Rule 57 – Preliminary Attachment
1. Magaling v Ong
2. Davao Light and Power Co v CA
RECIT READY:
Davao light filed a complaint for recovery of sum of money
and damages against the Queensland and Adarna with ex
parte application for a writ of preliminary attachment and
was granted. Queensland and Adarna then filed a motion
to discharge the attachment for lack of jurisdiction. Trial
Court denied the motion but CA annulled such order and
the attachment was discharged. ISSUE/S: WON writ of
preliminary attachment may be issued ex parte before
acquisition of the jurisdiction of the respondents person –
YES HELD: A preliminary attachment is a purely statutory
remedy in which the law requires a strict construction of
the provisions granting it. Having NO principle, statutory
or jurisprudential prohibiting its issuance by any court
BEFORE ACQUISITION OF JURISDICTION OVER THE
PERSON OF THE DEFENDANT, Lack of jurisdiction as
grounds for discharge is of no moment. Hence a writ of
preliminary attachment may be issued ex parte upon
fulfillment of the pertinent requisites laid down by law and
the plaintiff may do so at any time before or after the
service of summons on the defendant.
FACTS: Davao Light filed a verified complaint for recovery
of a sum of money and damages against private
respondents (Queensland and Adarna). Said complaint
contained an ex parte application for a writ of preliminary
attachment. An order was issued granting the ex parte
application and fixing the attachment bond. After
submitting attachment bond, the writ of attachment was
issued. Summons, copy of the complaint, writ of
attachment, and a copy of the attachment bond were
served to respondents. The sheriff seized the latters
properties.
Respondents filed a motion to discharge the attachment
for lack of jurisdiction because at the time the order of
attachment was promulgated, the trial court had not yet
acquired jurisdiction over the cause and the respondents.
Davao Light filed an opposition. Trial Court DENIED the
motion to discharge. However, upon appeal of the
respondents CA annulled the order of Trial court and
declared null and void and the attachment discharged.
HENCE THIS PETITION.
ISSUE/S: WON writ of preliminary attachment may be
issued ex parte before acquisition of the jurisdiction of the
respondents person -- YES
HELD: A preliminary attachment is a purely statutory
remedy in which the law requires a strict construction of
the provisions granting it. Having NO principle, statutory
or jurisprudential prohibiting its issuance by any court
BEFORE ACQUISITION OF JURISDICTION OVER THE
PERSON OF THE DEFENDANT, Lack of jurisdiction as
grounds for discharge is of no moment. Hence a writ of
preliminary attachment may be issued ex parte upon
fulfillment of the pertinent requisites laid down by law and
the plaintiff may do so at any time before or after the
service of summons on the defendant.
The only pre-requisite is that the Court be satisfied, upon
consideration of "the affidavit of the applicant or of some
other person who personally knows the facts:
1. that a sufficient cause of action exists,
2. that the case is one of those mentioned in Sec. 1
Rule 57,
3. that there is no other sufficient security for the
claim sought to be enforced by the action, and
4. that the amount due to the applicant, or the value
of the property the possession of which he is entitled to
recover, is as much as the sum for which the order (of
attachment) is granted above all legal counterclaims."
If the court be so satisfied, the "order of attachment shall
be granted," and the writ shall issue upon the applicant's
posting of a bond executed to the adverse party in an
amount to be fixed by the judge, not exceeding the
plaintiff's claim, conditioned that the latter will pay all the
costs which may be adjudged to the adverse party and all
damages which he may sustain by reason of the
attachment, if the court shall finally adjudge that the
applicant was not entitled thereto."
In the previous case Mindanao Savings & Loan Association,
Inc. v. CA (1989) the court held that no hearing is required
on an application for preliminary attachment, with notice
to the defendant, for the reason that this “ would defeat the
objective of the remedy since the time which a hearing
would take could be enough to enable the defendant to
abscond or dispose of his property before the writ of
attachment issues. In effect it would serve as a warning to
the absconding debtors-defendants.
There are 2 ways of discharging an attachment:
1. Posting of a counterbond
a. Speedier way of discharge
b. The submission of a counterbond is an efficacious
mode of lifting an attachment already enforced against
property, or even of preventing its enforcement altogether.
When property has already been seized under attachment,
the attachment may be discharged upon counterbond in
accordance with Section 12 of Rule 57. But even before
actual levy on property, seizure under attachment may be
prevented also upon counterbond. The defendant need not
wait until his property is seized before seeking the
discharge of the attachment by a counterbond. This is
made possible by Section 5 of Rule 57.
2. Showing of its improper or irregular issuance -
Aside from the filing of a counterbond, a preliminary
attachment may also be lifted or discharged on the ground
that it has been irregularly or improperly issued, in
accordance with Section 13 of Rule 57. Like the first, this
second mode of lifting an attachment may be resorted to
even before any property has beer levied on. Indeed, it
may be availed of after property has been released from a
levy on attachment, as is made clear by said Section 13.
1

In this case, the respondent used the second way
when it filed for a motion to discharge for lack of
jurisdiction. As discussed in the case of Mindanao Savings
& Loans Assoc. Inc. v. CA, “(W)hen the preliminary
attachment is issued upon a ground which is at the same
time the applicant's cause of action e.g., 'an action for
money or property embezzled or fraudulently misapplied
or converted to his own use by a public officer, or an
officer of a corporation, or an attorney, factor, broker,
agent, or clerk, in the course of his employment as such, or
by any other person in a fiduciary capacity, or for a willful
violation of duty.' (Sec. 1 [b], Rule 57), or 'an action against
a party who has been guilty of fraud in contracting the
debt or incurring the obligation upon which the action is
brought' (Sec. 1 [d], Rule 57), the defendant is not allowed
to file a motion to dissolve the attachment under Section
13 of Rule 57 by offering to show the falsity of the factual
averments in the plaintiff's application and affidavits on
which the writ was based — and consequently that the
writ based thereon had been improperly or irregularly
issued (SEE Benitez v. I.A.C., 154 SCRA 41) — the reason
being that the hearing on such a motion for dissolution of
the writ would be tantamount to a trial of the merits of the
action. In other words, the merits of the action would be
ventilated at a mere hearing of a motion, instead of at the
regular trial. Therefore, when the writ of attachment is of
this nature, the only way it can be dissolved is by a
counterbond (G.B. Inc. v. Sanchez, 98 Phil. 886)."
NOTE: Dissolution of preliminary attachment DOES NOT
DISCHARGE sureties on bond because bond is 'executed to
the adverse party, . . . conditioned that the . . . (applicant)
will pay all the costs which may be adjudged to the adverse
party and all damages which he may sustain by reason of
the attachment, if the court shall finally adjudge that the
applicant was not entitled thereto' (SEC. 4, Rule 57).
Hence, until that determination is made, as to the
applicant's entitlement to the attachment, his bond must
stand and cannot be withdrawn."
3. Olib v Pastoral
Facts: Corazon M. Navia sued the spouses Oscar and
Roberta Olib, petitioner herein, for dissolution of their
partnership and other reliefs, with a prayer for the
issuance of a writ of a preliminary attachment. it was
granted on November 10, 1983, resulting in the
attachment of six parcels of land belonging to the
petitioners, along with stocks of merchandise in their
bodega. The writ was amended on December 14, 1983, to
release the merchandise. Two years later, on May 16,
1985, the petitioners filed a motion to discharge the
preliminary attachment on the ground that the attachment
bond executed for one year from November 1983 had
already lapsed. On February 25,1986, Judge Miguel S.
