1 | P a g e

PROVISIONAL REMEDIES: CASES

RULE 59 RECEIVERSHIP
[G.R. No. 125008. June 19 199!"
COMMODI#IES S#ORAGE $ ICE PLAN# CORPORA#ION SPOUSES VIC#OR $ JOHANNAH
#RINIDADpetitioners, vs. COUR# O% APPEALS JUS#ICE PEDRO A. RAMIRE&
CHAIRMAN 'n( %AR EAS# )AN* $ #RUS# COMPAN+ respondents.
D E C I S I O N
PUNO J.:
In this petition for certiorari, petitioner seeks to annul and set aside the decision and resolution of the
Court of Appeals
[1]
in CA-G.R. SP No. !"# dis$issin% the co$plaint in Ci&il Case No. '(-)#")! *efore
the Re%ional +rial Court, ,ranch ', -anila.
+he facts sho. that in 1''", petitioner spouses /ictor and 0ohannah +rinidad o*tained a loan
of P1,""","""."" fro$ respondent 1ar 2ast ,ank 3 +rust Co$pan4 to finance the purchase of the Sta.
-aria Ice Plant 3 Cold Stora%e in Sta. -aria, ,ulacan. +he loan .as secured *4 a $ort%a%e o&er the ice
plant and the land on .hich the ice plant stands. Petitioner spouses failed to pa4 their loan. +he *ank
e5tra6udiciall4 foreclosed the $ort%a%e and the ice plant .as sold *4 pu*lic *iddin% on -arch ##,
1''. Respondent *ank .as the hi%hest *idder. It re%istered the certificate of sale on Septe$*er ##,
1'' and later took possession of the propert4.
7n No&e$*er ##, 1'', petitioner spouses filed Ci&il Case No. '8!---' a%ainst respondent *ank
*efore the Re%ional +rial Court, -alolos, ,ulacan for refor$ation of the loan a%ree$ent, annul$ent of the
foreclosure sale and da$a%es.
[#]
+he trial court dis$issed the co$plaint for petitioners9 failure to pa4 the
docket fees. +he dis$issal .as .ithout pre6udice to refilin% of the co$plaint.
[]
7n 7cto*er #:, 1''(, petitioners filed Ci&il Case No. '(-)#")! a%ainst respondent *ank *efore the
Re%ional +rial Court, ,ranch ', -anila for da$a%es, accountin% and fi5in% of rede$ption period.
[(]
As a
pro&isional re$ed4, petitioners filed on No&e$*er 1!, 1''( an ;<r%ent Petition for Recei&ership.; +he4
alle%ed that respondent *ank took possession of the ice plant forci*l4 and .ithout notice to the$= that
their occupation resulted in the destruction of petitioners9 financial and accountin% records $akin% it
i$possi*le for the$ to pa4 their e$plo4ees and creditors= the *ank has failed to take care of the ice plant
.ith due dili%ence such that the plant has started e$ittin% a$$onia and other to5ic refri%erant che$icals
into the at$osphere and .as posin% a ha>ard to the health of the people in the co$$unit4= the spouses9
attention had *een called *4 se&eral people in the *aran%a4 .ho threatened to infor$ the ?epart$ent of
2n&iron$ent and Natural Resources should the4 fail to take action. Petitioners thus pra4ed for the
appoint$ent of a recei&er to sa&e the ice plant, conduct its affairs and safe%uard its records durin% the
pendenc4 of the case.
[8]
Instead of an ans.er, respondent *ank filed on No&e$*er #8, 1''( a ;-otion to ?is$iss and
7pposition to Plaintiff9s Petition for Recei&ership.; It alle%ed that the co$plaint states no cause of action
and that &enue had *een i$properl4 laid. It also alle%ed that petitioners failed to pa4 the proper docket
fees and &iolated the rule on foru$-shoppin%.
[!]
In an order dated ?ece$*er 1, 1''(, the trial court %ranted the petition for recei&ership and
appointed petitioners9 no$inee, Ricardo Pes@uera, as recei&er. +he order disposed as follo.sA
;BC2R217R2, pre$ises considered the <r%ent Petition for Recei&ership is GRAN+2? and -r. Ricardo
Pes@uera to .hose appoint$ent no opposition .as raised *4 the defendant and .ho is an ice plant
contractor, $aintainer and installer is appointed recei&er. Accordin%l4, upon the filin% and appro&al of the
*ond of +B7 -IDDI7N EP#,""",""".""F pesos .hich shall ans.er for all da$a%es defendant $a4 sustain
*4 reason of the recei&ership, said Ricardo Pes@uera is authori>ed to assu$e the po.ers of a recei&er as
.ell as the o*li%ation as pro&ided for in Rule 8' of the Rules of Court after takin% his oath as such
recei&er.
