bound themselves in the sum of P42,000 —
(a) for the prosecution of the action,
(b) for the return of the property to the defendant if the return
thereof be adjudged, and
(c) for the payment of such sum as may in the cause be recovered
against the plaintiff and the costs of the action.
In the case at bar, all the necessary conditions for proceeding against the bond
are present, to wit:
(i) the plaintiff a quo, in bad faith, failed to prosecute the action,
and after relieving the property, it promptly disappeared;
(ii) the subject property disappeared with the plaintiff, despite a
court order for their return; and
(iii) a reasonable sum was adjudged to be due to respondent, by
way of actual and exemplary damages, attorney's fees and costs
of suit.
(p. 63, Rollo)
41
 CASES FOR RULE 58, 59, 60 AND 62
On the propriety of the award for damages and attorney's fees, suffice it to state, SO ORDERED.
that as correctly observed by the Court of Appeals, the record shows that the
same is supported by sufficient evidence. Northern Motors proved the damages it
suffered thru evidence presented in the hearing of the case itself and in the
hearing of its motion for execution against the replevin bond. No evidence to the
contrary was presented by Stronghold Insurance Co., Inc. in its behalf. It did not
impugn said award of exemplary damages and attorney's fees despite having
every opportunity to do so.

As correctly held by respondent Court of Appeals ––

Stronghold Insurance, Inc. has no ground to assail the awards

against it in the disputed Order. Unless it has a new defense, it
cannot simplistically dissociate itself from Leisure Club, Inc. and
disclaim liability vis-a-vis the findings made in the Decision of the
lower court dated June 9, 1986. Under Section 2, Rule 60 the bond
it filed is to ensure "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." The
bond itself ensures, inter alia, "the payment of such sum as may in
the cause be recovered against the plaintiff and the cost of the
action." (pp. 24-25, Rollo)

Beside, Leisure Club Inc.'s act of filing a replevin suit without the intention of
prosecuting the same but for the mere purpose of disappearing with the
provisionally recovered property in order to evade lawfully contracted obligations
constitutes a wanton, fraudulent, reckless, oppressive and malevolent breach of
contract which justifies award of exemplary damages under Art. 2232 of the Civil
Code.

The attorney's fees awarded in favor of Northern Motors Inc. are likewise
warranted under Article 2208 of the New Civil Code.

In any event, the trial court has decided with finality that the circumstances
justifying the award of exemplary damages and attorney's fees exist. The
obligation of Stronghold Insurance Co., Inc., under the bond is specific. It assures
"the payment of such sum as may in the cause be recovered against the plaintiff,
and the costs of the action." (emphasis supplied)

WHEREFORE, the petition is DENIED for lack of merit. No costs.

42

G.R. No. 79021 May 17, 1993
ROMEO S. CHUA, petitioner,
vs.
THE HON. COURT OF APPEALS, DENNIS CANOY AND ALEX DE
LEON, respondents.
Roberto R. Palmares for petitioner.
Josefino B. Remotigue for private respondents.
BIDIN, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of
Court assailing the decision of the Court of Appeals dated May 7, 1987 which
nullified the orders dated April 18, 1986 and May 19, 1986 of the Regional Trial
Court of Cebu City Branch VIII.
The facts of the case are not disputed. On April 12, 1986, Judge Lauro V.
Francisco of the Regional Trial Court of Cebu City Branch XIII, after examining
2Lt. Dennis P. Canoy and two (2) other witnesses, issued a search warrant
directing the immediate search of the premises of R.R. Construction located at
M.J. Cuenco Avenue, Cebu City, and the seizure of an Isuzu dump truck with
plate number GAP-175. At twelve noon of the same date, respondent Canoy
seized the aforesaid vehicle and took custody thereof.
On April 14, 1986, a civil action for Replevin/Sum of Money for the recovery of
possession of the same Isuzu dump truck was filed by petitioner against
respondent Canoy and one "John Doe" in the Regional Trial Court of Cebu City
Branch VIII, presided by Judge Leonardo B. Cañares and docketed thereat as
Civil Case No. CEB 4384 alleging among other things, petitioner's lawful
ownership and possession of the subject vehicle; that he has not sold the subject
vehicle to anyone; that he has not stolen nor carnapped it, and that he has never
been charged of the crime of carnapping or any other crime for that matter.
Further, petitioner questioned the validity of the search warrant and the
subsequent seizure of the subject vehicle on the strength of the aforesaid search
warrant.
CASES FOR RULE 58, 59, 60 AND 62
On the same date, April 14, 1986, Judge Cañares of the Regional Trial Court of
Cebu City Branch VIII directed the issuance of a writ of replevin upon the posting
of a bond in the amount of one hundred thousand pesos (P100,000.00). The writ
of replevin was also issued on the same date, and the subject vehicle was seized
on 15 April 1986 by Deputy Sheriff Galicano V. Fuentes.
On April 16, 1986, respondent Canoy filed a motion for the dismissal of the
complaint and for the quashal of the writ of replevin. The motion was opposed by
petitioner. The motion to dismiss and to quash the writ of replevin was denied in
an Order dated April 18, 1986. A motion for reconsideration of the
aforementioned Order was filed and was opposed by petitioner. In an order dated
May 19, 1986, the Regional Trial Court of Cebu Branch VIII denied the motion for
reconsideration and directed the delivery of the subject vehicle to petitioner. Not
satisfied, herein private respondents filed with the Court of Appeals a Petition
for Certiorari and Prohibition praying for the nullification of the orders dated April
18, 1986 and May 19, 1986.
Meanwhile, a case for Carnapping docketed as I.S. No. 86-185, entitled "Alex De
Leon, Complainant, vs. Romeo Chua, Respondent" pending preliminary
investigation before the Office of the City Fiscal of Cebu City was provisionally
dismissed upon motion of Romeo Chua with the following reservation: "without
prejudice to its reopening once the issue of ownership is resolved", (Rollo, p. 62).
In a decision dated May 17, 1987, the Court of Appeals reversed the Regional
Trial Court of Cebu City Branch VIII, and nullified the questioned orders. The
appellate court ordered the dismissal of the Replevin action, and directed that
possession of the subject vehicle be restored to Canoy. It applied the ruling in the
case of Pagkalinawan vs. Gomez (21 SCRA 1275 [1967]) which held:
Once a Court of First Instance has been informed that a search
warrant has been issued by another court of first instance, it cannot
require a sheriff or any proper officer of the court to take the
property subject of the replevin action, if theretofore it came into
custody of another public officer by virtue of a search warrant. Only
the court of first instance that issued such a search warrant may
order its release.
Furthermore, it was also pointed out in the same case that the validity of a search
warrant may only be questioned in the same court that issued it.
43

Petitioner moved for a reconsideration of the decision, but the respondent court
denied the same. Thus, petitioner filed this appeal by certiorari. The parties
submitted their respective memoranda, and thereafter the case was deemed
submitted for decision.
The issue presented before the Court is whether or not the validity of a seizure
made pursuant to a search warrant issued by a court can be questioned in
another branch of the same court, where the criminal action filed in connection
with which the search warrant was issued, had been dismissed provisionally.
At the outset, it must be pointed out that the ruling made by the Office of the City
Fiscal in the complaint for carnapping was erroneous. It held: ". . . the preliminary
investigation of that case is premature until such time that the issue of ownership
will be resolved by the Court of Appeals, so that the instant case is
hereby dismissed provisionally without prejudice to its reopening once the issue
of ownership is resolved in favor of complainant." (emphasis supplied).
A criminal prosecution for carnapping need not establish the fact that
complainant therein is the absolute owner of the motor vehicle. What is material
is the existence of evidence which would show that respondent took the motor
vehicle belonging to another. The Anti-Carnapping Law or Republic Act No. 6539
punishes as carnapping the taking with intent to gain, of a motor vehicle
belonging to another person, without the latter's consent or by means of violence
or intimidation of person or by using force upon things.
Another aspect which needs to be stressed is the fact that since a preliminary
investigation is not part of the trial, the dismissal of a case by the fiscal will not
constitute double jeopardy and hence there is no bar to the filing of another
complaint for the same offense (People vs. Medted, 68 Phil. 435).
We find no merit in the main issue presented before Us. Petitioner seeks a
reversal of a decision of the Court of Appeals which relied on the decision
in Pagkalinawan vs. Gomez (supra).
The principle followed among courts in the dispensation of justice is that a judge
who presides in a branch of a court cannot modify or annul the orders issued by
another branch of the same court, since the two (2) courts are of the same rank,
and act independently but coordinately (Montesa vs. Manila Cordage Co., 92
Phil. 25 [1952]).
CASES FOR RULE 58, 59, 60 AND 62
It is a basic tenet of civil procedure that replevin will not lie for property
in custodia legis. A thing is in custodia legiswhen it is shown that it has been and
is subjected to the official custody of a judicial executive officer in pursuance of
his execution of a legal writ (Bagalihog vs. Fernandez, 198 SCRA 614 [1991]).
The reason posited for this principle is that if it was otherwise, there would be
interference with the possession before the function of the law had been
performed as to the process under which the property was taken. Thus, a
defendant in an execution or attachment cannot replevy goods in the possession
of an officer under a valid process, although after the levy is discharged, an
action to recover possession will lie (Francisco, Revised Rules of Court in the
Philippines: Provisional Remedies, p. 402 [1985]).
The Court had occasion to rule on this issue in the case of Vlasons Enterprises
Corporation vs. Court of Appeals(155 SCRA 186 [1987]). In the aforementioned
case, two (2) propeller pieces were seized on the strength of a search warrant
issued by the Court of First Instance of Manila Branch XVIII. After the seizure,
criminal complaints were filed against the alleged thieves. However, the
complaints were later on dismissed. Five (5) months later, a civil action for the
recovery of the possession of the propellers were filed in the Court of First
Instance of Manila Branch XXIX. The latter court granted the motion for
repossession of the propellers. On appeal this Court held:
The proceeding for the seizure of the property in virtue of a search
warrant does not end with the actual taking of the property . . . and
its delivery . . ., to the court . . . . It is merely the first step in the
process to determine the character of the seized property. That
determination is done in the criminal action involving the crime or
crimes in connection with which the search warrant was issued.
Hence, such a criminal action should be prosecuted, or
commenced if not yet instituted, and prosecuted. The outcome of
the criminal action will dictate the disposition of the seized
property. (Vlasons Enterprises Corp. vs. Court of Appeals, supra.)
In the Vlasons case, the Court differentiated the case brought before it therein,
from the Pagkalinawan case. It stated that in the Pagkalinawan case, there was a
conflict in jurisdiction. On the other hand, in the Vlasons case, it was certain that
no criminal case would ensue subsequent to or in connection with the search
warrant, hence no conflict in jurisdiction or in the ultimate disposition of the
property could arise. Thus, where personal property is seized under a search
warrant and it appears that the seizure will not be followed by the filing of any
44
 CASES FOR RULE 58, 59, 60 AND 62
criminal action, but there are conflicting claims asserted over the seized property,
the appropriate remedy is the institution of an ordinary civil action by any
interested party, or of an interpleader action by the Government itself, in the
proper competent court to which the seizing court shall transfer custody of the
articles. Another branch of the same court, in an action to recover said property
and during the pendency thereof, cannot order the delivery of said personal
property to therein plaintiff pendente lite.