Rallos of the Regional Trial Court of Agusan del Norte and
Butuan City rendered judgment for the petitioners and
sentenced the private respondent to pay them actual,
moral and exemplary damages, plus attorney's fees and
litigation expenses. On April 16, 1986, Navia perfected her
appeal from the challenged judgment, and the records of
the case were elevated to the Court of Appeals. Although
the trial court found in the text of the decision that the
private respondent was not entitled to the issuance of the
writ of preliminary attachment, no mention was made of
the said writ in the dispositive portion. As a result, the
annotation of the preliminary attachment on the
certificates/titles of the attached lands was maintained
and could not be canceled.
The petitioners moved for the discharge of the writ of
preliminary attachment by the respondent court on the
basis of the judgment in their favor. Navia filed an
opposition, contending that as she had perfected her
appeal to the Court of Appeals, the trial court no longer
had any jurisdiction over the case.
On August 24, 1987, Judge Edelwina C. Pastoral, who had
succeeded Judge Rallos denied the motion on the ground
invoked in the opposition and declared:
Settled is the rule that the trial court loses its jurisdiction
over the record and over the subject of the case once an
appeal in the case has been perfected. The exception to this
rule refers to the orders of the Court to protect and
preserve the rights of the parties which do not involve any
matter litigated by appeal (Section 9, Rule 41 of the Rules
of Court). The writ of preliminary attachment was earlier
granted as a security for the satisfaction of the judgment,
the latter being now the subject of the appeal. To grant
defendant's motion at this juncture is to disturb and not to
preserve the rights of the parties. It is the stand of this
Court that the status quo of the parties shall be maintained
for it cannot predetermine the posture which the appellate
court will adopt, either to affirm, modify or reverse the
questioned decision of this Court.
They argued that if the court a quo could issue a writ of
attachment after the appeal had been perfected, then it
could a fortiori discharge such a writ, especially where, as
in the case at bar, the movants were the prevailing parties.
The petitioners also contended that there was really no
more need for an order discharging the attachment as this
followed by operation of Rule 57, Section 19, of the Rules
of Court. Such discharge was the immediate and automatic
effect of any judgment in favor of the party whose property
had been attached.
The motion having been denied, the petitioners sought
reconsideration a second time, insisting that (a) the
attachment had been automatically discharged under Rule
57, Section 19; and (b) the attachment bond had already
lapsed for non-payment of the premiums. They were
rebuffed again. They then came before this Court,
contending that the respondent court committed grave
abuse of discretion in denying their motion.
Issue: W/N The attachment has been discharged?
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Held: No. Attachment is defined as a provisional remedy by
which the property of an adverse party is taken into legal
custody, either at the commencement of an action or at any
time thereafter as a security for the satisfaction of any
judgment that may be recovered by the plaintiff or any
proper party. It is an auxiliary remedy and cannot have an
independent existence apart from the main suit or claim
instituted by the plaintiff against the defendant. Being
merely ancillary to a principal proceeding, the attachment
must fail if the suit itself cannot be maintained as the
purpose of the writ can no longer be justified. The
consequence is that where the main action is appealed, the
attachment which may have been issued as an incident of
that action, is also considered appealed and so also
removed from the jurisdiction of the court a quo. The
attachment itself cannot be the subject of a separate case
independent of the principal action because the
attachment was only an incident of such action.
the order of attachment is considered discharged only
where the judgment has already become final and
executory and not when it is still on appeal. The obvious
reason is that, except in a few specified cases, execution
pending appeal is not allowed. Petitioners may only lift the
writ of preliminary attachment in the Court of Appeals, to
which that ancillary remedy is deemed elevated along with
the principal action.
4. Valmonte v CA
Facts: Petitioner Lourdes A. Valmonte is a foreign resident.
Petitioners Lourdes and Alfredo are husband and wife
both residents of U.S.A. Petitioner Alfredo D. Valmonte,
who is a member of the Philippine bar, however, practices
his profession in the Philippines, commuting for this
purpose between his residence in the state of Washington
and Manila, where he holds office at Ermita, Manila.
Private respondent Rosita Dimalanta, who is the sister of
petitioner filed an action for partition of real and property
and accounting of rentals against petitioners. She alleged
that, the plaintiff is of legal age, a widow and is at present a
resident of Missouri, U.S.A., while the defendants are
spouses but, for purposes of this complaint may be served
with summons at Gedisco Center, Unit 304, 1564 A. Mabini
St., Ermita, Manila where defendant Alfredo D. Valmonte as
defendant Lourdes Arreola Valmonte’s spouse holds office
and where he can be found. He husband was also her
counsel, who has a law office in the Philippines. The
summons were served on her husband.
Petitioner in a letter, referred private respondent’s counsel
to her husband as the party to whom all communications
intended for her should be sent. Service of summons was
then made upon petitioner Alfredo at his office in Manila.
Alfredo D. Valmonte accepted his summons, but not the
one for Lourdes, on the ground that he was not authorized
to accept the process on her behalf. Accordingly the
process server left without leaving a copy of the summons
and complaint for petitioner Lourdes A. Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his Answer
with Counterclaim. Petitioner Lourdes A. Valmonte,
however, did not file her Answer. For this reason private
respondent moved to declare her in default. Petitioner
Alfredo D. Valmonte entered a special appearance in behalf
of his wife and opposed the private respondent’s motion.
RTC denied the MR of respondents. CA declared petitioner
Lourdes in default. Said decision was received by Alfredo
hence this petition.
Issue: Whether or not petitioner Lourdes A. Valmonte was
validly served with summons.
Held: NO. There was no valid service of summons on
Lourdes. The action herein is in the nature of an action
quasi in rem. Such an action is essentially for the purpose
of affecting the defendant’s interest in a specific property
and not to render a judgment against him. As petitioner
Lourdes A. Valmonte is a nonresident who is not found in
the Philippines, service of summons on her must be in
accordance with Rule 14, § 17. Such service, to be effective
outside the Philippines, must be made either:
(1) by personal service;
(2) by publication in a newspaper of general
circulation in such places and for such time as the court
may order, in which case a copy of the summons and order
of the court should be sent by registered mail to the last
known address of the defendant; or
(3) in any other manner which the court may deem
sufficient.
In the case at bar, the service of summons upon petitioner
Lourdes A. Valmonte was not done by means of any of the
first two modes. This mode of service, like the first two,
must be made outside the Philippines, such as through the
Philippine Embassy in the foreign country where the
defendant resides. The service of summons on petitioner
Alfredo D. Valmonte was not made upon the order of the
court as required by Rule 14, § 17 and certainly was not a
mode deemed sufficient by the court which in fact refused
to consider the service to be valid and on that basis declare
petitioner Lourdes A. Valmonte in default for her failure to
file an answer.
Secondly, the service in the attempted manner on
petitioner was not made upon prior leave of the trial court
as required also in Rule 14, § 17. As provided in § 19, such
leave must be applied for by motion in writing, supported
by affidavit of the plaintiff or some person on his behalf
and setting forth the grounds for the application.
Finally, because there was no order granting such leave,
petitioner Lourdes was not given ample time to file her
Answer which, according to the rules, shall be not less than
sixty (60) days after notice.