S7 7R?2R2?.;
[)]
Respondent *ank assailed this order *efore the Court of Appeals on a petition for certiorari. 7n
0anuar4 11, 1''!, the Court of Appeals annulled the order for recei&ership and dis$issed petitioners9
co$plaint for i$proper &enue and lack of cause of action. +he dispositi&e portion of the decision readsA
;BC2R217R2, the petition for certiorari is GRAN+2?. Accordin%l4, the assailed order dated ?ece$*er
1, 1''( EAnne5 A, petitionF is ANN<DD2? and S2+ ASI?2 and respondent9s co$plaint in Ci&il Case No.
'(-)#")! in the respondent court EAnne5es 1, petition= (, co$$entF, is ?IS-ISS2?. Costs a%ainst
respondents e5cept the court.
S7 7R?2R2?.;
Reconsideration .as denied on -a4 #, 1''!.
[:]
Cence, this petition.
Section 1 of Rule 8' of the Re&ised Rules of Court pro&ides thatA
"Sec. 1. When and by whom receiver appointed.-- 7ne or $ore recei&ers of the propert4, real or
personal, .hich is the su*6ect of the action, $a4 *e appointed *4 the 6ud%e of the Court of 1irst Instance in
.hich the action is pendin%, or *4 a 0ustice of the Court of Appeals or of the Supre$e Court, in the
follo.in% casesA
EaF Bhen the corporation has *een dissol&ed, or is insol&ent, or is in i$$inent dan%er of insol&enc4, or
has forfeited its corporate ri%hts=
E*F Bhen it appears fro$ the co$plaint or ans.er, and such other proof as the 6ud%e $a4 re@uire, that the
part4 appl4in% for the appoint$ent of recei&er has an interest in the propert4 or fund .hich is the su*6ect of
the action, and that such propert4 or fund is in dan%er of *ein% lost, re$o&ed or $ateriall4 in6ured unless
a recei&er *e appointed to %uard and preser&e it=
EcF Bhen it appears in an action *4 the $ort%a%ee for the foreclosure of a $ort%a%e that the propert4 is in
dan%er of *ein% .asted or $ateriall4 in6ured, and that its &alue is pro*a*l4 insufficient to dischar%e the
$ort%a%e de*t, or that the parties ha&e so stipulated in the contract of $ort%a%e=
EdF After 6ud%$ent, to preser&e the propert4 durin% the pendenc4 of the appeal, or to dispose of it
accordin% to the 6ud%$ent, or to aid e5ecution .hen the e5ecution has *een returned unsatisfied or the
6ud%$ent de*tor refuses to appl4 his propert4 in satisfaction of the 6ud%$ent, or other.ise carr4 the
6ud%$ent into effect=
EeF Bhene&er in other cases it appears that the appoint$ent of a recei&er is the $ost con&enient and
feasi*le $eans of preser&in%, ad$inisterin%, or disposin% of the propert4 in liti%ation.;
A recei&er of real or personal propert4, .hich is the su*6ect of the action, $a4 *e appointed *4 the court
.hen it appears fro$ the pleadin%s or such other proof as the 6ud%e $a4 re@uire, that the part4 appl4in%
for such appoint$ent has E1F an actual interest in it= and E#F that EaF such propert4 is in dan%er of *ein%
lost, re$o&ed or $ateriall4 in6ured= or E*F .hene&er it appears to *e the $ost con&enient and feasi*le
$eans of preser&in% or ad$inisterin% the propert4 in liti%ation.
[']
A recei&er is a person appointed *4 the court in *ehalf of all the parties to the action for the purpose
of preser&in% and conser&in% the propert4 in liti%ation and pre&ent its possi*le destruction or dissipation, if
it .ere left in the possession of an4 of the parties.
[1"]
+he appoint$ent of a recei&er is not a $atter of
a*solute ri%ht. It depends upon the sound discretion of the court
[11]
and is *ased on facts and
circu$stances of each particular case.