Construing the Pagkalinawan case together with the Vlasons case, we rule that
where personal property is seized under a search warrant and there is reason to
believe that the seizure will not anymore be followed by the filing of a criminal
and there are conflicting claims over the seized property, the proper remedy is
the filing of an action for replevin, or an interpleader filed by the Government in
the proper court, not necessarily the same one which issued the search warrant;
however, where there is still a probability that the seizure will be followed by the
filing of a criminal action, as in the case at bar where the case for carnapping
was "dismissed provisionally, without prejudice to its reopening once the issue of
ownership is resolved in favor of complainant" (emphasis supplied), or the
criminal information has actually been commenced, or filed, and actually
prosecuted, and there are conflicting claims over the property seized, the proper
remedy is to question the validity of the search warrant in the same court which
issued it and not in any other branch of the said court.

Thus, the Regional Trial Court of Cebu Branch VIII erred when it ordered the
transfer of possession of the property seized to petitioner when the latter filed the
action for replevin. It should have dismissed the case since by virtue of the
"provisional dismissal", of the carnapping case there is still a probability that a
criminal case would be filed, hence a conflict in jurisdiction could still arise. The
basic principle that a judge who presides in one court cannot annul or modify the
orders issued by another branch of the same court because they are co-equal
and independent bodies acting coordinately, must always be
adhered to.

WHEREFORE, the petition is denied. The decision of the Court of Appeals dated
May 7, 1987 is AFFIRMED.

SO ORDERED.

45

G.R. No. 61508 March 17, 1999
Citibank, N.A. (Formerly First National City Bank), petitioner,
vs.
The Honorable Court of Appeals and Douglas F. Anama, respondents.
PURISIMA, J.:
At bar is a special civil action for certiorari with prayer for a temporary restraining
order faulting the Court of Appeals 1 with grave abuse of discretion for nullifying
the lower court's order of seizure of mortgaged properties subject of a case for
sum of money and replevin.
The facts leading to the institution of the case are as follows:
In considering for a loan obtained from Citibank, N.A. (formerly First National City
Bank), the defendant (private respondent herein) Douglas Anama executed a
promissory note, dated November 10, 1972, 2 to pay the plaintiff bank the sum of
P418,000.00 in sixty (60) equal successive monthly installments of P8,722.25,
starting on the 10th day of December 1972 and on the 10th of every month
thereafter. The said Promissory Note stipulated further that:
(a) the loan is subject to interest at the rate of twelve
percent (12%) per annum;
(b) the promissory note and the entire amount
therein stated shall become immediately due and
payable without notice or demand upon —
(aa) default in the payment of any
installment of principal or interest at
the time when the same is due;
(bb) the occurrence of any change in
the condition and affairs of the
defendant, which in the opinion of the
plaintiff shall increase its credit risk;
CASES FOR RULE 58, 59, 60 AND 62
(c) the defendant agrees to pay all costs, expenses,
handling and insurance charges incurred in the
granting of the loan;
(d) in case the services of a lawyer is made
necessary for collection, defendant shall be liable for
attorney's fees of at least ten percent (10%) of the
total amount due. 3
To secure payment of the loan, private respondent Anama also constituted a
Chattel Mortgage of even date in favor of petitioner, on various machineries and
equipment located at No. 1302 Epifanio delos Santos Avenue, Quezon City,
under the following terms and conditions:
(a) The machineries and equipment subject of the
mortgage, stand as security for defendant's account.
(b) All replacement, substitutions, additions,
increases and accretions to the properties
mortgaged shall also be subject to the mortgage.
(c) The defendant appoints the plaintiff as his
attorney-in-fact with authority to enter the premises
of the defendant and take actual possession of the
mortgaged chattels without any court order, to sell
said property to any party.
(d) All expenses in carrying into effect the
stipulations therein shall be for the account of the
defendant and shall form part of the amount of the
obligation secured by the mortgage.
(e) In case the plaintiff institutes proceedings for the
foreclosure of the mortgage, the plaintiff shall be
entitled to the appointment of a receiver without a
bond.
(f) In case of default, the defendant shall be liable for
attorney's fees and cost of collection in the sum
46

equal to twenty-five (25%) of the total amount of the
indebtedness outstanding and unpaid. 4
On November 25, 1974, for failure and refusal of the private respondent to pay
the monthly installment due under the said promissory note since January 1974,
despite repeated demands, petitioner filed a verified complaint against private
respondent Anama for the collection of his unpaid balance of P405,820.52 on the
said promissory note, for the delivery and possession of the chattels covered by
the Chattel Mortgage preparatory to the foreclosure thereof as provided under
Section 14 of the Chattel Mortgage Law, docketed as Civil Case No. 95991
before the then Court of First Instance of Manila.
On February 20, 1975, the defendant Anama submitted his Answer with
Counterclaim, denying the material averments of the complaint, and
averring inter alia (1) that the remedy of replevin was improper and the writ of
seizure should be vacated; (2) that he signed the promissory note for
P418,000.00 without receiving from plaintiff Citibank any amount, and was even
required to pay the first installment on the supposed loan in December 1974; (3)
that the understanding between him and the Citibank was for the latter to release
to him the entire loan applied for prior to and during the execution of his
promissory note, but Citibank did not do so and, instead, delayed the release of
any amount on the loan even after the execution of the promissory note thereby
disrupting his timetable of plans and causing him damages; (4) that the amount
released by Citibank to him up to the present was not the amount stated in the
promissory note, and his alleged default in paying the installment on the loan was
due to the delay in releasing the full amount of the loan as agreed upon; (5) that
the macheniries and equipment described in the chattel mortgage executed by
him are really worth more than P1,000,000.00 but he merely acceded to the
valuation thereof by Citibank in said document because of the latter's
representation that the same was necessary to speed up the granting of the loan
applied for by him; (6) that the properties covered by said chattel mortgage are
real properties installed in a more or less permanent nature at his (defendant's)
premises in Quezon City, as admitted by Citibank in said mortgage document; (7)
that the mortgage contract itself stipulated that the manner and procedure for
affecting the sale or redemption of the mortgage properties, if made extrajudicial,
shall be governed by Act No. 1508 and other pertinent laws which all pertain to
real properties; and (8) that because of the filing of this complaint without valid
grounds therefor, he suffered damages and incurred attorney's fees; the
defendant, now private respondent, averred.
CASES FOR RULE 58, 59, 60 AND 62
On December 2, 1974, the trial court upon proof of default of the private
respondent in the payment of the said loan, issued an Order of Replevin over the
macheneries and equipment covered by the Chattel Mortgage.
However, despite the issuance of the said order of seizure of subject chattels,
actual delivery of possession thereof to petitioner did not take place because
negotiations for an amicable settlement between the parties were encouraged by
the trial court.
On March 24, 1975, a pre-trial conference was held and the lower court issued
an order for joint management by the petitioner and the private respondent of the
latter's business for ten (10) days, after which the former would appointed
receiver for the said business.
On April 1, 1975, the petitioner took over private respondent's business as
receiver. When further proposals to settle the case amicably failed, the lower
court proceeded to try the case on the merits.
On January 29, 1977, petitioner presented a Motion for the Issuance of
an Alias Writ of Seizure, ordering the sheriff to seize the properties involved and
dispose of them in accordance with the Revised Rules of Court. The lower court
then gave private respondent five (5) days to oppose the said motion and on
February 22, 1977, he sent in his opposition thereto on the grounds: (1) that
Citibank's P400,000 replevin bond to answer for damages was grossly
inadequate because the market value of the properties involved is P1,710,000
and their replacement cost is P2,342,300.00 per the appraisal report of the
Appraisal and Research Corp.; (2) that he was never in default to justify the
seizure; (3) that the Civil Case No. 18071 of the Court of First Instance,
entitled Hernandes vs. Anama, et al., which, according to Citibank, supposedly
increased its credit risk in the alleged obligation, had already been dismissed as
against him and the case terminated with the dismissal of the complaint against
the remaining defendant, First National City Bank, by the Court in its orders of
January 12, 1977 and February 7, 1977; (4) that his (defendant's) supposed
obligations with Citibank were fully secured and his mortgaged properties are
more than sufficient to secure payment thereof; and (5) that the writ of seizure if
issued would stop his business operations and contracts and expose him to
lawsuits from customers, and also dislocate his employees and their families
entirely dependent thereon for their livelihood.
47

On February 28, 1977, acting on the said Motion and private respondent's
opposition, the trial court issued an Order granting the Motion for Alias Writ of
Seizure, ruling thus:
WHEREFORE, the motion for alias writ of seizure is hereby
granted. At any rate, this Order gives another opportunity for
defendant and the intervenor who claims to be a part owner to file
a counterbond under Sec. 60 of Rules of Court. 5
Private respondent moved for reconsideration of the aforesaid order but the
same was denied by the Resolution of March 18, 1977, to wit:
In view of the foregoing, the motion for reconsideration is hereby
denied.
At any rate, as already stated, the defendant has still a remedy
available which is to file a bond executed to the plaintiff in double
the value of the properties as stated in the plaintiff's affidavit. The
Court at this instance therefore has no authority to stop or
suspended the writ of seizure already ordered. 6
Accordingly, by virtue of the Alias writ of Seizure, petitioner took possession of
the mortgaged chattels of private respondent. As a consequence, the sheriff
seized subject properties, dismantled and removed them from the premises
where they were installed, delivered them to petitioner's possession on March 17,
18 and 19, 1977 and advertised them for sale at public auction scheduled on
March 22, 1977.
On March 21, 1977, private respondent filed with the Court of Appeals a Petition
for Certiorari and Prohibition 7 with Injunction to set aside and annul the
questioned resolution of the trial court on the ground that they were issued "in
excess of jurisdiction and with grave abuse of discretion" because of the "lack of
evidence and clear cut right to possession of First National City Bank (herein
petitioner)" top the machineries subject of the Chattel Mortgage.
On July 30, 1982, finding that the trial court acted with grave abuse of discretion
amounting to excess of lack of jurisdiction in issuing the assailed resolutions, the
Court of Appeals granted petition, holding that the provision of the Rules of Court
on Replevin and Receivership have not been complied with, in that (1) there was
no Affidavit of Merit accompanying the Complaint for Replevin; (2) the bond
CASES FOR RULE 58, 59, 60 AND 62
posted by Citibank was insufficient; and (3) there was non-compliance with the
requirement of a receiver's bond and oath of office. The decretal portion of the
assailed decision of the Court of Appeals, reads:
WHEREFORE, the petition is granted. The questioned resolutions
issues by the respondent judge in Civil Case No. 95991, dated
February 28, 1977 and March 18, 1977, together with the writs and
processes emanating or deriving therefrom, are hereby declare null
and void ab initio.
The respondent ex-officio sheriff of Quezon City and the
respondent First National City Bank are hereby ordered to return
all the machineries and equipment with their accessories seized,
dismantled and hauled, to their original and respective places and
position in the shop flooring of the petitioner's premises where
these articles were, before they were dismounted, seized and
hauled at their own expense. The said respondents are further
ordered to cause the repair of the concrete foundations destroyed
by them including the repair of the electrical wiring and facilities
affected during the seizure, dismanting and hauling.
The writ of preliminary injunction heretofore in effect is hereby
made permanent. Costs against the private respondents.
SO ORDERED 8
Therefrom, Citibank came to this Court via its present petition for certiorari,
ascribing grave abuse of discretion to the Court of Appeals and assigning as
errors, that:
I
THE RESPONDENT COURT ERRED IN PRACTICALLY AND IN
EFFECT RENDERING JUDGMENT ON THE MERITS AGAINST
THE HEREIN PETITIONER BY ORDERING THE RETURN OF
THE MACHINERIES AND EQUIPMENT AND ITS ACCESSORIES
TO THEIR ORIGINAL AND RESPECTIVE PLACES AND
POSITIONS.
II
48