Rule 58 (Preliminary Injunction)
5. Strategic Alliance Dev Corp v Star Infrastructure Dev
Corp
3
Petitioner Strategic Alliance Development Corporation
(STRADEC) is a domestic corporation primarily engaged in
the business of a development with principal place of
business at Bayambang, Pangasinan t. Along with five
individuals4 and three other corporations,5 STRADEC
incorporated respondent Star Infrastructure Development
Corporation (SIDC) for the purpose of engaging in the
general construction business with the original principal
place of business at Pasig City, then moved to Poblacion
Sur, Bayambang, Pangasinan7 and, later, to Lipa, Batangas.
STRADEC fully paid and owned 49% of the 5,000,000
shares of stock into which SIDC’s authorized capital stock.
In 2004, respondents Yujuico and Sumbilla, in
their respective capacities as then President and Treasurer
of STRADEC, executed a Promissory Note for and in
consideration of a loan in the sum ofP10,000,000.00
ostensibly extended in favor of said corporation by
respondent Robert L. Wong, one of the incorporators of
SIDC.9 As security for the payment of the principal as well
as the stipulated interests thereon, a pledge constituted
over STRADEC’s entire shareholdings in SIDC was
executed by respondent Yujuico on 1 April 2005.10
In view of STRADEC’s repeated default on its
obligations,11 however, the shares thus pledged were sold
by way of the 26 April 2005 notarial sale conducted in
Makati City by respondent Raymond M. Caraos. Having
tendered the sole bid of P11,800,000.00,12 respondent
Wong was issued the corresponding certificates of stocks
by respondent Bede S. Tabalingcos, SIDC’s Corporate
Secretary for the years 2004 and 2005, after the transfer
was recorded in the corporation’s stock and transfer
book.13
In 2006,Quiambao, in his capacity as President
and Chairman of the Board of Directors of STRADEC,
commenced the instant suit with the filing of the petition
before a commercial court in Batangas City alleging four
causes of action, to wit: that respondents Yujuico and
Sumbilla were not authorized to enter into any loan
agreement with respondent Wong, that the auction sale
was held in a wrong venue, that the transfer of STRADED
shares in SIDC was made fraudulently and that the 30 July
2005 annual stockholders meeting and 20 July 2006
special stockholder’s meeting of SIDC where the change of
principal place of business was approved is invalid
pending determination of the legitimate Board of Directors
for STRADEC.
Issue: Whether or not the cause of action of petitioners is
an intra-corporate dispute.
Ruling:
Meritorious.
An intra-corporate dispute is understood as a suit
arising from intra-corporate relations or between or
among stockholders or between any or all of them and the
corporation. Applying what has come to be known as the
relationship test, it has been held that the types of actions
embraced by the foregoing definition include the following
suits: (a) between the corporation, partnership or
association and the public; (b) between the corporation,
partnership or association and its stockholders, partners,
members, or officers; (c) between the corporation,
partnership or association and the State insofar as its
franchise, permit or license to operate is concerned; and,
(d) among the stockholders, partners or associates
themselves. As the definition is broad enough to cover all
kinds of controversies between stockholders and
corporations, the traditional interpretation was to the
effect that the relationship test brooked no distinction,
qualification or any exemption whatsoever.
However, the unqualified application of the
relationship test has been modified on the ground that the
same effectively divests regular courts of jurisdiction over
cases for the sole reason that the suit is between the
corporation and/or its corporators. It was held that the
better policy in determining which body has jurisdiction
over a case would be to consider not only the status or
relationship of the parties but also the nature of the
question that is the subject of their controversy.33 Under
the nature of the controversy test, the dispute must not
only be rooted in the existence of an intra-corporate
relationship, but must also refer to the enforcement of the
parties' correlative rights and obligations under the
Corporation Code as well as the internal and intra-
corporate regulatory rules of the corporation.34 The
combined application of the relationship test and the
nature of the controversy test has, consequently, become
the norm in determining whether a case is an intra-
corporate controversy or is purely civil in character.
In the case at bench, STRADEC’s first and second
causes of action seek the nullification of the loan and
pledge over its SIDC shareholding contracted by
respondents Yujuico, Sumbilla and Wong as well the
avoidance of the notarial sale of said shares conducted by
respondent Caraos.
Applying the relationship test, we find that
STRADEC’s first and second causes of action qualify as
intra-corporate disputes since said corporation and
respondent Wong are incorporators and/or stockholders
of SIDC. Having acquired STRADEC’s shares thru the
impugned notarial sale conducted by respondent Caraos,
respondent Wong appears to have further transferred said
shares in favor of CTCII, a corporation he allegedly formed
with members of his own family. By reason of said
transfer, CTCII became a stockholder of SIDC and was, in
fact, alleged to have been recognized as such by the latter
and its corporate officers.
Considering that they fundamentally relate to
STRADEC’s status as a stockholder and the alleged
fraudulent divestment of its stockholding in SIDC, the same
causes of action also qualify as intra-corporate disputes
under the nature of the controversy test. As part of the
fraud which attended the transfer of its shares, STRADEC
distinctly averred, among other matters, that respondents
Yujuico and Sumbilla had no authority to contract a loan
with respondent Wong; that the pledge executed by
respondent Yujuico was simulated since it did not receive
the proceeds of the loan for which its shares in SIDC were
set up as security; that irregularities attended the notarial
sale conducted by respondent Caraos who sold said shares
to respondent Wong; that the latter unlawfully transferred
the same shares in favor of CTCII; and, that SIDC and its
4
officers recognized and validated said transfers despite
being alerted about their defects. Ultimately, the foregoing
circumstances were alleged to have combined to rid
STRADEC of its shares in SIDC and its right as a
stockholder to participate in the latter’s corporate affairs.
Moreover, pursuant to Section 5.2 of Republic Act
No. 8799,41 otherwise known as the Securities Regulation
Code, the jurisdiction of the SEC over all cases enumerated
under Section 5 of Presidential Decree No. 902-A has been
transferred to RTCs designated by this Court as SCCs42
pursuant to A.M. No. 00-11-03-SC promulgated on 21
November 2000.
On the issue of venue and jurisdiction, unlike the
SEC which is a tribunal of limited jurisdiction, special
commercial courts (SCC) like the RTC are still competent
to tackle civil law issues incidental to intra-corporate
disputes filed before them.
Section 5.2 of R.A. No. 8799 directs merely the
Supreme Court's designation of RTC branches that shall
exercise jurisdiction over intra-corporate disputes.
Nothing in the language of the law suggests the diminution
of jurisdiction of those RTCs to be designated as SCCs. The
assignment of intra-corporate disputes to SCCs is only for
the purpose of streamlining the workload of the RTCs so
that certain branches thereof like the SCCs can focus only
on a particular subject matter.
The RTC exercising jurisdiction over an intra-
corporate dispute can be likened to an RTC exercising its
probate jurisdiction or sitting as a special agrarian court.
The designation of the SCCs as such has not in any way
limited their jurisdiction to hear and decide cases of all
nature, whether civil, criminal or special proceedings.