[1#]
Petitioners clai$ that the appoint$ent of a recei&er is 6ustified under Section 1 E*F of Rule 8'. +he4
ar%ue that the ice plant .hich is the su*6ect of the action .as in dan%er of *ein% lost, re$o&ed and
$ateriall4 in6ured *ecause of the follo.in% ;i$$inent perils;A
;!.1 ?an%er to the li&es, health and peace of $ind of the inha*itants li&in% near the Sta. -aria Ice Plant=
!.# ?rastic action or sanctions that could *e *rou%ht a%ainst the plaintiff *4 affected third persons,
includin% .orkers .ho ha&e clai$s a%ainst the plaintiff *ut could not *e paid due to the nu$*in% $anner
*4 .hich the defendant took the Sta. -aria Ice Plant=
!. +he rapid reduction of the Ice Plant into a scrap heap *ecause of e&ident inco$petence, ne%lect and
&andalis$.;
[1]
A petition for recei&ership under Section 1 E*F of Rule 8' re@uires that the propert4 or fund .hich is
the su*6ect of the action $ust *e in dan%er of loss, re$o&al or $aterial in6ur4 .hich necessitates protection
2 | P a g e
or preser&ation. +he %uidin% principle is the pre&ention of i$$inent dan%er to the propert4. If an action *4
its nature, does not re@uire such protection or preser&ation, said re$ed4 cannot *e applied for and
%ranted.
[1(]
In the instant case, .e do not find the necessit4 for the appoint$ent of a recei&er. Petitioners ha&e
not sufficientl4 sho.n that the Sta. -aria Ice Plant is in dan%er of disappearin% or *ein% .asted and
reduced to a ;scrap heap.; Neither ha&e the4 pro&en that the propert4 has *een $ateriall4 in6ured .hich
necessitates its protection and preser&ation.
[18]
In fact, at the hearin% on respondent *ank9s $otion to
dis$iss, respondent *ank, throu%h counsel, $anifested in open court that the leak in the ice plant had
alread4 *een re$edied and that no other leaka%es had *een reported since.
[1!]
+his state$ent has not
*een disputed *4 petitioners.
At the ti$e the trial court issued the order for recei&ership of the propert4, the pro*le$ had *een
re$edied and there .as no i$$inent dan%er of another leaka%e. Bhate&er dan%er there .as to the
co$$unit4 and the en&iron$ent had alread4 *een contained.
+he ;drastic sanctions; that $a4 *e *rou%ht a%ainst petitioners due to their ina*ilit4 to pa4 their
e$plo4ees and creditors as a result of ;the nu$*in% $anner *4 .hich [respondent *ank] took the ice
plant; does not concern the ice plant itself. +hese clai$s are the personal lia*ilities of petitioners
the$sel&es. +he4 do not constitute ;$aterial in6ur4; to the ice plant.
-oreo&er, the recei&er appointed *4 the court appears to *e a representati&e of
petitioners. Respondent *ank alle%es that it .as not a.are that petitioners no$inated one -r. Pes@uera
as recei&er.
[1)]
+he %eneral rule is that neither part4 to a liti%ation should *e appointed as recei&er .ithout
the consent of the other *ecause a recei&er should *e a person indifferent to the parties and should *e
i$partial and disinterested.
[1:]
+he recei&er is not the representati&e of an4 of the parties *ut of all of the$
to the end that their interests $a4 *e e@uall4 protected .ith the least possi*le incon&enience and e5pense.
[1']
+he po.er to appoint a recei&er $ust *e e5ercised .ith e5tre$e caution. +here $ust *e a clear
sho.in% of necessit4 therefor in order to sa&e the plaintiff fro$ %ra&e and irre$edia*le loss or da$a%e.
[#"]
It
is onl4 .hen the circu$stances so de$and, either *ecause there is i$$inent dan%er that the propert4
sou%ht to *e placed in the hands of a recei&er *e lost or *ecause the4 run the risk of *ein% i$paired,
endea&ourin% to a&oid that the in6ur4 there*4 caused *e %reater than the one sou%ht to *e a&oided.
[#1]
+he Court of Appeals correctl4 found that the trial court %ra&el4 a*used its discretion in issuin% the
order for recei&ership. +he respondent court, ho.e&er, .ent further and took co%ni>ance of respondent
*ank9s $otion to dis$iss. And findin% $erit in the $otion, it dis$issed the co$plaint. Petitioners no.
clai$ that the respondent court should ha&e refrained fro$ rulin% on the $otion to dis$iss *ecause the
$otion itself .as not *efore it.