THE RESPONDENT COURT ERRED IN FINDING THAT THE
COMPLAINT OF THE PETITIONER DID NOT COMPLY WITH
THE PROVISIONS OF SEC. 2, RULE 60 OF THE RULES OF
COURT.
III
THAT THE RESPONDENT COURT ERRED IN FINDING THAT
THE BOND POSTED BY THE PETITIONER IS QUESTIONABLE
AND/OR INSUFFICIENT.
IV
THE RESPONDENT COURT ERRED IN FINDING THAT THE
PETITIONER DID NOT COMPLY WITH THE PROVISIONS OF
SEC. 5, RULE 59 BY FAILING TO POST A RECEIVER'S BOND.
V Sec. 2. Affidavit and Bond. — Upon applying or such order the
THE RESPONDENT ERRED IN FINDING THAT THE HON.
JORGE R. COQUIA ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO EXCESS OR LACK OF
JURISDICTION IN DEALING WITH THE SITUATION.
I
Anent the first assigned error, petitioner contends that the Court of
Appeals, by nullifying the writ of seizure issued below, in effect, rendered
judgment on the merits and adjudged private respondent Anama as the
person lawfully entitled to the possession of the properties subject of the
replevin suit. It is theorized that the same cannot be done, as the case
before the court below was yet at trial stage and lower court still had to
determine whether or not private respondent was in fact in default in the
payment of his obligation to petitioner Citibank, which default would
warrant the seizure of subject machineries and equipment.
The contention is untenable. A judgment is on the merits when it
determines the rights and liabilities of the parties on the basis of the
disclosed facts, irrespective of formal technical or dilatory objections, and
it is not necessary that there should have been a trial. 9 The assailed
CASES FOR RULE 58, 59, 60 AND 62
decision of the Court of Appeals did not make any adjudication on the
rights and liabilities between Citibank and Douglas Anama. There was no
finding yet of the fact of default. The decision only ruled on the propriety of
the issuance of the writ of seizure by the trial court. As worded by the
respondent court itself, "the main issues to be resolved are whether there
was lack or excess of jurisdiction, or grave abuse of discretion, in the
issuance of the orders in question, and there is no appeal nor any plain,
speedy, and adequate remedy in the ordinary course of law." 10
In resolving the issue posed by the petition, the Court of Appeals limited
its disposition to a determination of whether or not the assailed order of
seizure was issued in accordance with law, that is, whether the provisions
of the Rules of Court on delivery of personal property or replevin as a
provisional remedy were followed. The Court of Appeals relied on Ruled
60 of the Rules of Court, which prescribed the procedure for the recovery
of possession of personal property, which Rule, provides:
plaintiff must show by his own affidavit or that of some other
person who personally knows the facts:
(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 of knowledge, information and
belief;
(c) That it has nor been taken for a tax assessment
or fine pursuant to law, or seized under an
execution, or an attachment against the property of
the plaintiff, or is so seized, that 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 of the value of the property as stated in the affidavit
49

aforementioned, for the property to the defendant of such sum as
he may recover from the plaintiff in the action.
The Court of Appeals did not pass upon the issue of who, as between Douglas
Anama and Citibank, is entitled to the possession of subject machineries, as
asserted by the latter. When it ordered the restoration of the said machineries to
Douglas Anama (now the private respondent), it merely defendant to the
possession of his properties, since there was a finding that the issuance of the
writ was not in accordance with the specific rules of the Rules of Court.
II
In its second assignment of errors, petitioner theorizes that the Court of
Appeals erred in finding that it did not comply with Section 2, Rule 60 of
the Rules of Court requiring the replevin plaintiff to attach an affidavit of
merit to the compliant.
Petitioner maintains that although there was no affidavit of merit accompanying
its complaint, there was nonetheless substantial compliance with the said rule as
all that is required to be alleged in the affidavit of merit was set forth in its verified
complaint. Petitioner argues further that assuming arguendo that there was non-
compliance with the affidavit of merit requirement, such defense can no longer be
availed of by private respondent Anama as it was not alleged in his Answer and
was only belatedly interposed in his Reply to the Petitioner's Comment on the
Petitioner for Certiorari before the Court of Appeals.
Petitioner is correct insofar as it contends that substantial compliance with the
affidavit requirement may be permissible. There is substantial compliance with
the rule requiring that an affidavit of merit to support the complaint for replevin if
the complaint itself contains a statements of every fact required to be stated in
the affidavit of merit and the complaint is verified like an affidavit. On the matter
of replevin, Justice Vicente Francisco's Comment on the Rules of Court, states:
Although the better practice is to keep the affidavit and pleading
separate, if plaintiff's pleading contains a statement of every fact
which the statute requires to be shown in the affidavits, and the
pleading is verified by affidavit covering every statement therein,
this will be sufficient without a separate affidavit; but in no event
can the pleading supply the absence of the affidavit unless all that
the affidavit is required to contain is embodied in the pleading, and
CASES FOR RULE 58, 59, 60 AND 62
the pleading is verified in the form required in the case of a
separate affidavit. (77 CJS 65 cited in Francisco, Rules of Court of
the Philippines, Vol. IV-A, p. 383)
And similarly, in the case of an attachment which likewise requires an affidavit of
merit, the Court held that the absence of an affidavit of merit is not fatal where
the petition itself, which is under oath, recites the circumstances or facts
constitutive of the grounds for the petition. 11
The facts that must be set forth in the affidavit of merit are (1) that plaintiff owns
the property particularly describing the same, or that he is entitled to its
possession; (2) wrongful detention by defendants of said property; (3) that the
property is not taken by virtue of a tax assessment or fine pursuant to law or
seized under execution or attachment or, if it is so seized, that it is exempt from
seizure; and the, (4) the actual value of the property. 12
But, as correctly taken note of by the Court of Appeals, petitioner's complaint
does not allege all the facts that should be set forth in an affidavit of merit.
Although the complaint alleges that petitioner is entitled to the possession of
subject properties by virtue of the chattel mortgage executed by the private
respondent, upon the latter's default on its obligation, and the defendant's alleged
"wrongful detention" of the same, the said complaint does not state that subject
properties were not taken by virtue of a tax assessment or fine imposed pursuant
to law or seized under execution or attachment or, if they were so seized, that
they are exempt from such seizure.
Then too, petitioner stated the value of subject properties at a "probable value of
P200,000.00, more or less". Pertinent rules require that the affidavit of merit
should state the actual value of the property subject of a replevin suit and not just
its probable value. Actual value (or actual market value) means "the price which
an article would command in the ordinary course of business, that is to say, when
offered for sale by one willing to sell, but not under compulsion to sell and
purchased by another who is willing to buy, but under no obligation to purchase
it".13Petitioner alleged that the machineries and equipment involved are valued at
P200,000.00 while respondent denies the same, claiming that per the appraisal
report, the market value of the said properties is P1,710,000.00 and their
replacement cost is P2,342,300.00. Petitioner's assertion is belied by the fact that
upon taking possession of the aforesaid properties, it insured the same for
P610,593.74 and P450,000.00, separately. It bears stressing that the actual
value of the properties subject of a replevin is required to be in the affidavit
50

because such actual value will be the basis of the replevin bond required to be
posted by the plaintiff. Therefore, when the petitioner failed to declare the actual
value of the machineries and equipment subject of the replevin suit, there was
non-compliance with Section 2, Rule 60 of the Revised Rules of Court.
It should be noted, however, that the private respondent interposed the defense
of lack of affidavit of merit only in his Reply to the Comment of Citibank on the
Petition for Certiorari which respondent filed with the Court of Appeals. Section 2,
Rule 9 of the Revised Rules of Court, provides:
Sec. 2. Defenses and objections not pleaded deemed waived —
Defenses and objections not pleaded either in a motion to dismiss
or in the answer are deemed waived; except the failure to state a
cause of action which may be alleged in later pleading, . . . .
This Rule has been revised and amended, as follows:
Sec. 1. Defenses and objection not pleaded. — Defenses and
objections not pleaded in a motion to dismiss or in the answer are
deemed waived. However, when it appears from the pleadings or
the evidence on record that the court has no jurisdiction over the
subject matter, that there is another action pending between the
same parties for the same cause, or that the action is barred by a
prior judgment or by statute of limitations, the court shall dismiss
the claim.
Thus, although respondent's defense of lack of affidavit of merit is meritorious,
procedurally, such a defense is no longer available for failure to plead the same
in the Answer as required by the omnibus motion rule.
III
Petitioner also faults the Court of Appeals for finding that the bond posted by the
petitioner is questionable and/or insufficient. It is averred that, in compliance with
Section 2, Rule 60 requiring the replevin plaintiff to post a bond in double the
value of the properties involved, it filed a bond in the amount P400,000.00 which
is twice the amount of P200,000.00 declared in its complaint.
The Court reiterates its findings on the second assignment of errors, particularly
on the issue of the actual of subject properties as against their probable value.
CASES FOR RULE 58, 59, 60 AND 62
Private respondent, at the onset, has put into issues the value of the said
properties. In the Special Defenses contained in his Answer, private respondent
averred:
That while defendant admits that he executed a Chattel Mortgage
in favor of plaintiff, he vigorously denies that the machineries
covered therein are worth P200,000.00. The fact is that plaintiff
knew fully well that said chattels are worth no less than
P1,000,000.00, said defendant having acceded to said valuation
upon plaintiff's representation that it would be necessary to speed
up the granting of the loan.
As here was a disagreement on the valuation of the properties in the first place,
proper determination of the value of the bond to be posted by the plaintiff cannot
be sufficiently arrived at. Though the rules specifically require that the needed
bond be double the value of the properties, since plaintiff merely denominated a
probable value of P200,000.00 and failed to aver the properties' actual value,
which is claimed to be much greater than that declared by plaintiff, the amount of
P400,000.00 would indeed be insufficient as found by the Court of Appeals. The
Rules of Court requires the plaintiff to "give a bond, executed to the defendant in
double the value of the property as stated in the affidavit
. . . ." Hence, the bond should be double the actual value of the properties
involved. In this case, what was posted was merely an amount which was double
the probable value as declared by the plaintiff and, therefore, inadequate should
there be a finding that the actual value is actually far greater than P200,000.00.
Since the valuation made by the petitioner has been disputed by the respondent,
the lower court should have determined first the actual value of the properties. It
was thus as error for the said court to approve the bond, which was based
merely on the probable value of the properties.
It should be noted that a replevin bond is intended to indemnify the defendant
against any loss that he may suffer by reason of its being compelled to surrender
the possession of the disputed property pending trial of the
action. 14 The same may also be answerable for damages if any when judgment
is rendered in favor of the defendant or the party against whom a writ of replevin
was issued and such judgment includes the return of the property to him. 15 Thus,
the requirement that the bond be double the actual value of the properties
litigated upon. Such is the case because the bond will answer for the actual loss
to the plaintiff, which corresponds to the value of the properties sought to be
recovered and for damages, if any.
51