At any rate, it cannot be gainsaid that STRADEC
correctly commenced its petition before the RTC
exercising jurisdiction over SIDC’s principal place of
business which was alleged to have been transferred from
Bayambang, Pangasinan to Lipa, Batangas.51 It matters
little that STRADEC, as pointed out by respondents, also
questions the validity of the 30 July 2005 SIDC
stockholders’ annual meeting where the aforesaid change
in the address of its principal place of business was
allegedly approved. Said matter should be properly
threshed out in the proceedings before the RTC alongside
such issues as the validity of the transfers of STRADEC’s
shares to respondents Wong and CTCII, the propriety of
the recording of said transfers in SIDC’s books, STRADEC’s
status as a stockholder of SIDC, the legality of the 20 July
2006 SIDC stockholders’ special meeting or, for that
matter, Cezar T. Quiambao’s authority to represent
STRADEC in the case at bench.1avvphi1
On the principle that a corporation is a legal entity with a
personality separate and distinct from its individual
stockholders or members and from that of its officers who
manage and run its affairs,56 we find that the other
pending actions have little or no bearing to the issues set
forth in STRADEC’spetition which, at bottom, involve the
transfer of its own shareholding in SIDC and its status and
rights as such stockholder
6. Australian Professional Realty v Municipality of
Padre Garcia
7. Allgemeine Bau Chemie Phil v Metrobank
8. Cabili v Balindog
Rule 59 (Receivership)
9. Normandy v Duque
RECIT READY:
Normandy was appointed receiver of the WARVETS and
went to Japan by the court’s authority to check on the
reported under valuation of goods shipped to WARVETS
and the preparation of the shipment, which had not yet
been committed. Expenses for which Normandy was
ordered reimbursed by the lower court. Normandy filed a
motion to fix his and his co-receiver’s compensation which
was denied by the lower court. While the motion for
reconsideration was pending, Normandy filed a motion
resigning as a receiver and for the court to fix his fees and
compensation as a receiver which was granted by the
court. Subsequently Atty. Magno filed a motion for the
payment of attorney’s fees and Normandy filed for
payment and cancellation and reimbursement of receiver’s
bond. Both motions were granted but the attorney’s fees
was reduced from 10k to 1k. Barely 2 months after such
order, petitioner filed another motion for reimbursement
for the clerk that he hired to help him with the voluminous
paper and legal work he had attended to as a receiver,
which the court denied. ISSUE/S: WON petitioner is
entitled is additional reimbursement or compensation. –
NO. HELD: Clerical services employed by the receiver must
be wit the leave of court for reimbursement to be proper.
It is inherent in the office of a receiver not only that he
should act at all times with the diligence and prudence of a
good father of a family but should also not incur any
obligation or expenditure without leave of court to
supervise the receiver and see to it that he adheres to the
above standard of his trust and limits the expense of the
receivership to the minimum. Whatever amount he seeks
in addition to what had already been reimbursed would be
improper. He is estopped from claiming any further
amount for the alleged clerical services without prior to
approval or authority of this court.
FACTS: Normandy was appointed receiver of the
WARVETS “to do and perform such acts respecting the
property, assets and transaction” of the organization “as
the court may authorize.” Upon filing a bond of 50k he
started the discharge of his functions. He went to Japan by
the court’s authority for the purpose of checking on the
reported under valuation of goods shipped to WARVET
and the preparation of the shipment which had not yet
been committed. Expenses for which Normandy was
ordered reimbursed by the lower court.
For 3 years as receiver, Normandy did not receive any fee
for compensation from WARVETS. So he filed a motion to
fix his and his co-receiver’s (Marcario Ofilada)
compensation. He further prayed for atorney’s fees and
stenographer’s fees as the court may allow. Lower court
issued an “Omnibus Order” denying the motion of the
appellant. Petitioner filed a motion for reconsideration but
5
while this was pending, he filed another motion resigning
from his post as receiver and praying that the lower court
accept it and at the same time fix the amount of his fees
and compensation. Such motion was granted and was
discharged as receiver and his compensation was fixed.
Subsequently, Atty. Magno filed a motion for payment of
attorney’s fees to him for his alleged services as legal
counsel for the appellant when he was a receiver.
Normandy filed another motion for the payment and
cancellation of his receiver’s bond and for the
reimbursement to him of the sum he paid out of his
personal funds as premium for said bond. Lower court
granted the compensation to Atty. Magno in a reduced
amount and the reimbursement of the whole sum to
Normandy.
Barely 2 months after, Normandy filed another motion for
reimbursement for the compensation of a clerk he
employed when he was still a receiver in view of the
voluminous paper and legal work it was necessary for him
to engage the service of a types-stenographer who doubled
as messenger, filing clerk, utility clerk and records clerk.
Lower court denied the last motion on the ground that
whatever amount he not seeks in addition to the previous
orders are improper and that he is no estopped from
claiming any further as compensation for alleged clerical
services.
ISSUE/S: WON petitioner is entitled is additional
reimbursement or compensation. – NO.
HELD: A receiver is a representative of the Court
appointed for the purpose of preserving and
conserving the property in litigation and prevent its
possible destruction or dissipation, if it were left in the
possession of any of the parties. The receiver is not the
representative of any of the parties but of all of them to the
end that their interests may be equally protected with the
least possible inconvenience and expense. It is inherent in
the office of a receiver not only that he should act at all
times with the diligence and prudence of a good father of a
family but should also not incur any obligation or
expenditure without leave of court to supervise the
receiver and see to it that he adheres to the above
standard of his trust and limits the expense of the
receivership to the minimum. It is generally the
receivership court that is in a better position to determine
whether a particular expenditure is reasonable and
justified or not and its ruling therein may not be disturbed
by this Court.
The receivership court's reasons for withholding approval
of the reimbursement in question are precisely because
"whatever amount he (the receiver now seeks in addition
thereto (P10,000.00) would be improper. Moreover, he is
now estopped from claiming any further amount as
compensation for alleged clerical services employed by
him as such receiver without prior approval or authority of
this Court." We find these reasons to be cogent enough in
the premises, especially because appellant's alleged
employment of a clerk was made without prior leave of
court. In these circumstances, it cannot be said that the
court a quo abused its discretion, much less gravely.
Rule 60(Replevin)
10. BA Finance Corp v CA
Facts: The spouses Reynaldo and Florencia Manahan
executed, on 15 May 1980, a promissory note binding
themselves to pay Carmasters, Inc., the amount of
P83,080.00 in thirty-six monthly installments commencing
01 July 1980. To secure payment, the Manahan spouses
executed a deed of chattel mortgage over a motor vehicle,
a Ford Cortina 1.6 GL. Carmasters later assigned the
promissory note and the chattel mortgage to petitioner BA
Finance Corporation with the conformity of the Manahans.
When the latter failed to pay the due installments,
petitioner sent demand letters. The demands not having
been heeded, petitioner, on 02 October 1987, filed a
complaint for replevin with damages against the spouses,
as well as against a John Doe, praying for the recovery of
the vehicle with an alternative prayer for the payment of a
sum of money should the vehicle not be returned. Upon
petitioner's motion and the filing of a bond in the amount
of P169,161.00, the lower court issued a writ of replevin.
The court, however, cautioned petitioner that should
summons be not served on the defendants within thirty
(30) days from the writ's issuance, the case would be
dismissed for failure to prosecute.
The service of summons upon the spouses Manahan was
caused to be served by petitioner. The original of the
summons had the name and the signature of private
respondent Roberto M. Reyes indicating that he received,
on 14 October 1987, a copy of the summons and the
complaint. petitioner, through its Legal Assistant, Danilo E.