[##]
A%ain, .e re6ect petitioners9 contention. +he $otion to dis$iss is anchored on i$proper &enue, lack
of cause of action and foru$-shoppin%. Be a%ree .ith the respondent court that the @uestion of &enue
relates to the principal action and is ,-e.u(/0/'1 to the ancillar4 issue of recei&ership. Althou%h the
%rounds for dis$issal .ere not specificall4 raised *efore the appellate court, the said court $a4 consider
the sa$e since the petition for recei&ership depends upon a deter$ination thereof.
[#]
In their co$plaint, petitioners pra4ed for the follo.in%A
;BC2R217R2, in &ie. of the fore%oin%, it is respectfull4 pra4ed that after trial on the $erits 6ud%$ent *e
renderedA
1. 7rderin% the ?efendant to pa4 C7--7?I+I2S actual and co$pensator4 da$a%es in the a$ount of
P2S7SA +B7 -IDDI7N 1I/2 C<N?R2? +C7<SAN? and ""G1"" EP#,8"",""".""F=
#. 7rderin% the ?efendant to pa4 Plaintiffs $oral da$a%es in the a$ount of P2S7SA +B7 -IDDI7N and
""G1"" EP#,""",""".""F to co$pensate the Plaintiffs for the an5iet4 and *es$irched reputation caused *4
the un6ust actuations of the ?efendant=
. 7rderin% the ?efendant to pa4 Plaintiffs no$inal and e5e$plar4 da$a%es in the a$ount of
P2S7SA 1I/2 C<N?R2? +C7<SAN? and ""G1"" EP8"",""".""F to deter the repetition of such un6ust
and $alicious actuations of the ?efendant=
(. In o-(e- 2o -e32o-e 24e 1e5'1 -/542 o6 24e P1'/n2/66 COMMODI#IES 2o -e(ee7 /23 6o-e01o3e(
,-o,e-28 ' -/542 94/04 COMMODI#IES 4'3 :een un.u3218 (e,-/;e( o6 :8 24e 7'1/0/ou3 'n( :'( 6'/24
7'04/n'2/on3 o6 24e De6en('n2 0o7,e11/n5 24e De6en('n2 2o ,-o(u0e 24e 0o--e02 1'96u1 o66/0/'1
'n( 4one32 32'2e7en23 o6 '00oun2 'n( ',,1/0'2/on o6 ,'87en2. Con0o7/2'n218 o-(e-/n5 24e
De6en('n2 2o '00e,2 24e -e(e7,2/on o6 24e 6o-e01o3e( ,-o,e-2/e3 ,u-3u'n2 2o Ru1e <9 o6 24e
Re;/3e( Ru1e3 o6 Cou-2 /n 0on.un02/on 9/24 A02 <1<5 9/24/n 24e ,-e30-/:e( ,e-/o( 6o- -e(e7,2/on
3'/( ,e-/o( 2o 0o77en0e 6-o7 24e ('2e o6 -e0e/,2 :8 24e P1'/n2/66 COMMODI#IES o6 24e 0o--e02
1'96u1 o66/0/'1 'n( 4one32 32'2e7en23 o6 '00oun2 'n( ',,1/0'2/on o6 ,'87en23=
8. 7rderin% the ?efendant to pa4 attorne49s fees in the a$ount of P2S7SA +CR22 C<N?R2?
+C7<SAN? EP"",""".""F= and costs of liti%ation.
7ther reliefs and re$edies 6ust and e@uita*le under the circu$stances are like.ise pra4ed for.;
[#(]
Petitioners pra4 for t.o re$ediesA da$a%es and rede$ption. +he pra4er for da$a%es is *ased on
respondent *ank9s forci*le occupation of the ice plant and its $alicious failure to furnish the$ their
state$ents of account and application of pa4$ents .hich pre&ented the$ fro$ $akin% a ti$el4
rede$ption.
[#8]
Petitioners also pra4 that respondent *ank *e co$pelled to furnish the$ said docu$ents,
and upon receipt thereof, allo. rede$ption of the propert4. +he4 ulti$atel4 seek rede$ption of the
$ort%a%ed propert4. +his is e5plicit in para%raph ( of their pra4er.
An action to redee$ *4 the $ort%a%e de*tor affects his title to the foreclosed propert4. If the action
is seasona*l4 $ade, it seeks to erase fro$ the 2/21e of the 6ud%$ent or $ort%a%e de*tor the lien created *4
re%istration of the $ort%a%e and sale.
[#!]