Petitioner also maintains that, assuming for the sake of argument that its replevin
bond was grossly inadequate or insufficient, the recourse of the respondent
should be to post a counterbound or a redelivery bond as provided under Section
5 of Rule 60.
Sec. 5 and 6, Rule 60 of the Rules of Court, read:
Sec. 5. Return of property. — If the defendant objects to the
sufficient of the plaintiff's 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, if such delivery be
adjudge, 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.
Sec. 6. Disposition of property by officer. — If within five (5) days
after the taking of the property by the officer, the defendant does
not object to the sufficiecy of the bond, or of the surety or sureties
thereon, or require the return of the property as provided in the last
preceding section; or if the defendant so objects, and the plaintiff's
first or new bond is approved; or if the defendant so require, and
his bond is object to and found insufficient and he does not
forthwith file an approved bond, the property shall be delivered to
the plaintiff, the officer must return it to the defendant.
The Court held in a prior case 16 that the remedies provided under Section 5,
Rule 60, are alternative remedies. ". . . If a defendant in a replevin action wishes
to have the property taken by the sheriff restored to him, he should, within five
days from such taking, (1) post a counter-bond in double the value of said
property, and (2) serve plaintiff with a copy thereof, both requirements as well as
compliance therewith within the five-day period mentioned — being
mandatory." 17 This course of action is available to the defendant for as long as
he does not object to the sufficiency of the plaintiff's bond.
Conformably, a defendant in a replevin suit may demand the return of
possession of the property replevined by filing a redelivery bond executed to the
plaintiff in double the value of the property as stated in the plaintiff's affidavit
within the period specified in Section 5 and 6.
CASES FOR RULE 58, 59, 60 AND 62
Alternatively, "the defendant may object to the sufficiency of the plaintiff's bond,
or of the surety or sureties thereon;" but if he does so, "he cannot require the
return of the property" by posting a counter-bond pursuant to Section 5 and 6. 18
In the case under consideration, the private respondent did not opt to
cause redelivery of the properties to him by filing a counter-bond precisely
because he objected to the sufficiency of the bond posted by plaintiff.
Therefore, he need not file a counter-bond or redelivery bond. When such
objection was not given due course in the court below — when, instead of
requiring the plaintiff to post a new bond, the court approved the bond in
the amount of P400,000.00, claimed by respondent to be insufficient, and
ordered the seizure of the properties — recourse to a petition
for certiorari before the Court of Appeals assailing such order is proper
under the circumstances.
IV
As its fourth assignment of errors, petitioner contends that the Court of Appeals
made an error of judgment in finding that the petitioner did not comply with the
provisions of Section 5, Rule 59 by failing to post a receiver's bond. Petitioner
contends that although it is in agreement with the Court of Appeals that a
receiver's bond is separate and distinct from a replevin bond, under the
circumstances it was not required to file a receiver's bond because it did not
assume receivership over the properties. It is further argued that assuming that it
did assume receivership, the Chattel Mortgage expressly provides, that:
In case the MORTGAGEE institutes proceedings, judicially or
otherwise, for the foreclosure of this Chattel Mortgage, or to
enforce any of its rights hereunder, the MORTGAGEE shall be
entitled as a matter of right to the appointment of a receiver,
without bond, of the mortgaged properties and of such properties,
real or personal, claims and rights of the MORTGAGOR as shall
be necessary or proper to enable the said receiver to property
control and dispose of the mortgaged properties. 19
The order of the trial court dated March 24, 1975 provided, among others, that
the properties shall be under joint management for a period of ten days, after
which period "the bank, by virtue of the stipulations under the chattel mortgage,
becomes the Receiver to perform all the obligations as such Receiver" and "in
52
 CASES FOR RULE 58, 59, 60 AND 62
the event that the bank decides not to take over the receivership, the joint A
management continues." 20 L

From the evidence on record, it is palpably clear that petitioner Citibank did, in C
fact, assume receivership. A letter 21dated April 1, 1975 sent by petitioner to the I
private respondent, reads: T

1975 B
A
Anama Engineering Service Group N
K
114 R. Lagmay Street
B
San Juan, Rizal y
:
Attention: Mr. Douglas Anama a
g
Gentlemen: e
r
Pursuant to the Court order, we have decided to take over your
machine shop as Receiver. Petitioner cannot therefore deny that nine days after the trial court issued the
order of receivership, it informed he private respondent that it would, as it did,
We are hereby appointing Mr. Artemio T. Gonzales as our assume receivership.
representative.
The Court of Appeals found that the requirements of Section 5, Rule 59 on
y receivership were not complied with by the petitioner, particularly the filing or
posting of a bond and the taking of an oath.
y
o It should be noted that under the old Rules of Court which was in effect at the
u time this case was still at trial stage, a bond for the appointment of a receiver was
r not generally required of the applicant, except when the application was ex
s parte. 22 Therefore, petitioner was not absolutely required to file a bond. Besides,
, as stipulated in the chattel mortgage contract between the parties, petitioner, as
the mortgagee, is entitled to the appointment of a receiver without a bond.
N
A However, the Court of Appeals was right in finding a defect in such assumption of
T receiver in that the requirement of taking an oath has not been complied with
I Section 5, Rule 59, states:
O
N
53
 CASES FOR RULE 58, 59, 60 AND 62
Sec. 5. Oath and bond of receiver. — Before entering upon his in the absence of unequivocal agreement in the contract itself or
duties, the receiver must be sworn to perform them faithfully, and express provision to the effect in the statute.
must file a bond, executed to such person and in such sum as the
court or judge may direct, to the effect that he will faithfully WHEREFORE, for lack of merit, the petition is hereby DISMISSED. No
discharge the duties of receiver in the action and obey the orders pronouncement as to costs.
of the court therein.
SO ORDERED.
Consequently, the trail court erred in allowing the petitioner to assume
receivership over the machine shop of private respondent without requiring the
appointed receiver to take an oath.

In light of the foregoing, the answer to the fifth assignment of errors is in the
negative. For erroneously issuing the alias writ of seizure without inquiring into
the sufficiency of the replevin bond and for allowing petitioner to assume
receivership without the requisite oath, the Court of Appeals aptly held that the
trial court acted with grave abuse of discretion in dealing with situation.

Under the Revised Rules of Court, the property seized under a writ of replevin is
not to be delivered immediately to the plaintiff. 23 This is because a possessor
has every right to respected in its possession and may not be deprived of it
without due process. 24

As enunciated by this Court in the case of Filinvest Credit Corporation vs. Court
of Appeals, 25

The reason why the law does not allow the creditor to possess
himself of the mortgaged property with violence and against the will
of the debtor is to be found in the fact that the creditor's right of
possession is conditioned upon the fact of default, and the
existence of this fact may naturally be the subject of controversy.
The debtor, for instance, may claim in good faith, and rightly or
wrongly, that the debt is paid, or that for some other reason the
alleged default is nonexistent. His possession in this situation is as
fully entitled to protection as that of any other person, and in the
language of Article 446 of the Civil Code, he must be respected
therein. To allow the creditor to seized the property against the will
of the debtor would make the former to a certain extent both judge
and executioner in his own cause — a thing which is inadmissible

54

[G.R. No. 93540. December 13, 1999]
FULGENCIO S. FACTORAN, JR., Secretary, Department of Environment
and Natural Resources, VICENTE A. ROBLES and NESTOR
GAPUZAN, petitioners, vs.COURT OF APPEALS (Third Division),
Hon. BENIGNO T. DAYAW,as, Judge, Regional Trial Court of Quezon
City, Branch 80, JESUS SY and LILY FRANCISCO UY, respondents.
DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision and Resolution
of the Court of Appeals dated March 30, 1990 and May 18, 1990, respectively,
dismissing petitioners charge that Honorable Benigno T. Dayaw, Presiding Judge
of Branch 80 of the Regional Trial Court (RTC) of Quezon City, committed grave
abuse of discretion in ordering them to deliver to private respondents the six-
wheeler truck and its cargo, some 4,000 board feet of narra lumber which were
confiscated by the Department of Environment and Natural Resources (DENR)
and forfeited in favor of the government.[1]
The antecedent facts:
On August 9, 1988, two (2) police officers of the Marikina Police Station,
Sub-Station III, intercepted a six-wheeler truck, with Plate No. NJT-881, carrying
4,000 board feet of narra lumber as it was cruising along the Marcos
Highway. They apprehended the truck driver, private respondent Jesus Sy, and
brought the truck and its cargo to the Personnel Investigation Committee/Special
Actions and Investigation Division (PIC/SAID) of the DENR Office in Quezon
City. There, petitioner Atty. Vicente Robles of the PIC/SAID investigated them,
and discovered the following discrepancies in the documentation of the narra
lumber:[2]
a. What were declared in the documents (Certificate of Timber Origin, Auxiliary
Invoices and various Certifications) were narra flitches, while the cargo of the
truck consisted of narra lumber;
b. As appearing in the documents, the Plate Numbers of the truck supposed to
carry the forest products bear the numbers BAX-404, PEC-492 or NSN-267,
while the Plate Number of the truck apprehended is NVT-881;
CASES FOR RULE 58, 59, 60 AND 62
c. Considering that the cargo is lumber, the transport should have been
accompanied by a Certificate of Lumber Origin, scale sheet of said lumber and
not by a Certificate of Timber Origin, which merely covers only transport of logs
and flitches;
d. The Log Sale Purchase Agreement presented is between DSM Golden Cup
International as the seller and Bonamy Enterprises as the buyer/consignee and
not with Lily Francisco Lumber and Hardware,[3]
which are in violation of Bureau of Forestry Development (BFD) Circular No. 10.
The said BFD Circular requires possession or transportation of lumber to be
supported by the following documents: (1) Certificate of Lumber Origin (CLO)
which shall be issued only by the District Forester, or in his absence, the
Assistant District Forester; (2) Sales Invoice; (3) Delivery Receipt; and (4) Tally
Sheets.[4] Such omission is punishable under Sec. 68 of Presidential Decree
(P.D.) No. 705 otherwise known as the Revised Forestry Code.[5] Thus, petitioner
Atty. Robles issued a temporary seizure order and seizure receipt for the narra
lumber and the six-wheeler truck.[6]
On January 20, 1989, petitioner Fulgencio S. Factoran, then Secretary of
Environment and Natural Resources (hereinafter referred to as petitioner
Secretary) issued an order for the confiscation of the narra lumber and the six-
wheeler truck.[7]
Private respondents neither asked for reconsideration of nor appealed, the
said order to the Office of the President. Consequently, the confiscated narra
lumber and six-wheeler truck were forfeited in favor of the government. They
were subsequently advertised to be sold at public auction on March 20, 1989. [8]
On March 17, 1989, private respondents filed a complaint with prayer for the
issuance of writs of replevin and preliminary injunction and/or temporary
restraining order for the recovery of the confiscated lumber and six-wheeler truck,
and to enjoin the planned auction sale of the subject narra lumber,
respectively.[9] Said complaint was docketed as Civil Case No. Q-89-2045 and
raffled to Branch 80 of the RTC of Quezon City.
On the same day, the trial court issued an Order directing petitioners to
desist from proceeding with the planned auction sale and setting the hearing for
the issuance of the writ of preliminary injunction on March 27, 1989.[10]
On March 20, 1989, the scheduled date of the auction sale, private
respondents filed an Ex-Parte Motion for Release and Return of Goods and
55