Solano, issued a certification to the effect that it had
received from Orson R. Santiago, the deputy sheriff of the
Regional Trial Court of Manila, Branch 20, the Ford Cortina
seized from private respondent Roberto M. Reyes, the John
Doe referred to in the complaint, in Sorsogon, Sorsogon.
On 20 October 1987, the lower court came out with an
order of seizure.
Alleging possession in good faith, private respondent filed,
on 26 October 1987, a motion for an extension of time
within which to file his answer and/or a motion for
intervention. The court granted the motion.
Petitioner then filed a notice of dismissal of the case it also
sought in another motion the withdrawal of the replevin
bond. The court merely noted the notice of dismissal and
denied the motion to withdraw the replevin bond
considering that the writ of replevin had been
implemented. Private respondent filed a motion praying
that petitioner be directed to comply with the court order
requiring petitioner to return the vehicle tom him. In turn
petitioner filed a motion for reconsideration contending
that: (a) the dismissal of the case was tantamount to
adjudication on the merits that thereby deprived it with
the remedy to enforce the promissory note, the chattel
mortgage and the deed of assignment, under Section 3,
Rule 117, of the Rules of Court; (b) the order to return the
vehicle to private respondent was a departure from
jurisprudence recognizing the right of the mortgagor to
foreclose the property to respond to the unpaid obligation
secured by the chattel mortgage, and (c) there were no
6
legal and factual bases for the court's view that the filing of
the replevin case was "characterized (by) evil practices."
The court granted petitioner's motion for reconsideration
and accordingly recalled the order directing the return of
the vehicle to private respondent. Petitioner filed a motion
to declare private respondent in default. The court granted
the motion on that same day and declared private
respondent "in default for his failure to file the x x x
answer within the reglementary period." The court
dismissed the case against private respondent for failure of
petitioner to show any legal basis for said respondent's
liability.
In its appeal to the Court of Appeals, petitioner has
asserted that a suit for replevin aimed at the foreclosure of
the chattel is an action quasi in rem which does not
necessitate the presence of the principal obligors as long
as the court does not render any personal judgment
against them The appellate court, subsequently, denied
petitioner's motion for reconsideration. In the instant
appeal, petitioner insists that a mortgagee can maintain an
action for replevin against any possessor of the object of a
chattel mortgage even if the latter were not a party to the
mortgage.
Issues: W/N a mortgagee can maintain an action for
replevin against any possessor of the object of a chattel
mortgage evne if the latter were not a party to the
mortgage.
Held: Replevin, broadly understood, is both a form of
principal remedy and of a provisional relief. It may refer
either to the action itself, i.e., to regain the possession of
personal chattels being wrongfully detained from the
plaintiff by another, or to the provisional remedy that
would allow the plaintiff to retain the thing during the
pendency of the action and hold it pendente lite. The action
is primarily possessory in nature and generally determines
nothing more than the right of possession. Replevin is so
usually described as a mixed action, being partly in rem
and partly in personam-in rem insofar as the recovery of
specific property is concerned, and in personam as regards
to damages involved. As an "action in rem," the gist of the
replevin action is the right of the plaintiff to obtain
possession of specific personal property by reason of his
being the owner or of his having a special interest therein.
Consequently, the person in possession of the property
sought to be replevied is ordinarily the proper and only
necessary party defendant, and the plaintiff is not required
to so join as defendants other persons claiming a right on
the property but not in possession thereof. Rule 60 of the
Rules of Court allows an application for the immediate
possession of the property but the plaintiff must show that
he has a good legal basis, i.e., a clear title thereto, for
seeking such interim possession.
In effect then, the mortgagee, upon the mortgagor's
default, is constituted an attorney-in-fact of the mortgagor
enabling such mortgagee to act for and in behalf of the
owner. Accordingly, that the defendant is not privy to the
chattel mortgage should be inconsequential. By the fact
that the object of replevin is traced to his possession, one
properly can be a defendant in an action for replevin. It is
here assumed that the plaintiff's right to possess the thing
is not or cannot be disputed.
A chattel mortgagee, unlike a pledgee, need not be in, nor
entitled to, the possession of the property unless and until
the mortgagor defaults and the mortgagee thereupon
seeks to foreclose thereon. Since the mortgagee's right of
possession is conditioned upon the actual fact of default
which itself may be controverted, the inclusion of other
parties, like the debtor or the mortgagor himself, may be
required in order to allow a full and conclusive
determination of the case. When the mortgagee seeks a
replevin in order to effect the eventual foreclosure of the
mortgage, it is not only the existence of, but also the
mortgagor's default on, the chattel mortgage that, among
other things, can properly uphold the right to replevy the
property. The burden to establish a valid justification for
that action lies with the plaintiff. An adverse possessor,
who is not the mortgagor, cannot just be deprived of his
possession, let alone be bound by the terms of the chattel
mortgage contract, simply because the mortgagee brings
up an action for replevin.
11. Chiao Liong Tan v CA
Facts: Chiao Long Tan claims to be the owner of a 1976
Isuzu Elf van. As owner thereof, petitioner says he has
been in possession, enjoyment, and utilization of the van
until his older brother, Tan Ban Yong (respondent),
unlawfully took it away from him.
Petitioner:
That the van is registered under his name.
He claims to have bought the vehicle from isuzu
Balintawak;
That he sent his brother to pay for the van and the receipt
was issued in his name because it was his money that was
used to pay for the vehicle;
That he allowed his brother to use the vehicle because the
latter was working for the company;
And that his brother later refused to return the vehicle and
appropriated the same for himself.
Private respondent on the other hand testifies:
1. CLT Industries is the family business and it was under
the name of petitioner since
at the that time, he was leaving for the US and petitioner is
the only Filipino left in the Philippines
2. When the family business needed a vehicle, he asked
petitioner to look for a vehicle
and gave him money as downpayment for an Isuzu Elf van
3. After a month, he paid for the van by getting a loan from
a friend
4. As much as the receipt was placed in the name of
petitioner, private respondent allowed the registration
under the name of petitioner
5. There was also agreement that he would use the vehicle
as he paid for the same
All the abovementioned allegations of private respondent
has been corroborated by witnesses. The trial court hence
7
ruled in favor of the private respondent and the CA
affirmed this decision.
Issue: WON CA erred in affirming the decision of the TC?
Held: No. It is true that the judgment in a replevin suit
must only resolve in whom is the right of possession.
Primarily, the action of replevin is possessory in character
and determines nothing more than the right of possession.
However, when the title to the property is distinctly put in
issue by the defendant’s plea and by reason of this policy
to settle in one action all the conflicting claims of the
parties to the possession of the property in controversy,
the question of ownership may be resolved in the same
proceeding.
Procedure-wise, the Court observes that the action by
petitioner as plaintiff in the trial court was only one for
Replevin and Damages. Since replevin is only a provisional
remedy where the replevin plaintiff claims immediate
delivery of personal property pending the judgment of the
trial court in a principal case, the petitioner should have
filed in the trial court as a main case an action to recover
possession of the Isuzu Elf van which was in the
possession of the private respondent. Logically, the basis
of petitioner's cause of action should have been his
ownership of said van. In the State of California, from
whose Code of Procedure we copied our rule on replevin,
their old replevin rule which allowed the immediate
delivery of the chattel at the commencement of the action
upon application with bond by the replevin plaintiff had
already been struck down as early as July 1, 1971 in the
case of Blair v. Pitchess. As in fact, on June 12, 1972 when
the United States Supreme Court struck down as
unconstitutional the Florida and Pennsylvania replevin
statutes in Fuentes v. Shevin, most of the states, on their
own, changed their replevin statutes to include a
mandatory preliminary hearing before the writ could be
Rule 61(Support Pendente Lite)
12. Lam v Chua
The case commenced upon the filing of a petition for
declaration of nullity of marriage by Chua against Lam.