If not $ade seasona*l4, it $a4 seek to reco&er o.nership to the
land since the purchaser9s inchoate title to the propert4 *eco$es consolidated after e5piration of the
rede$ption period.
[#)]
2ither .a4, rede$ption in&ol&es the title to the foreclosed propert4. It is a real action.
Section # of Rule ( of the Re&ised Rules of Court pro&idesA
"Sec. 2. Venue in Courts of First Instance.-- a! "ea# actions.-- Actions affectin% title to, or for reco&er4 of
possession, or for partition or conde$nation of, or foreclosure of $ort%a%e on, real propert4, shall *e
co$$enced and tried in the pro&ince .here the propert4 or an4 part thereof lies.;
[#:]
Bhere the action affects title to the propert4, it should *e instituted in the Re%ional +rial Court .here the
propert4 is situated. +he Sta. -aria Ice Plant 3 Cold Stora%e is located in Sta. -aria, ,ulacan. +he &enue
in Ci&il Case No. '(-)#")! .as therefore laid i$properl4.
1inall4, there is no $erit in petitioners9 clai$ that the respondent *ank is no lon%er the real part4 in
interest after sellin% the ice plant to a third person durin% the pendenc4 of the case. Section #" of Rule
of the Re&ised Rules of Court pro&ides that in a transfer of interest pendin% liti%ation, the action $a4 *e
continued *4 or a%ainst the ori%inal part4, unless the court, upon $otion, directs the transferee to *e
su*stituted in the action or 6oined .ith the ori%inal part4. +he court has not ordered the su*stitution of
respondent *ank.
IN VIE> >HEREO%, the decision dated 0anuar4 11, 1''! and resolution dated -a4 #, 1''! of the
Court of Appeals in CA-G.R. SP No. !"# are affir$ed. Costs a%ainst petitioners.
SO ORDERED.
HHHHHHHHHHHHHHHH
G.R. No. ?<05 Se,2e7:e- 2? 1911
COMPA@IA GENERAL DE #A)ACOS DE %ILIPINAS plaintiff-appellee,
&s.
ROMANA GAU&ON 'n( JUAN D. POMAR defendants.
JUAN D. POMAR recei&er-appellant.
$. Fernande% &amson' for appe##ant.
(. ). Seva' for appe##ee.
JOHNSON J.:
3 | P a g e
+he present appeal is $ade *4 the defendant 0uan ?. Po$ar, as recei&er, a%ainst the order of the Con.
Al*ert e. -cCa*e, 6ud%e of the Pro&ince of 7ccidental Ne%ros, disallo.in% certain ite$s in the final
account of the said recei&er.
It appears fro$ the record that the defendant, Ro$ana Gau>on, on the 1"th da4 of Septe$*er, 1'"(,
e5ecuted and deli&ered to the plaintiff ECo$paIia General de +a*acos de 1ilipinasF a $ort%a%e upon an
hacienda kno.n as ;San 0ose,; in the $unicipalit4 of San Carlos, in the Pro&ince of 7ccidental Ne%ros.
+he said defendant ERo$ana Gau>onF ha&in% failed to pa4 the said $ort%a%e, the plaintiff ECo$paIia
General de +a*acos de 1ilipinasF, on the ##d da4 Septe$*er, 1'"8, co$$enced an action for the
foreclosure of said $ort%a%e, and asked, in addition to the foreclosure of the $ort%a%e, that a recei&er *e
appointed to take chan%e of the propert4 in @uestion, pendin% the said action. 7n the sa$e da4 E##nd of
Septe$*er, 1'"8F the Con. /icente 0ocson, after hearin% the petition filed in said cause, appointed the
said defendant, 0uan ?. Po$ar, an e$plo4ee of the plaintiff, recei&er of the propert4 in&ol&ed in said
foreclosure proceedin%s. Said foreclosure proceedin%s continued to a ter$ination. +he result of said
proceedin%s $a4 *e found in t.o decisions of this court, the cases of Da Co$paIia General de +a*acos
de 1ilipinas &s. Gan>on E1 Phil. Rep., ()#F and Da Co$paIia General de +a*acos de 1ilipinas &s.
Gan>on E1 Phil. Rep., (:1F. +he facts relatin% to the foreclosure proceedin%s and the 6ud%$ent therein
are not i$portant in the present cause, further than to sho. the histor4 of the transactions of the recei&er,
the defendant, 0uan ?. Po$ar.