Documents (Replevin) supported by an Affidavit for Issuance of Writ of Replevin
and Preliminary Injunction and a Replevin Bond in the amount of
P180,000.00.[11] The trial court granted the writ of replevin on the same day and
directed the petitioners to deliver the xxx [n]arra lumber, original documents and
truck with plate no. NJT 881 to the custody of the plaintiffs and/or their
representative x x x.[12]
On March 22, 1989, the trial court issued a writ of seizure. However,
petitioners refused to comply therewith.[13] David G. Brodett, Sheriff of Branch 80
of the RTC of Quezon City (hereinafter referred to as the Sheriff) reported that
petitioners prevented him from removing the subject properties from the DENR
Compound and transferring them to the Mobil Unit Compound of the Quezon City
Police Force.To avoid any unwarranted confrontation between them, he just
agreed to a constructive possession of the properties in question.[14] In the
afternoon of the same day, petitioners filed a Manifestation stating their intention
to file a counterbond under Rule 60 of the Rules of Court to stay the execution of
the writ of seizure and to post a cash bond in the amount of P180,000.00. But the
trial court did not oblige petitioners for they failed to serve a copy of the
Manifestation on private respondents. Petitioners then immediately made the
required service and tendered the cash counterbond in the amount of
P180,000.00, but it was refused, petitioners Manifestation having already been
set for hearing on March 30, 1989. [15]
On March 27, 1989, petitioners made another attempt to post a counterbond
which was, however, denied for the same reason. [16]
On the same day, private respondents filed a motion to declare petitioners in
contempt for disobeying the writ of seizure.[17] The trial court gave petitioners
twenty-four (24) hours to answer the motion. Hearing thereon was scheduled on
March 30, 1989.
However, on March 29, 1989, petitioners filed with the Court of Appeals a
Petition for Certiorari, Prohibition and/or Mandamus to annul the Orders of the
trial court dated March 20, 1989 and March 27, 1989.[18]
On March 30, 1989, the Court of Appeals granted petitioners temporary relief
in the form of a temporary restraining order (TRO).
On September 11, 1989, the Court of Appeals converted the TRO into a writ
of preliminary injunction upon filing by petitioners of a bond in the amount of
P180,000.00.[19]
However, on March 30, 1990, the Court of Appeals lifted the writ of
preliminary injunction and dismissed the petition. It declared that as the complaint
CASES FOR RULE 58, 59, 60 AND 62
for replevin filed by private respondents complied with the requirements of an
affidavit and bond under Secs. 1 and 2 of Rule 60 of the Revised Rules of court,
issuance of the writ of replevin was mandatory.[20]
As for the contempt charges against petitioners, the Court of Appeals
believed the same were sufficiently based on a written charge by private
respondents and the report submitted by the Sheriff.[21]
On April 25, 1990, petitioners filed a motion for reconsideration of the
foregoing decision. However, that motion was denied by the Court of Appeals in
its Resolution dated May 18, 1990.[22]
Hence this petition.
On the one hand, petitioners contend, thus:
(1) Confiscated lumber cannot be subject of replevin.[23]
(2) Petitioners not compelled to criminally prosecute private respondents
but may opt only to confiscate lumber".[24]
(3) Private respondent charged criminally in court.[25] and
(4) Writ of Replevin issued in contravention of PD #605.[26]
On the other hand, private respondents argue that:
(1) The respondent Judge had jurisdiction to take cognizance of the
complaint for recovery of personal property and, therefore, had
jurisdiction to issue the necessary orders in connection therewith.[27]
(2) The issuance of the order for the delivery of personal property
upon application, affidavit and filing of replevin bond by the plaintiff is
mandatory and not discretionary, hence, no abuse of discretion can
be committed by the trial court in the issuance thereof.[28]
(3) The Order of March 20, 1989 was in accordance with Section 4, Rule
60 of the Rules of Court and is, therefore, valid.[29]
(4) The private respondents have not been proven to have violated
Section 68 of the Revised Forestry Code.[30]
(5) The petitioners do not have the authority to keep private respondents
property for an indefinite period, more so, to dispose of the same
without notice and hearing or without due process.[31]
56

(6) Contrary to the allegation of petitioners, no formal investigation was
conducted by the PIC with respect to the subject lumber in this
case.[32]
(7) The alleged Order dated January 20, 1989 of the petitioner Secretary
Fulgencio Factoran, Jr. of the DENR is not valid and does not make
the issuance of the order of replevin illegal.[33] and
(8) The subject properties were not in custody of the law and may be
replevied.[34]
At the outset we observe that herein respondents never appealed the
confiscation order of petitioner Secretary to the Office of the President as
provided for in Sec. 8 of P.D. No. 705 which reads:
All actions and decisions of the Director are subject to review, motu propio or
upon appeal of any person aggrieved thereby, by the Department Head whose
decision shall be final and executory after the lapse of thirty (30) days from
receipt by the aggrieved party of said decision unless appealed to the President x
x x. The decision of the Department Head may not be reviewed by the courts
except through a special civil action for certiorari and prohibition.
The doctrine of exhaustion of administrative remedies is basic. Courts, for
reasons of law, comity and convenience, should not entertain suits unless the
available administrative remedies have first been resorted to and the proper
authorities have been given an appropriate opportunity to act and correct their
alleged errors, if any, committed in the administrative forum.[35] As to the
application of this doctrine in cases involving violations of P.D. No. 705, our ruling
in Paat v. Court of Appeals, is apropos:
Moreover, it is important to point out that the enforcement of forestry laws, rules
and regulations and the protection, development and management of forest
lands fall within the primary and special responsibilities of the Department of
Environment and Natural Resources. By the very nature of its function, the
DENR should be given a free hand unperturbed by judicial intrusion to determine
a controversy which is well within its jurisdiction. The assumption by the trial
court, therefore, of the replevin suit filed by private respondents constitutes an
encroachment into the domain of the administrative agencys prerogative. The
doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the
authority to resolve a controversy the jurisdiction over which is initially lodged
with an administrative body of special competence. In Felipe Ismael, Jr. and Co.
CASES FOR RULE 58, 59, 60 AND 62
vs. Deputy Executive Secretary, which was reiterated in the recent case of
Concerned Officials of MWSS vs. Vasquez, this Court held:
Thus, while the administration grapples with the complex and multifarious
problems caused by unbridled exploitation of these resources, the judiciary will
stand clear. A long line of cases establish the basic rule that the courts will not
interfere in matters which are addressed to the sound discretion of government
agencies entrusted with the regulation of activities coming under the special
technical knowledge and training of such agencies.[36]
However, petitioners did not file a motion to dismiss based on the ground of
non-exhaustion of administrative remedies. Thus, it is deemed waived.[37]
Nonetheless, the petition is impressed with merit.
First. A writ of replevin does not just issue as a matter of course upon the
applicants filing of a bond and affidavit, as the Court of Appeals has wrongly put
it. The mere filing of an affidavit, sans allegations therein that satisfy the
requirements of Sec. 2, Rule 60 of the Revised Rules of Court, cannot justify the
issuance of a writ of replevin. Said provision reads:
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:
(a) That the plaintiff is the owner of the property claimed, particularly describing
it, or entitled to the possession thereof;
(b) That the property is wrongfully detained by the defendant, alleging the cause
of detention thereof 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 plaintiff,
or, if so seized, that it is exempt from such seizure; and
(d) The actual value of the property.
xxxxxxxxx.
Wrongful detention by the defendant of the properties sought in an action for
replevin must be satisfactorily established. If only a mechanistic averment thereof
is offered, the writ should not be issued.
57

In the case at bar, the subject narra lumber and six-wheeler truck were
confiscated by petitioner Secretary pursuant to Section 68-A of P.D. No. 705, as
amended by Executive Order (E.O.) No. 277, to wit:
SEC. 68-A. Administrative Authority of the Department Head or His Duly
Authorized Representative to Order Confiscation. - In all cases of violations of
this Code or other forest laws, rules and regulations, the Department Head or his
duly authorized representative, may order the confiscation of any forest products
illegally cut, gathered, removed, or possessed or abandoned, and all
conveyances used either by land, water, or air in the commission of the
offense and to dispose of the same in accordance with pertinent laws,
regulations or policies on the matter.[38]
As the petitioner Secretarys administrative authority to confiscate is clearly
provided by law, the taking of the subject properties is not wrongful and does not
warrant the issuance of a writ of replevin prayed for by private respondents.
Second. Issuance of the confiscation order by petitioner Secretary was a
valid exercise of his power under Sec. 68-A of P.D. No. 705. By virtue of said
order, the narra lumber and six-wheeler truck of private respondents were held in
custodia legis and hence, beyond the reach of replevin.
Property lawfully taken by virtue of legal process is deemed to be in custodia
legis.[39] When a thing is in official custody of a judicial or executive officer in
pursuance of his execution of a legal writ, replevin will not lie to recover
it.[40] Otherwise, there would be interference with the possession before the
function of law had been performed as to the process under which the property
was taken.[41] So basic is this doctrine that it found inclusion in the 1997
amendments introduced to the Rules of Civil Procedure. Thus, Sec. 2(c), Rule 60
of the 1997 Rules of Civil Procedure provides that:
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:
x x x x x x x x x;
(c) That the property has not been distrained or taken for a tax assessment or
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; x x x
CASES FOR RULE 58, 59, 60 AND 62
x x x x x x x x x.[42]
Third. Petitioner Secretarys authority to confiscate forest products under
Sec. 68-A of P.D. No. 705 is distinct from and independent of the confiscation of
forest products in a criminal action provided for in Section 68 of P.D. No.
705. Thus, in Paat, we held that:
x x x precisely because of the need to make forestry laws more responsive to
present situations and realities and in view of the urgency to conserve the
remaining resources of the country, that the government opted to add Section
68-A. This amendatory provision is an administrative remedy totally separate and
distinct from criminal proceedings. x x x. The preamble of EO 277 that added
Section 68-A to PD 705- is most revealing:
WHEREAS, there is an urgency to conserve the remaining forest resources of
the country for the benefit and welfare of the present and future generations of
Filipinos;
WHEREAS, our forest resources may be effectively conserved and protected
through the vigilant enforcement and implementation of our forestry laws, rules
and regulations;
WHEREAS, the implementation of our forestry laws suffers from technical
difficulties, due to certain inadequacies in the Penal provisions of the Revised
Forestry Code of the Philippines; and
WHEREAS, to overcome this [sic] difficulties, there is a need to penalize certain
acts more responsive to present situations and realities;
It is interesting to note that Section 68-A is a new provision authorizing the DENR
to confiscate, not only conveyances but forest products as well. On the other
hand, confiscation of forest products by the court in a criminal action has long
been provided for in Section 68. If as private respondents insist, the power of
confiscation cannot be exercised except only through the court under Section 68,
then Section 68-A would have no purpose at all. Simply put, Section 68-A would
not have provided any solution to the problem perceived in EO 277, x x x. [43]
Sec. 68-A was added precisely to supplant the inadequacies and
supplement criminal enforcement of forestry laws.
58