Pasay RTC declared that the marriage between petitioner
and respondent null and void for being bigamous by
nature. Likewise, respondent is ordered to give a monthly
support to his son John Paul in the amount of P20,000.00.
Jose filed a MR thereof but only insofar as the decision
awarded monthly support to his son in the amount of
P20,000.00. He argued that there was already a provision
for support of the child as embodied in the decision of the
Makati RTC wherein he and Adriana agreed to contribute
P250,000.00 each to a common fund for the benefit of the
child. Jose further alleged in his motion that his
contribution to the common fund had even amounted to
P500,000.00. Pasay RTC denied Jose’s MR. Jose appealed to
the CA. CA affirmed Pasay RTC’s decision. The issue in this
case is whether or not the compromise agreement where
the parties bound themselves to contribute to a common
fund for the benefit of their child bars the trial court in
annulment case to again award support in favor of the
child. The Court held no. Judgment for support does not
become final. The right to support is of such nature that its
allowance is essentially provisional; for during the entire
period that a needy party is entitled to support, his or her
alimony may be modified or altered, in accordance with his
increased or decreased needs, and with the means of the
giver. It cannot be regarded as subject to final
determination.
Facts: The case commenced upon the filing of a petition for
declaration of nullity of marriage by Adriana Chua against
Jose Lam. Chua alleged that: she and Jose were married;
out of said marriage, they begot one son, John Paul Chua
Lam; Jose was psychologically incapacitated to comply
with the essential marital obligations of marriage but said
incapacity was not then apparent; such psychological
incapacity of Jose became manifest only after the
celebration of the marriage when he frequently failed to go
home, indulged in womanizing and irresponsible activities,
such as, mismanaging the conjugal partnership of gains; in
order to save what was left of the conjugal properties, she
was forced to agree with Jose on the dissolution of their
conjugal partnership of gains and the separation of present
and future properties; said agreement was approved by
the Makati RTC; they had long been separated in bed and
board; they have agreed that the custody of their child will
be with her, subject to visitation rights of Jose. Adriana
prayed that the marriage between her and Jose be
declared null and void but she failed to claim and pray for
the support of their child, John Paul.
Summons was duly served on Jose; and despite the lapse of
fifteen days after service of summons, no responsive
pleading was filed by him.
The trial court set the case for hearing. Adriana testified
that her marriage with Jose was arranged by her parents in
the traditional Chinese way; that her married life was
abnormal because Jose very seldom came home, never
worked for a living and instead kept asking for money
from her to buy his sports cars; that she was also the one
spending for all the expenses of their only child, John Paul.
After her testimony, counsel for Adriana formally offered
the documentary evidence. No evidence was presented
regarding the amount of support needed by John Paul or
the capacity of Jose to give support.
Adriana filed an Urgent Motion to Re-Open on the ground
that she was able to secure additional new evidence which
were significant, material and indispensable. The trial
court granted the motion to re-open the case and held a
hearing for the reception of additional evidence. Evidence
showed that Jose had been married twice before he
married Adriana in 1984.
Pasay RTC declared that the marriage between petitioner
and respondent null and void for being bigamous by
nature. Likewise, respondent is ordered to give a monthly
support to his son John Paul Chua Lam in the amount of
P20,000.00.
Jose filed a MR thereof but only insofar as the decision
awarded monthly support to his son in the amount of
8
P20,000.00. He argued that there was already a provision
for support of the child as embodied in the decision of the
Makati RTC wherein he and Adriana agreed to contribute
P250,000.00 each to a common fund for the benefit of the
child. Jose further alleged in his motion that his
contribution to the common fund had even amounted to
P500,000.00.
Pasay RTC denied Jose’s MR ruling that the compromise
agreement entered into by the parties and approved by the
Makati RTC before the marriage was declared null and
void ab initio by the Pasay RTC, is of no moment and
cannot limit and/or affect the support ordered by the
latter court. Jose then appealed the Pasay RTC’s decision to
the CA.
CA affirmed Pasay RTC’s decision. Jose filed a MR of the
Decision but CA denied the same.
Issue: Whether or not the compromise agreement where
the parties bound themselves to contribute to a common
fund for the benefit of their child bars the trial court in
annulment case to again award support in favor of the
child. - NO
Ratio: The Pasay RTC and the CA are both correct insofar
as they ruled that the amount of support is by no means
permanent. In Advincula vs. Advincula, the Court held that
another action for support could be filed again by the same
plaintiff notwithstanding the fact that the previous case for
support filed against the same defendant was dismissed.
The Court further held in said case that:
. . . Judgment for support does not become final. The right
to support is of such nature that its allowance is essentially
provisional; for during the entire period that a needy party
is entitled to support, his or her alimony may be modified
or altered, in accordance with his increased or decreased
needs, and with the means of the giver. It cannot be
regarded as subject to final determination.
Thus, there is no merit to the claim of Jose that the
compromise agreement between him and Adriana, as
approved by the Makati RTC and embodied in its decision
in the case for voluntary dissolution of conjugal
partnership of gains, is a bar to any further award of
support in favor of their child John Paul. The provision for
a common fund for the benefit of their child John Paul, as
embodied in the compromise agreement between herein
parties which had been approved by the Makati RTC,
cannot be considered final and res judicata since any
judgment for support is always subject to modification,
depending upon the needs of the child and the capabilities
of the parents to give support.
13. Calderon v Roxas
Facts: This case stemmed from the Decision of this Court in
G.R. No. 139337, declaring that the Order of Support issued
by the 260th Branch of the RTC of Paranaque City in Civil
Case No. 97- 0608 was lawfully rendered. The latter Civil
Case was filed by Petitioner for the declaration of nullity of
her marriage with Private-Respondent on the ground of
psychological incapacity. Because of the said Decision by
the Court, the trial court, upon motion of Petitioner, issued
an Order dated October 11, 2002 directing Private-
Respondent to give support in the amount of P42,292.50
per month starting April 1, 1999. By March 7, 2005, an
Order was issued by the trial court reducing the amount of
support to be given while also denying Petitioner’s motion
for spusal support, increase of her children’s monthly
support pendent lite and support-in-arrears. By May 16,
2005 the trial court rendered its Decision in Civil Case No.
97-0608 declaring Petitioner’s marriage null and void but
ordering Private-Respondent to pay only P30,000 as
monthly support. Not satisfied, Petitioner filed a Notice of
Appeal with the CA. In her appeal however, Petitioner
contended that she was not appealing the May 16, 2005
Decision of the trial court, rather she was appealing the
March 7, 2005 Decision as well as the Order denying her
Motion for Reconsideration. The CA dismissed her appeal
on the ground that it would disturb the May 16, 2005
Decision of the trial court since it had long been final
executory. Hence this case. Petitioner contends that the CA
committed grave abuse of discretion amounting to lack or
excess of jurisdiction when it dismissed outright the
appeal from said RTC orders. Petitioner maintained that
while assailed Orders were interlocutory in nature, they
ceased to be so when arrearages incurred by Pirvate-
Respondent became due and demandable.