After the ter$ination of the recei&ership, the court re@uired of the recei&er E0uan ?. Po$arF a report and an
accountin% of his operations as recei&er. It appears fro$ the record that the lo.er court had a %ood deal of
trou*le in securin% a final report. +he recei&er apparentl4 acted as thou%h his onl4 responsi*ilit4 .as to the
plaintiff ECo$paIia General de +a*acos de 1ilipinasF= ho.e&er, finall4 the lo.er court secured .hat
appears to *e a final accountin% *4 the recei&er, upon the 'th or 1"th da4 of Au%ust, 1'"'. +he report of
the recei&er contained $an4 ite$s.
After a careful consideration of the &arious ite$s of the account of the recei&er, 0ud%e -cCa*e allo.ed the
follo.in% ite$s of said account J
1. Care of cane *efore cuttin% P1,8##."
#. Cuttin% and %rindin%, accordin% to report of co$$issioners :,8!8.')
. 1uel 18".""
(. 25penses in Iloilo, accordin% to recei&er9s 25hi*it , #,8'1.#:
8. Stora%e (#:.#:
!. Insurance (#:. #:
). Sellin% co$$ission !(:. #:
:. 0ud%$ent for plaintiff in cause No. #(' ',1:).:"
'. Recei&er9s pa4 1,""".""
+otal #(,8##."(
or a*out the first +uesda4 of No&e$*er, 1'"', the su$ of P),::.)!, a *alance .hich he ou%ht to ha&e
had in his possession. 1ro$ the order allo.in% said ite$s onl4 the defendant appealed to this court and
$ade the follo.in% assi%n$ents of errorA .
I. +he court erred in reducin% to P:,8!8.') the P##,'((.) spent *4 the recei&er for cuttin%, haulin%, and
$anufacture of :,""8.8: piculs of su%ar, for packin%, transportation and stora%e thereof, and insurance
and sellin% co$$ission thereon.
II. +he court erred in not allo.in% the ite$ of P1().:! paid out *4 the recei&er as interest on $one4
*orro.ed to co&er the first e5penses of his recei&ership.
III. +he court erred in not appro&in% the dis*urse$ent $ade *4 the recei&er of the P,""1.'( deli&ered to
the aparceros as their share of the crop.
I/. +he court erred in reducin% to P1,""" the P(,:!".:) .hich the recei&er clai$ed as co$pensation for
his ser&ices.
/. +he court erred in holdin% that the order appointin% the recei&er does not e5tend his po.ers *e4ond
those prescri*ed in section 1)8 of Act No. 1'".
Bith reference to the first assi%n$ent of error, it .ill *e noted that the recei&er presented an account for
cuttin%, %rindin%, etc., of the su%ar cane upon the hacienda, o&er .hich he had control as recei&er,
a$ountin% to P##,'((.). 0ud%e -cCa*e refused to allo. that a$ount for cuttin% and %rindin%, etc., of
said su%ar cane, upon the %round that it .as an unreasona*le char%e. +he parties in the lo.er court
a%reed to the appoint$ent of three co$$issioners for the purpose of ascertainin% the reasona*le cost of
cuttin%, %rindin%, etc., of the su%ar cane upon the said hacienda. +he co$$issioners .ere dul4 appointed,
the plaintiff selectin% one, the defendant another and the court selectin% the third. In due ti$e and after
due deli*eration, the co$$issioners etc., of the said su%ar cane per pico .as P1."). +here .ere :,""8.8:
picos of su%ar cane, .hich calculated at the rate of per pico for cuttin%, %rindin%, etc., .ould a$ount to
P:,8!8.'), .hich a$ount the lo.er court allo.ed the recei&er. +he co$$issioners appointed *4 the lo.er
court .ere $en .ho had e5perience in the cuttin% and %rindin% of su%ar cane. It .as the dut4 of the
recei&er to har&est the su%ar cane at least possi*le cost to the o.ners of the crop. +here is $uch proof in
the record to indicate that the recei&er did not har&est the crop of su%ar cane as e5peditiousl4 as he should
ha&e done. +here is no proof in the record .hich sho.s that the a$ount esti$ated *4 the said
co$$issioner for the cuttin%, %rindin%, etc., of the su%ar cane in @uestion, .as not a reasona*le a$ount
for that e5pense. Be find nothin% in the record .hich 6ustifies us in $odif4in% the decision of the lo.er
court .ith reference to this first assi%n$ent of error.