Fourth. Sec. 80 of P. D. No. 705 which requires delivery of the seized forest
products within six (6) hours from the time of the seizure to the appropriate
official designated by law to conduct preliminary investigations applies only to
criminal prosecutions provided for in Sec. 68, and not to administrative
confiscation provided for in Section 68-A.
Sec. 80 of P.D. No. 705 provides:
SEC. 80. Arrest; Institution of criminal actions. - A forest officer or employee of
the Bureau shall arrest even without a warrant any person who has committed or
is committing in his presence any of the offenses defined in this Chapter. He
shall also seize and confiscate, in favor of the Government, the tools and
equipment used in committing the offense, and the forest products cut, gathered
or taken by the offender in the process of committing the offense. The arresting
officer or employee shall thereafter deliver within six (6) hours from the time of
arrest and seizure, the offender and the confiscated forest products, tools and
equipment to, and file the proper complaint with, the appropriate official
designated by law to conduct preliminary investigations and file informations in
court.
x x x x x x x x x.
The title of Sec. 80 - Arrest; Institution of Criminal Actions - bespeaks this
intendment of the law. The fact, too, that Secs. 68 and 80 were co-existing prior
to the introduction of Sec. 68-A, proves that Sec. 80 applies to the criminal
prosecutions subject of Sec. 68 and not to the administrative confiscation subject
of Sec. 68-A. Sec. 68-A, therefore, should not be interpreted in relation to Sec.
80 as to require that criminal charges be filed with and seized forest products be
immediately delivered to, the fiscal in case of administrative confiscation, for this
renders nugatory the purpose sought to be achieved thereby. Statutes should
always be construed in the light of the object to be achieved and the evil or
mischief to be suppressed, and they should be given such interpretation as will
advance the object, suppress the mischief, and secure the benefits intended. [44]
Fifth. Nothing in the records supports private respondents allegation that
their right to due process was violated as no investigation was conducted prior to
the confiscation of their properties.
On the contrary, by private respondents own admission, private respondent
Sy who drove the six-wheeler truck was properly investigated by petitioner Atty.
Robles at the PIC/SAID Office of the DENR.Thereafter, private respondent Sy
and his witnesses were given full opportunity to explain the deficiencies in the
CASES FOR RULE 58, 59, 60 AND 62
documents.[45] Private respondents categorically stated that they made a
continuous and almost daily follow-up and plea x x x with the PIC for the return of
the truck and lumber x x x.[46] Finally in a letter dated December 30, 1989, private
respondent Lily Francisco Uy requested petitioner Secretary for immediate
resolution and release of the impounded narra sawn lumber.[47]
Undoubtedly, private respondents were afforded an opportunity to be heard
before the order of confiscation was issued. There was no formal or trial type
hearing but the same is not, in all instances, essential in administrative
proceedings. It is settled that due process is satisfied when the parties are
afforded fair and reasonable opportunity to explain their side of the controversy
or an opportunity to move for a reconsideration of the action or ruling complained
of.[48]
Moreover, respondents claim that the order of confiscation was antedated
and not the product of the investigation supposedly conducted by the PIC of the
DENR. However, they proffer no proof to support that allegation. On the other
hand, there is the legal presumption that official duty has been regularly
performed. The presumption of regularity in the performance of official duties is
even particularly strong with respect to administrative agencies like the DENR
which are vested with quasi-judicial powers in enforcing the laws affecting their
respective fields of activity, the proper regulation of which requires of them such
technical mastery of all relevant conditions obtaining in the nation.[49]
Finally. The writ of seizure and the writ of replevin were issued by the trial
court in grave abuse of its discretion. Thus, disobedience thereto cannot
constitute indirect contempt of court which presupposes that the court order
thereby violated was valid and legal. Without a lawful order having been issued,
no contempt of court could be committed.[50]
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the
Court of Appeals dated March 30, 1990 and its Resolution dated May 18, 1990 in
CA-G.R. SP No. 17194 are hereby SET ASIDE and REVERSED. Respondent
Presiding Judge Benigno T. Dayaw, of the Regional Trial Court of Quezon City,
is PERMANENTLY ENJOINED from enforcing the Orders dated March 20, 1989
and March 22, 1989 in Civil Case No. Q-89-2045, or if said orders have already
been enforced, the said respondent Judge is directed to render judgment of
forfeiture on the replevin bond filed by private respondents. Finally, the said
respondent Judge is PERMANENTLY ENJOINED from further acting on the
Motion for Contempt filed by private respondents against the petitioners.
Costs against private respondents.SO ORDERED.
59
 CASES FOR RULE 58, 59, 60 AND 62
ADVENT CAPITAL AND G.R. No. 183018

FINANCE CORPORATION,

Petitioner, Present: The Case

CARPIO, J.,
Chairperson,
This petition for review1 assails the 28 December 2007 Decision2 and 15 May
LEONARDO-DE 2008 Resolution3 of the Court of Appeals in CA-G.R. SP No. 96266. The Court of
CASTRO,* Appeals set aside the 24 March 2006 and 5 July 2006 Orders4 of the Regional
Trial Court of Makati City, Branch 147, and directed petitioner Advent Capital and
- versus - BRION, Finance Corporation to return the seized vehicle to respondent Roland Young.
The Court of Appeals denied the motion for reconsideration.
PEREZ, and
The Antecedents
SERENO, JJ.

ROLAND YOUNG, Promulgated:

The present controversy stemmed from a replevin suit instituted by petitioner
Respondent. August 3, 2011 Advent Capital and Finance Corporation (Advent) against respondent Roland
Young (Young) to recover the possession of a 1996 Mercedes Benz E230 with
x-----------------------------------------------------------------------------------------x plate number UMN-168, which is registered in Advents name.5

Prior to the replevin case, or on 16 July 2001, Advent filed for corporate
rehabilitation with the Regional Trial Court of Makati City, Branch 142
DECISION (rehabilitation court).6

On 27 August 2001, the rehabilitation court issued an Order (stay order) which
states that the enforcement of all claims whether for money or otherwise, and
CARPIO, J.: whether such enforcement is by court action or otherwise, against the petitioner
(Advent), its guarantors and sureties not solidarily liable with it, is stayed.7
60

On 5 November 2001, Young filed his Comment to the Petition for Rehabilitation,
claiming, among others, several employee benefits allegedly due him as Advents
former president and chief executive officer.
On 6 November 2002, the rehabilitation court approved the rehabilitation plan
submitted by Advent. Included in the inventory of Advents assets was the subject
car which remained in Youngs possession at the time.
Youngs obstinate refusal to return the subject car, after repeated demands,
prompted Advent to file the replevin case on 8 July 2003. The complaint,
docketed as Civil Case No. 03-776, was raffled to the Regional Trial Court of
Makati City, Branch 147 (trial court).
After Advents posting of P3,000,000 replevin bond, which was double the value
of the subject car at the time, through Stronghold Insurance Company,
Incorporated (Stronghold), the trial court issued a Writ of Seizure8 directing the
Sheriff to seize the subject car from Young. Upon receipt of the Writ of Seizure,
Young turned over the car to Advent,9 which delivered the same to the
rehabilitation receiver.10
Thereafter, Young filed an Answer alleging that as a former employee of Advent,
he had the option to purchase the subject car at book value pursuant to the
company car plan and to offset the value of the car with the proceeds of his
retirement pay and stock option plan. Young sought the (1) execution of a deed
of sale over the subject car; and (2) determination and payment of the net
amount due him as retirement benefits under the stock option plan.
CASES FOR RULE 58, 59, 60 AND 62
Advent filed a Reply with a motion to dismiss Youngs counterclaim, alleging that
the counterclaim did not arise from or has no logical relationship with the issue of
ownership of the subject car.
After issues have been joined, the parties entered into pre-trial on 2 April 2004,
which resulted in the issuance of a pre-trial order of even date reciting the facts
and the issues to be resolved during the trial.
On 28 April 2005, the trial court issued an Order dismissing the replevin case
without prejudice for Advents failure to prosecute. In the same order, the trial
court dismissed Youngs counterclaim against Advent for lack of jurisdiction. The
order pertinently reads:
It appears that as of July 28, 2003, subject motor vehicle has been turned
over to the plaintiff, thru its authorized representative,
and adknowledged by the parties respective counsels in separate
Manifestations filed. To date, no action had been taken by the plaintiff in
the further prosecution of this case. Accordingly, this case is ordered
dismissed without prejudice on the ground of failure to prosecute.
Anent plaintiffs Motion to Dismiss defendant Youngs counterclaim for
benefits under the retirement and stock purchase plan, the Court rules as
follows: The only issue in this case is who is entitled to the possession of
the subject motor vehicle. This issue may have a connection, but not a
necessary connection with defendants rights under the retirement plan
and stock purchase plan as to be considered a compulsory counterclaim.
xxx
61