Issue/s: W/N appeal may be had in the March 7, 2005
Order as well as the Order denying Petitioner’s Motion for
Reconsideration. NO.
Held: The Court held that the word interlocutory refers to
something intervening between the commencement and
the end of the suit which decides some point or matter but
is not a final decision of the whole controversy. An
interlocutory order merely resolves incidental matters and
leaves something more to be done to resolve the merits of
the case. In contrast, a judgment or order is considered
final if the order disposes of the action or proceeding
completely, or terminates a particular stage of the same
action. Clearly, whether an order or resolution is final or
interlocutory is not dependent on compliance or non-
compliance by a party to its directive, as what petitioner
suggests.
Further, the Court ruled that the subject orders on the
matter of support pendente lite are but an incident to the
main action for declaration of nullity of marriage hence
provisional remedies. Provisional remedies are writs and
processes available during the pendency of the action
which may be resorted to by a litigant to preserve and
protect certain rights and interests therein pending
rendition, and for purposes of the ultimate effects, of a
final judgment in the case. They are provisional because
they constitute temporary measures availed of during the
pendency of the action, and they are ancillary because they
are mere incidents in and are dependent upon the result of
the main action.
Finally, the Court noted that pursuant to Sec. 1(h), Rule 41
of the Revised Rules of Civil Procedure, the remedy against
an interlocutory order not subject of an appeal is an
appropriate special civil action under Rule 65 provided
that the interlocutory order is rendered without or in
excess of jurisdiction or with grave abuse of discretion.
Therefore, by having chosen the wrong remedy in
9
questioning the subject interlocutory orders of the RTC,
The Court ruled that petitioner's appeal was correctly
dismissed by the CA.
Rule 62 (Interpleader)
14. Ocampo v Tirona
RECIT READY:
Facts: Respondent Tirona was a lessee of a land purchased
by the petitioner. However, when the area was declared a
priority development, respondent informed petitioner that
she will suspend paying the rentals. The petitioner
purchased the said land from the original owner. This
prompted the petitioner to file an action for unlawful
detainer and damages against the respondent. The MTC
held that Tirona had no reason to suspend the payment of
rents as this made her occupation of the property illegal.
Thus, the petitioner has the right to recover possession.
The RTC concurred with this decision. Appellate Court set
aside and dismissed complaint. Hence, this instant petition.
Issue: Whether or not an action for interpleader is proper
in this case RULING: Yes. Tirona should have filed an
interpleader and need not wait for the actual filing of a suit
by petitioner against her. The action is proper when a
lessee does not know who to pay to the rentals due to
conflicting claims in the subject property. This remedy is
afforded not to protect anyone against double liabilities
but to protect him against double vexation with respect to
one's liability. When a court orders that claimants litigate
among themselves there arises a new action. The pleading
which initiates the action is referred to as the complaint of
interpleader and not a cross-complaint.
Facts:
Ocampo alleged that he is the owner of a parcel of land in
Pasay City. Ocampo brought the subject land from Breton,
heir of the subject lands registered owner Cruz. Possession
and administration of the subject land are claimed to be
already in Ocampos management even thought there’s no
TCT yet. Tirona on the other hand, is a lessee occupying a
portion of the subject land.
Ocampo alleged that a formal written notice was given to
Tirona, such notice was said to be a formal agreement.
Ocampo wrote a letter to Tirona demanding to pay rentals
in favor of the latter, however, Tirona failed and refused
hence, Ocampo filed a complaint for unlawful detainer and
damages against Tirona before MTC.
MTC: held that Tirona had no reason to suspend payment
of rents as this mader her occupation of the property
illegal. Thus, petitioner had the right to recover possession.
RTC: concurred with the decision.
Appellate Court: set aside and dismissed the complaint.
Hence, this instant petition.
ISSUE: Whether or not an action for interpleader is proper
in this case HELD: YES
RULING:
Tirona should have filed an interpleader and need not wait
for the actual filing of a suit by petitioner against her. The
action is proper when a lessee does not know who to pay
to the rentals due to conflicting claims in the subject
property. This remedy is afforded not to protect anyone
against double liabilities but to protect him against double
vexation with respect to one's liability. When a court
orders that claimants litigate among themselves there
arises a new action. The pleading which initiates the action
is referred to as the complaint of interpleader and not a
cross-complaint.
The action of interpleader is a remedy whereby a person
who has property whether personal or real, in his
possession, or an obligation to render wholly or partially,
without claiming any right in both, or claims an interest
which in whole or in part is not disputed by the conflicting
claimants, comes to court and asks that the persons who
claim the said property or who consider themselves
entitled to demand compliance with the obligation, be
required to litigate among themselves, in order to
determine finally who is entitled to one or the other thing.
The remedy is afforded not to protect a person against a
double liability but to protect him against a double
vexation in respect of one liability. When the court orders
that the claimants litigate among themselves, there arises
in reality a new action and the former are styled
interpleaders, and in such a case the pleading which
initiates the action is called a complaint of interpleader
and not a cross-complaint.
15. Wack Wack Golf and Country Club v Lee E. Won
This case is stemmed from a controversy involving
petitioner corp. and respondent who was claiming
ownership of membership fee certificate 201. The case
was decided by the CFI of Manila in favor of Lee who was
deemed to be the rightful owner. Now petitioner is filing a
complaint praying that Lee and Bienvenido Tan, who is
also claims to be the owner of said certificate, to interplead
and litigate their conflicting claims and that judgment be
rendered after hearing. Issue: WON the action of
interpleader by petitioner will prosper. Held: No, the
Corporation has not shown any justifiable reason why it
did not file an application for interpleader in civil case
26044 to compel the appellees herein to litigate between
themselves their conflicting claims of ownership. It was
only after adverse final judgment was rendered against it
that the remedy of interpleader was invoked by it. By then
it was too late, because to be entitled to this remedy the
applicant must be able to show that lie has not been made
independently liable to any of the claimants. And since the
Corporation is already liable to Lee under a final judgment,
the present interpleader suit is clearly improper and
unavailing.
Facts: This case stems from a controversy between
petitioner and respondent Lee about the ownership of
Membership Fee Certificate 201 in the CFI of Manila. The
CFI rendered a decision in favor of Lee. Now, petitioner
seeks that (a) an order be issued requiring Lee and Tan,
who is also claiming ownership of the said certificate, to
interplead and litigate their conflicting claims; and (b)
judgment. be rendered, after hearing, declaring who of the
two is the lawful owner of membership fee certificate 201,
and ordering the surrender and cancellation of
membership fee certificate 201-serial no. 1478 issued in
10
the name of Lee. Both defendants moved to dismiss the
complaint of the ground of res judicata.
Issue: WON the action for interpleader will prosper.
Held: No, the Corporation has not shown any justifiable
reason why it did not file an application for interpleader in
civil case 26044 to compel the appellees herein to litigate
between themselves their conflicting claims of ownership.
It was only after adverse final judgment was rendered
against it that the remedy of interpleader was invoked by
it. By then it was too late, because to be entitled to this
remedy the applicant must be able to show that lie has not
been made independently liable to any of the claimants.
And since the Corporation is already liable to Lee under a
final judgment, the present interpleader suit is clearly
improper and unavailing.