Bith reference to the second assi%n$ent of error, it appears that the recei&er atte$pted to char%e
P1().:!, as interest on $one4 *orro.ed *4 hi$ durin% his ad$inistration as recei&er. +here is no proof in
the record .hich sho.s that it .as necessar4 for hi$ to *orro. $one4 to properl4 conser&e the interests
of the o.ners and creditors interested in the ad$inistration of the hacienda. +he lo.er court correctl4 said,
;a recei&er has no authorit4 to *orro. $one4 unless the sa$e is e5pressl4 %i&en *4 the court.; Be .ould
*e inclined, ho.e&er, to allo. this a$ount EP1().:!F had the necessit4 *een full4 de$onstrated for
*orro.in% the $one4. In the a*sence of authorit4 e5pressl4 %i&en and especiall4 in the a*sence of proof of
the a*solute necessit4 for incurrin% this ite$ of e5pense, .e refuse to $odif4 the conclusions of the lo.er
court .ith respect to this ite$.
Bith reference to the third assi%n$ent of error a*o&e noted, the recei&er included in his account the ite$
of P,""1.'(, *ein% the a$ount, accordin% to this state$ent, of $one4 and effects deli&ered to "#os
aparceros de #a hacienda" durin% his ad$inistration. It is a .ell kno.n custo$ a$on% su%ar %ro.ers in the
Philippine Islands, that the aparceros plant and culti&ate su%ar cane at their o.n e5pense, recei&in% one-
half of the su%ar produced and deli&erin% the other half to the o.ner land. It is also a .ell kno.n custo$
that the o.ners of the land fro$ ti$e to ti$e ad&ance $one4 and effects to the aparceros, deductin% the
&alue of the sa$e fro$ the &alue of the su%ar after the sa$e is har&ested. In the present case it appears
that the recei&er deli&ered one-half of the su%ar to theaparceros .ithout deductin% the a$ount of $one4
and effects ad&anced to the$. If he, in fact, ad&anced to theaparceros the said su$ EP,""1.'(F he should
ha&e deducted it fro$ the a$ount due said aparceros, and not ha&e atte$pted to collect the sa$e fro$
the a$ount due the o.ner of the hacienda, pre6udicin% the o.ner of the hacienda there*4. Cere a%ain the
recei&er e5ceeded his authorit4. Ne&ertheless .e .ould *e inclined to allo. this a$ount EP,""1.'(F if it
.ere a 6ust char%e a%ainst the ad$inistration of the hacienda. ,ut, as .as said a*o&e, it is not a 6ust
4 | P a g e
char%e a%ainst the o.ner of the hacienda. +his a$ount should ha&e *een collected fro$ the aparceros.
0ud%e -cCa*e co$$itted no error in disallo.in% this ite$ in the account of the recei&er.
Bith reference to the fourth assi%n$ent of error a*o&e noted, it .ill *e seen that the recei&er included in
his account the su$ of P(,:!".:) as co$pensation for his ad$inistration as recei&er. +he lo.er court
disallo.ed that a$ount *ut did allo. hi$ the su$ of P1,""" as his 6ust co$pensation as recei&er. +he
lo.er court, in the appoint$ent of the recei&er, did not fi5 an4 su$ for his co$pensation= neither is it
custo$ar4 for courts in appointin% recei&ers to fi5 their co$pensation in ad&ance. +heir co$pensation is a
$atter .hich is al.a4s left to the sound discretion of the court, to *e allo.ed fro$ ti$e to ti$e. +he
recei&er atte$pted to reco&er as his co$pensation 18 per cent of the &alue of the su%ar. +he lo.er court
found that the a$ount of P(,:!". :) .as an unreasona*le a$ount to *e allo.ed as co$pensation for the
ser&ices of the recei&er in the present case. +he court found that the recei&er $i%ht ha&e done all the .ork
.hich he did do in the course of his ad$inistration as recei&er in one hundred da4s. +he Code of
Procedure in Ci&il Actions allo.s ad$inistrators of estates of deceased persons the su$ of P( a da4 for
the ti$e actuall4 e$plo4ed in the ad$inistration of the estate. +he lo.er court, follo.in% this pro&ision of
the la., *elie&in% the present case to *e so$e.hat analo%ous, allo.ed the recei&er P( a da4 for his
ser&ices. +he lo.er court also allo.ed an additional a$ount, the *asis of .hich does not clearl4 appear in
the record, $akin% the total co$pensation of the recei&er the su$ of P1,""". A%ainst that order the o.ner
of the hacienda did not appeal. Considerin% the ne%li%ent $anner in .hich the recei&er ad$inistered the
hacienda, as appears fro$ the record, as .ell as his ne%li%ence in co$pl4in% .ith the &arious orders of the
court .ith reference to renderin% accounts, .e are of the opinion that the su$ of P1,""" is, in fact, $ore
than a 6ust co$pensation for his ser&ices. In &ie., ho.e&er, of the fact that the o.ner of the hacienda did
not appeal fro$ the order of the court allo.in% said su$ EP1,"""F .e appro&e the findin% of the lo.er
court.