Notably, defendants claim is basically one for benefits under and by virtue
of his employment with the plaintiff, and the subject vehicle is merely an
incident in that claim. Said claim is properly ventilated, as it is resolvable
by, the Rehabilitation Court which has jurisdiction and has acquired
jurisdiction, to the exclusion of this Court. Accordingly, plaintiffs
Motion To Dismiss defendant Youngs counterclaim is granted.11
On 10 June 2005, Young filed a motion for partial reconsideration of the
dismissal order with respect to his counterclaim.
On 8 July 2005, Young filed an omnibus motion, praying that Advent return the
subject car and pay him P1.2 million in damages (f)or the improper and irregular
seizure of the subject car, to be charged against the replevin bond posted by
Advent through Stronghold.
On 24 March 2006, the trial court issued an Order denying Youngs motion for
partial reconsideration, viz:
In the instant case, defendant, in his counterclaim anchored her [sic] right
of possession to the subject vehicle on his alleged right to purchase the
same under the company car plan. However, considering that the Court
has already declared that it no longer has jurisdiction to try defendants
counterclaim as it is now part of the rehabilitation proceedings before the
corporate court concerned, the assertions in the Motion for
Reconsiderations (sic) will no longer stand.
CASES FOR RULE 58, 59, 60 AND 62
On the other hand, the plaintiff did not file a Motion for Reconsideration of
the same Order, dismissing the complaint for failure to prosecute, within
the reglementary period. Hence, the same has attained finality.
Defendant alleged that the dismissal of the case resulted in the dissolution
of the writ. Nonetheless, the Court deems it proper to suspend the
resolution of the return of the subject vehicle. In this case, the subject
vehicle was turned over to plaintiff by virtue of a writ of replevin validly
issued, the latter having sufficiently shown that it is the absolute/registered
owner thereof. This was not denied by the defendant. Plaintiffs ownership
includes its right of possession. The case has been dismissed without a
decision on the merits having been rendered. Thus, to order the return of
the vehicle to one who is yet to prove his right of possession would not be
proper.
Accordingly, the Motion for Partial Reconsideration is denied.12
On 8 June 2006, Young filed a motion to resolve his omnibus motion.
In an Order dated 5 July 2006, the trial court denied the motion to resolve, to wit:
In the instant case, the Court suspended the resolution of the return of the
vehicle to defendant Roland Young. It should be noted that the writ
of replevin was validly issued in favor of the plaintiff and that it has
sufficiently established ownership over the subject vehicle which includes
its right to possess. On the other hand, the case (Olympia International vs.
Court of Appeals) cited by defendant finds no application to this case,
inasmuch as in the former the Court has not rendered judgment affirming
62

plaintiffs (Olympia) right of possession on the property seized. Moreover,
the Court, in the Order dated April 28, 2005, has already denied
defendants counterclaim upon which he based his right of possession on
the ground of lack of jurisdiction. Accordingly, the Court reiterates its
previous ruling that to order the return of the subject vehicle to defendant
Young, who is yet to prove his right of possession before the
Rehabilitation Court would not be proper.
WHEREFORE, there being no new and substantial arguments raised, the
Motion to Resolve is denied.13
Young filed a petition for certiorari and mandamus with the Court of Appeals
seeking to annul the trial courts Orders of 24 March 2006 and 5 July 2006.
The Court of Appeals Ruling
In his petition before the Court of Appeals, Young argued mainly that the trial
court committed grave abuse of discretion amounting to lack or excess of
jurisdiction in (1) not directing the return of the subject vehicle to him; (2) refusing
to hold a hearing to determine the damages to be recovered against
the replevin bond; and (3) dismissing his counterclaim.
The Court of Appeals ruled in favor of Young and annulled the assailed rulings of
the trial court. The Court of Appeals held:
CASES FOR RULE 58, 59, 60 AND 62
It is noteworthy that the case was dismissed by the court a quo for failure
of Advent to prosecute the same. Upon dismissal of the case, the writ of
seizure issued as an incident of the main action (for replevin)
became functus officio and should have been recalled or lifted. Since
there was no adjudication on the merits of the case, the issue of who
between Advent and petitioner has the better right to possess the subject
car was not determined. As such, the parties should be restored to their
status immediately before the institution of the case.
The Supreme Courts ruling in Olympia International, Inc. vs. Court
of Appeals (supra) squarely applies to the present controversy, to wit:
Indeed, logic and equity demand that the writ of replevin be cancelled.
Being provisional and ancillary in character, its existence and efficacy
depended on the outcome of the case. The case having been dismissed,
so must the writs existence and efficacy be dissolved. To let the writ stand
even after the dismissal of the case would be adjudging Olympia as the
prevailing party, when precisely, no decision on the merits had been
rendered. The case having been dismissed, it is as if no case was filed at
all and the parties must revert to their status before the litigation.
Indeed, as an eminent commentator on Remedial Law expounds:
63

The plaintiff who obtains possession of the personal property by a writ
of replevin does not acquire absolute title thereto, nor does the defendant
acquire such title by rebonding the property, as they only hold the property
subject to the final judgment in the action. (I Regalado, Remedial Law
Compendium, Eighth Revised Edition, p. 686)
Reversion of the parties to the status quo ante is the
consequence ex proprio vigore of the dismissal of the case. Thus,
in Laureano vs. Court of Appeals (324 SCRA 414), it was held:
(A)lthough the commencement of a civil action stops the running of the
statute of prescription or limitations, its dismissal or voluntary
abandonment by plaintiff leaves the parties in exactly the same position
as though no action had been commenced at all.
By the same token, return of the subject car to petitioner pending
rehabilitation of Advent does not constitute enforcement of claims against
it, much more adjudication on the merits of petitioners counterclaim. In
other words, an order for such return is not a violation of the stay order,
which was issued by the rehabilitation court on August 27, 2001. x x x
Corollarily, petitioners claim against the replevin bond has no connection
at all with the rehabilitation proceedings. The claim is not against the
insolvent debtor (Advent) but against bondsman, Stronghold. Such claim
is expressly authorized by Sec. 10, Rule 60, in relation to Sec. 20, Rule
57, id., x x x14
The dispositive portion of the Court of Appeals decision reads:
CASES FOR RULE 58, 59, 60 AND 62
WHEREFORE, premises considered, the instant petition is PARTLY
GRANTED. The orders of the Regional Trial Court dated March 24, 2006
and July 5, 2006 are ANNULLED and SET ASIDE in so far as they
suspended resolution of petitioners motion for, and/or disallowed, the
return of the subject car to petitioner. Accordingly, respondent Advent
Capital and Finance Corporation is directed to return the subject car to
petitioner.
The Regional Trial Court of Makati City (Branch 147) is directed to
conduct a hearing on, and determine, petitioners claim for damages
against the replevin bond posted by Stronghold Insurance Co.
SO ORDERED.15
Advent filed a motion for reconsideration, which was denied by the Court of
Appeals in a Resolution dated 15 May 2008.
The Issue
The main issue in this case is whether the Court of Appeals committed reversible
error in (1) directing the return of the seized car to Young; and (2) ordering the
trial court to set a hearing for the determination of damages against
the replevin bond.
The Courts Ruling
The petition is partially meritorious.
64

On returning the seized vehicle to Young
We agree with the Court of Appeals in directing the trial court to return the seized
car to Young since this is the necessary consequence of the dismissal of
the replevin case for failure to prosecute without prejudice. Upon the dismissal of
the replevin case for failure to prosecute, the writ of seizure, which is merely
ancillary in nature, became functus officio and should have been lifted. There
was no adjudication on the merits, which means that there was no determination
of the issue who has the better right to possess the subject car. Advent cannot
therefore retain possession of the subject car considering that it was not
adjudged as the prevailing party entitled to the remedy of replevin.
Contrary to Advents view, Olympia International Inc. v. Court of Appeals16 applies
to this case. The dismissal of the replevin case for failure to prosecute results in
the restoration of the parties status prior to litigation, as if no complaint was filed
at all. To let the writ of seizure stand after the dismissal of the complaint would be
adjudging Advent as the prevailing party, when precisely no decision on the
merits had been rendered. Accordingly, the parties must be reverted to
their status quo ante. Since Young possessed the subject car before the filing of
the replevin case, the same must be returned to him, as if no complaint was filed
at all.
Advents contention that returning the subject car to Young would constitute a
violation of the stay order issued by the rehabilitation court is untenable. As the
Court of Appeals correctly concluded, returning the seized vehicle to Young is
not an enforcement of a claim against Advent which must be suspended by virtue
of the stay order issued by the rehabilitation court pursuant to Section 6 of the
Interim Rules on Corporate Rehabilitation (Interim Rules).17 The issue in
the replevin case is who has better right to possession of the car, and it was
Advent that claimed a better right in filing the replevin case against Young.
In defense, Young claimed a better right to possession of the car arising from
Advents car plan to its executives, which he asserts entitles him to offset the
value of the car against the proceeds of his retirement pay and stock option plan.
CASES FOR RULE 58, 59, 60 AND 62
Young cannot collect a money claim against Advent within the contemplation of
the Interim Rules. The term claim has been construed to refer to debts or
demands of a pecuniary nature, or the assertion to have money paid by the
company under rehabilitation to its creditors.18 In the replevin case, Young
cannot demand that Advent pay him money because such payment, even if valid,
has been stayed by order of the rehabilitation court. However, in
the replevin case, Young can raise Advents car plan, coupled with his retirement
pay and stock option plan, as giving him a better right to possession of the car.
To repeat, Young is entitled to recover the subject car as a necessary
consequence of the dismissal of the replevin case for failure to prosecute without
prejudice.
On the damages against the replevin bond
Section 10, Rule 60 of the Rules of Court19 governs claims for damages on
account of improper or irregular seizure in replevin cases. It provides that
in replevin cases, as in receivership and injunction cases, the damages to be
awarded upon the bond shall be claimed, ascertained, and granted in
accordance with Section 20 of Rule 57 which reads:
Sec. 20. Claim for damages on account of improper, irregular or
excessive attachment. - An application for damages on account of
improper, irregular or excessive attachment must be filed before the trial
or before appeal is perfected or before the judgment becomes executory,
with due notice to the attaching obligee or his surety or sureties, setting
forth the facts showing his right to damages and the amount thereof. Such
damages may be awarded only after proper hearing and shall be included
in the judgment on the main case. e
If the judgment of the appellate court be favorable to the party against
whom the attachment was issued, he must claim damages sustained
during the pendency of the appeal by filing an application in the appellate
65

court with notice to the party in whose favor the attachment was issued or
his surety or sureties, before the judgment of the appellate court
becomes executory. The appellate court may allow the application to be
heard and decided by the trial court.
Nothing herein contained shall prevent the party against whom the
attachment was issued from recovering in the same action the damages
awarded to him from any property of the attaching obligeenot exempt from
execution should the bond or deposit given by the latter be insufficient or
fail to fully satisfy the award.
The above provision essentially allows the application to be filed at any time
before the judgment becomes executory.20 It should be filed in the same case
that is the main action,21 and with the court having jurisdiction over the case at
the time of the application.22
e remed
In this case, there was no application for damages against Stronghold resulting
from the issuance of the writ of seizure before the finality of the dismissal of the
complaint for failure to prosecute. It appears that Young filed his omnibus motion
claiming damages against Stronghold after the dismissal order issued by the trial
court on 28 April 2005 had attained finality. While Young filed a motion for partial
reconsideration on 10 June 2005, it only concerned the dismissal of his
counterclaim, without any claim for damages against the replevin bond. It was
only on 8 July 2005 that Young filed an omnibus motion seeking damages
against the replevin bond, after the dismissal order had already become final for
Advents non-appeal of such order. In fact, in his omnibus motion, Young
stressed the finality of the dismissal order.23 Thus, Young is barred from claiming
damages against the replevin bond.
CASES FOR RULE 58, 59, 60 AND 62
The dismissal of the case filed by the plaintiffs-appellees on July 11, 1959,
had become final and executory before the defendant-
appellee corporation filed its motion for judgment on the bond on
September 7, 1959. In the order of the trial court, dismissing the
complaint, there appears no pronouncement whatsoever against the
surety bond. The appellee-corporation failed to file its proper application
for damages prior to the termination of the case against it. It is barred to
do so now. The prevailing party, if such would be the proper term for
the appellee-corporation, having failed to file its application for damages
against the bond prior to the entry of final judgment, the bondsman-
appellant is relieved of further liability thereunder.
Since Young is time-barred from claiming damages against the replevin bond,
the dismissal order having attained finality after the application for damages, the
Court of Appeals erred in ordering the trial court to set a hearing for the
determination of damages against the replevin bond.
WHEREFORE, the Court GRANTS the petition IN PART. The Court SETS
ASIDE the portion in the assailed decision of the Court of Appeals in CA-G.R. SP
No. 96266 ordering the trial court to set a hearing for the determination of
damages against the replevin bond.
SO ORDERED.