It is the general rule that before a person will be deemed to
be in a position to ask for an order of intrepleader, he must
be prepared to show, among other prerequisites, that he
has not become independently liable to any of the
claimants.
In the case at hand, the Corporation allowed civil case
26044 to proceed to final judgment. And it offered no
satisfactory explanation for its failure to implead Tan in
the same litigation. In this factual situation, it is clear that
this interpleader suit cannot prosper because it was filed
much too late.
Rule 63 (Declaratory Relief)
16. DBM v Manilas Finest Retirees Association
17. Martelino v NHMF Corp
Case stemmed from the petition for declaratory relief and
prohibition with urgent prayer for the issuance of a TRO
and/or preliminary injunction filed before the RTC by the
petitioners against NHMFC, and HDMF. Petitioners had
obtained housing loans from the respondents who
released the proceeds to the subdivision developer
SHELTER who failed to complete the subdivision.
Respondents failed to ensure shelter’s completion of the
subdivision and ignored their right to suspend
amortization payments, charged interests and penalties on
their outstanding loans and initiated foreclosure
proceedings against petitioner. A hearing for the
preliminary injunction was set but the summons and
petition were served only to NHMFC and not HDMF.
Despite the notice NHMFC did not attend the hearing and
RTC issued WPI, which restrained respondents from
foreclosing the mortgages on petitioners’ houses. NHMFC
filed its Answer with Special and Affirmative Defenses.
NHMFC filed a Manifestation and Motion to Dismiss. A day
after HDMF moved to set aside the WPI order on the
ground that it was not notified and that the case should be
filed with HLURB. Petitioners opposed both NHMFC’s
motion to dismiss and HDMF’s motion to set aside and
moved to cite HDMR’s legal dept. mngr. in contempt. RTC
ruled in favor of NHMFC and HDMR. CA affirmed RTC’s
order and also denied petitioner’s motion for
reconsideration. Hence this petition.
ISSUE/S: WON CA erred in not holding that the petition
should be converted into an ordinary action assuming that
declaratory relief is not the proper remedy. -- NO HELD:
The respondent’s act of initiating foreclosure was in
breach of RA 8501 and rendered the action of declaratory
relief improper. It was then suggested by RTC that the
proper remedy is an ordinary civil action and that the CA
should’ve ordered the conversion of the petition pursuant
to Sec. 6 Rule 63. Although such provision might allow
such course of action, the respondents did not argue the
point, and we note petitioners' failure to specify the
ordinary action they desired. We also cannot reasonably
assume that they now seek annulment of the mortgages.
Further, the records support the CA’s finding that this
issue was not raised before the RTC. The CA therefore
properly refused to entertain the issue as it cannot be
raised for the first time on appeal.
FACTS: Case stemmed from the petition for declaratory
relief and prohibition with urgent prayer for the issuance
of a TRO and/or preliminary injunction filed before the
RTC by the petitioners against NHMFC (National Home
Mortgage Finance Corporation), and HDMF (Home
Development Mutual Fund). Petitioners speficfially sought
a declaration from RTC for the following:
1. their right as house and lot buyers to suspend payment
to Shelter for its failure to fully develop the subdivision
2. That during the suspention, respondents should not
assess them accrued interest and penalties.
Petitioners alleged that they obtained housing loans from
the respondents who released the proceeds to the
subdivision developer SHELTER (Shelter Phils.). SHELTER
failed to complete the subdivision. Respondents failed to
ensure shelter’s completion of the subdivision and ignored
their right to suspend amortization payments, charged
interests and penalties on their outstanding loans and
initiated foreclosure proceedings against petitioner.
The preliminary Injunction hearing with the RTC was set
but summons and petition were served only to NHMFC
and Sheriff Castillo but despite notice the NHMFC failed to
attend the hearing.
RTC issued WPI and restrained respondents from
foreclosing the mortgages on petitioners’ houses.
NHMFC filed its Answer with Special and Affirmative
Defenses. NHMFC filed a Manifestation and Motion to
Dismiss on the ground that RTC had no jurisdiction over its
person/subject matter of the case. The next day HDMF
moved to set aside the WPI order on the ground that it was
not notified and that the petition should be filed with
HLURB as the case involved the developer’s failure to
complete the subdivision. Petitioners opposed both
NHMFC’s motion to dismiss and HDMF’s motion to set
aside. Petitioners’ moved to cite Atty Delos Santos,
manager of HDMF’s Legal department in contempt for
foreclosing the mortgage of Rosete and threatening to
pursue similar actions against the petitioners. RTC Issued
an order Granting HDMF’s motion to set aside (because it
was not notified of the preliminary injunction hearing),
Denying the motion to cite Atty. Delos Santos in contempt,
granting the NHMFC’s motion to dismiss.
CA affirmed RTC’s order for the following reasons:
1. CA ruled that the writ of preliminary injunction was not
valid against the HDMF since
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under Section 5, 19 Rule 58 of the Rules of Court, no
preliminary injunction shall be granted without hearing
and prior notice to the party or person sought to be
enjoined. The HDMF was not notified of the hearing and
only appeared before the RTC to object to its jurisdiction
for non-service of summons.
2. CA held that petitioners were not denied due process
because the motions to dismiss and to set aside the RTC’s
Order both raised the issue of jurisdiction and were duly
heard. Petitioners even filed a memorandum.
3. CA did not entertain the issue of whether the petition for
declaratory relief can be converted to an ordinary action
for it was not raised before the RTC. The Court of Appeals
also denied the motion for reconsideration.
ISSUE/S: WON CA erred in not holding that the petition
should be converted into an ordinary action assuming that
declaratory relief is not the proper remedy. -- NO
HELD: In Sec. 1 of Rule 63, it states that a person must file
a petition for declaratory relief before breach or violation
of a deed, will, contract, other written instrument, statue,
EO, regulation, ordinance or any other governmental
regulation. However in this case the petitioners had stated
in their petition that respondents assessed them interest
and penalties on their outstanding loans, initiated
foreclosure proceedings against petitioner Rafael
Martelino as evidenced by the notice of extra-judicial sale
and threatened to foreclose the mortgages of the other
petitioners, all in disregard of their right to suspend
payment to Shelter for its failure to complete the
subdivision. Said statements clearly mean one thing:
petitioners had already suspended paying their
amortization payments. Unfortunately, their actual
suspension of payments defeated the purpose of the action
to secure an authoritative declaration of their supposed
right to suspend payment, for their guidance. Thus, the
RTC could no longer assume jurisdiction over the action
for declaratory relief because its subject initially
unspecified, now identified as P.D. No. 957 and relied upon
— correctly or otherwise — by petitioners, and assumed
by the RTC to be Rep. Act No. 8501, was breached before
filing the action.
The respondent’s act of initiating foreclosure was in
breach of RA 8501 and rendered the action of declaratory
relief improper. It was then suggested by RTC that the
proper remedy is an ordinary civil action and that the CA
should’ve ordered the conversion of the petition pursuant
to Sec. 6 Rule 63. Although such provision might allow
such course of action, the respondents did not argue the
point, and we note petitioners' failure to specify the
ordinary action they desired. We also cannot reasonably
assume that they now seek annulment of the mortgages.
Further, the records support the Court of Appeals' finding
that this issue was not raised before the RTC. The Court of
Appeals therefore properly refused to entertain the issue
as it cannot be raised for
the first time on
appeal.

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