In Jao v. Royal Financing Corporation,24 the Court held that defendant therein
was precluded from claiming damages against the surety bond since defendant
failed to file the application for damages before the termination of the case, thus:
66

G.R. No. 70145 November 13, 1986
MARCELO A. MESINA, petitioner,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT, HON. ARSENIO M.
GONONG, in his capacity as Judge of Regional Trial Court — Manila
(Branch VIII), JOSE GO, and ALBERT UY, respondents.
PARAS, J.:
This is an appeal by certiorari from the decision of the then Intermediate
Appellate Court (IAC for short), now the Court of Appeals (CA) in AC-G.R. S.P.
04710, dated Jan. 22, 1985, which dismissed the petition for certiorari and
prohibition filed by Marcelo A. Mesina against the trial court in Civil Case No. 84-
22515. Said case (an Interpleader) was filed by Associated Bank against Jose
Go and Marcelo A. Mesina regarding their conflicting claims over Associated
Bank Cashier's Check No. 011302 for P800,000.00, dated December 29, 1983.
Briefly, the facts and statement of the case are as follows:
Respondent Jose Go, on December 29, 1983, purchased from Associated Bank
Cashier's Check No. 011302 for P800,000.00. Unfortunately, Jose Go 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, who had then a visitor in the person of Alexander Lim. Uy had to
answer a phone call on a nearby telephone after which he proceeded to the
men's room. When he returned to his desk, his visitor Lim was already gone.
When Jose Go inquired for his cashier's check from Albert Uy, the check was not
in his folder and nowhere to be found. The latter advised Jose Go to go to the
bank to accomplish a "STOP PAYMENT" order, which suggestion Jose Go
immediately followed. He also executed an affidavit of loss. Albert Uy went to the
police to report the loss of the check, pointing to the person of Alexander Lim as
the one who could shed light on it.
The records of the police show that Associated Bank received the lost check for
clearing on December 31, 1983, coming from Prudential Bank, Escolta Branch.
The check was immediately dishonored by Associated Bank by sending it back to
Prudential Bank, with the words "Payment Stopped" stamped on it. However, the
CASES FOR RULE 58, 59, 60 AND 62
same was again returned to Associated Bank on January 4, 1984 and for the
second time it was dishonored. Several days later, respondent Associated Bank
received a letter, dated January 9, 1984, from a certain Atty. Lorenzo Navarro
demanding payment on the cashier's check in question, which was being held by
his client. He however refused to reveal the name of his client and threatened to
sue, if payment is not made. Respondent bank, in its letter, dated January 20,
1984, replied saying the check belonged to Jose Go who lost it in the bank and is
laying claim to it.
On February 1, 1984, police sent a letter to the Manager of the Prudential Bank,
Escolta Branch, requesting assistance in Identifying the person who tried to
encash the check but said bank refused saying that it had to protect its client's
interest and the Identity could only be revealed with the client's conformity.
Unsure of what to do on the matter, respondent Associated Bank on February 2,
1984 filed an action for Interpleader naming as respondent, Jose Go and one
John Doe, Atty. Navarro's then unnamed client. On even date, respondent bank
received summons and copy of the complaint for damages of a certain Marcelo
A. Mesina from the Regional Trial Court (RTC) of Caloocan City filed on January
23, 1984 bearing the number C-11139. Respondent bank moved to amend its
complaint, having been notified for the first time of the name of Atty. Navarro's
client and substituted Marcelo A. Mesina for John Doe. Simultaneously,
respondent bank, thru representative Albert Uy, informed Cpl. Gimao of the
Western Police District that the lost check of Jose Go is in the possession of
Marcelo Mesina, herein petitioner. When Cpl. Gimao went to Marcelo Mesina to
ask how he came to possess the check, he said it was paid to him by Alexander
Lim in a "certain transaction" but refused to elucidate further. 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 on February 24, 1984 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 inthe 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 filed on May 17, 1984 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
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sue. Respondent bank in the other civil case (CC-11139) for damages moved to
dismiss suit in view of the existence already of the Interpleader case.
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 itnerpleader. Petitioner
filed his motion for reconsideration which was denied by the trial court on
September 26, 1984. Upon motion for respondent Jose Go dated October 31,
1984, respondent judge issued an order on November 6, 1984, declaring
petitioner in default since his period to answer has already expirecd and set
the ex-parte presentation of respondent bank's evidence on November 7, 1984.
Petitioner Mesina filed a petition for certioari with preliminary injunction with IAC
to set aside 1) order of respondent court denying his omnibus Motion to Dismiss
2) order of 3) the order of default against him.
On January 22, 1985, IAC rendered its decision dimissing the petition for
certiorari. Petitioner Mesina filed his Motion for Reconsideration which was also
denied by the same court in its resolution dated February 18, 1985.
Meanwhile, on same date (February 18, 1985), the trial court in Civil Case #84-
22515 (Interpleader) rendered a decisio, the dispositive portion reading as
follows:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered ordering plaintiff Associate Bank to replace Cashier's
Check No. 011302 in favor of Jose Go or its cas equivalent with
legal rate of itnerest from date of complaint, and with costs of suit
against the latter.
SO ORDERED.
On March 29, 1985, the trial court in Civil Case No. C-11139, for
damages, issued an order, the pertinent portion of which states:
The records of this case show that on August 20, 1984
proceedings in this case was (were) ordered suspended because
the main issue in Civil Case No. 84-22515 and in this instant case
are the same which is: who between Marcelo Mesina and Jose Go
is entitled to payment of Associated Bank's Cashier's Check No.
CASES FOR RULE 58, 59, 60 AND 62
CC-011302? Said issue having been resolved already in Civil
casde No. 84-22515, really this instant case has become moot and
academic.
WHEREFORE, in view of the foregoing, the motion sholud be as it
is hereby granted and this case is ordered dismissed.
In view of the foregoing ruling no more action should be taken on
the "Motion For Reconsideration (of the order admitting the
Intervention)" dated June 21, 1984 as well as the Motion For
Reconsideration dated September 10, 1984.
SO ORDERED.
Petitioner now comes to Us, alleging that:
1. IAC erred in ruling that a cashier's check can be countermanded even in the
hands of a holder in due course.
2. IAC erred in countenancing the filing and maintenance of an interpleader suit
by a party who had earlier been sued on the same claim.
3. IAC erred in upholding the trial court's order declaring petitioner as in default
when there was no proper order for him to plead in the interpleader complaint.
4. IAC went beyond the scope of its certiorari jurisdiction by making findings of
facts in advance of trial.
Petitioner now interposes the following prayer:
1. Reverse the decision of the IAC, dated January 22, 1985 and set aside the
February 18, 1985 resolution denying the Motion for Reconsideration.
2. Annul the orders of respondent Judge of RTC Manila giving due course to the
interpleader suit and declaring petitioner in default.
Petitioner's allegations hold no water. Theories and examples advanced by
petitioner on causes and effects of a cashier's check such as 1) it cannot be
countermanded in the hands of a holder in due course and 2) a cashier's check is
a bill of exchange drawn by the bank against itself-are general principles which
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cannot be aptly applied to the case at bar, without considering other things.
Petitioner failed to substantiate his claim that he is a holder in due course and for
consideration or value as shown by the established facts of the case. Admittedly,
petitioner became the holder of the cashier's check as endorsed by Alexander
Lim who stole the check. He refused to say how and why it was passed to him.
He had therefore notice of the defect of his title over the check from the start. The
holder of a cashier's check who is not a holder in due course cannot enforce
such check against the issuing bank which dishonors the same. If a payee of a
cashier's check obtained it from the issuing bank by fraud, or if there is some
other reason why the payee is not entitled to collect the check, the respondent
bank would, of course, have the right to refuse payment of the check when
presented by the payee, since respondent bank was aware of the facts
surrounding the loss of the check in question. Moreover, there is no similarity in
the cases cited by petitioner since respondent bank did not issue the cashier's
check in payment of its obligation. Jose Go bought it from respondent bank for
purposes of transferring his funds from respondent bank to another bank near his
establishment realizing that carrying money in this form is safer than if it were in
cash. The check was Jose Go's property when it was misplaced or stolen, hence
he stopped its payment. At the outset, respondent bank knew it was Jose Go's
check and no one else since Go had not paid or indorsed it to anyone. The bank
was therefore liable to nobody on the check but Jose Go. The bank had no
intention to issue it to petitioner but only to buyer Jose Go. When payment on it
was therefore stopped, respondent bank was not the one who did it but Jose Go,
the owner of the check. Respondent bank could not be drawer and drawee for
clearly, Jose Go owns the money it represents and he is therefore the drawer
and the drawee in the same manner as if he has a current account and he issued
a check against it; and from the moment said cashier's check was lost and/or
stolen no one outside of Jose Go can be termed a holder in due course because
Jose Go had not indorsed it in due course. The check in question suffers from
the infirmity of not having been properly negotiated and for value by respondent
Jose Go who as already been said is the real owner of said instrument.
In his second assignment of error, petitioner stubbornly insists that there is no
showing of conflicting claims and interpleader is out of the question. There is
enough evidence to establish the contrary. 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
CASES FOR RULE 58, 59, 60 AND 62
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.
In his third assignment of error, 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. What else is
the purpose of a law suit but to litigate?
The records of the case show that respondent bank had to resort to details in
support of its action for Interpleader. Before it resorted to Interpleader,
respondent bank took an precautionary and necessary measures to bring out the
truth. On the other hand, petitioner concealed the circumstances known to him
and now that private respondent bank brought these circumstances out in court
(which eventually rendered its decision in the light of these facts), petitioner
charges it with "gratuitous excursions into these non-issues." Respondent IAC
cannot rule on whether respondent RTC committed an abuse of discretion or not,
69
 CASES FOR RULE 58, 59, 60 AND 62
without being apprised of the facts and reasons why respondent Associated
Bank instituted the Interpleader case. Both parties were given an opportunity to
present their sides. Petitioner chose to withhold substantial facts. Respondents
were not forbidden to present their side-this is the purpose of the Comment of
respondent to the petition. IAC decided the question by considering both the
facts submitted by petitioner and those given by respondents. IAC did not act
therefore beyond the scope of the remedy sought in the petition.

WHEREFORE, finding that the instant petition is merely dilatory, the same is
hereby denied and the assailed orders of the respondent court are hereby
AFFIRMED in toto.

SO ORDERED.

70