Bith reference to the fifth assi%n$ent of error a*o&e noted, the appellant see$s to *elie&e that section
1)8 of the Code of Procedure in Ci&il Actions %a&e hi$ full po.er to ad$inister the propert4 placed under
his control as recei&er as he $i%ht dee$ .ise and necessar4, .ithout an4 inter&ention on the part of the
court or of the interested parties. +he appellant e&identl4 o&erlooked the phrase of said article .hich sa4sA
;+he recei&er shall ha&e, under the contro# of the court in which the action is pendin*, po.er, etc.; +he
6ud%e of the lo.er court in his decision %oes into detail at len%th and cites authorities e5tensi&el4, for the
purpose of sho.in% the %eneral duties, po.ers and responsi*ilities of recei&ers, e&identl4 for the purpose
of instructin% recei&ers in his district. +he recei&er is %enerall4 defined to *e ;an indifferent person *et.een
the parties liti%ant, appointed *4 the court and on *ehalf of all the parties, and not of the plaintiff or
defendant onl4, to recei&e and hold the thin% or propert4 in liti%ation, pendin% the suit E,ooth vs. Clark, 1)
Co.. E<. S.F,##, 1F, to recei&e the rents, issues or profits of the land or thin% in @uestion E,oth vs.
Clark, supraF, to recei&e the rents or other inco$e, to hold possession and control of the propert4 .hich is
the su*6ect $atter of the liti%ation, and to dispose of the sa$e or deli&er it to such person or persons as
$a4 *e directed *4 the court. EBis.all vs. Kun>, 1) Ill., 11".F; +he reports of the decisions of the courts
are filled .ith decisions supportin% the a*o&e doctrine. +he recei&er is said to *e the ar$ and hand of the
courtJa part of the $achiner4 of the court, *4 .hich the ri%hts of parties are protected. Ce is re@uired not
onl4 to preser&e the propert4, *ut to protect the ri%hts of all of the parties interested. If he is not &ersed in
the la., he should secure le%al ad&ice, .ith the per$ission of the court and in case of dou*t should ad&ise
.ith the court and recei&e direction.
After a full consideration of the a*o&e assi%n$ents of error, in connection .ith the facts contained in the
record, .e find no reason for chan%in% or $odif4in% the decision of the lo.er court, and the sa$e is
here*4 affir$ed, .ith costs.
+orres' $apa and $ore#and' ,,.' concur.
HHHHHHHHHHHHHHHHHHHHH
G.R. No. LA2B508 A,-/1 25 19?9
CEN#RAL SA>MILLS INC. plaintiff-appellee,
&s.
AL#O SURE#+ $ INSURANCE CO. E# AL. defendants,
AL#O SURE#+ $ INSURANCE CO. defendant-appellant.
$. )eres Cardenas for p#aintiff-appe##ee.
(ristorenas and "e#ova for defendant-appe##ant.
)ARREDO J.:
+his appeal fro$ the order of the Court of 1irst Instance of -anila dated 7cto*er (, 1'!" in its Ci&il
Case No. #))(, entitled Central Sa.$ills, Inc. &s. Alto Suret4 3 Insurance Co., et al., orderin% the
appoint$ent of a recei&er of the properties of defendant-appellant Alto Suret4 3 Insurance Co$pan4 as
.ell as fro$ the order of 7cto*er #8, 1'!" den4in% the $otion for reconsideration thereof .as certified to
this Court *4 the Court of Appeals in a resolution, the pertinent portions of .hich read thusA
+he undisputed e&idence presented durin% the hearin% on the petition for recei&ership is
su$$ari>ed *4 the court a -uo, as follo.sA
+hat a decision .as rendered in the a*o&e-entitled case in fa&or of plaintiff and a%ainst the
defendants, 6ointl4 and solidaril4, one of .hich is the defendant Alto Suret4 3 Insurance Co., Inc. E25hi*it
A-Recei&ershipF= that a .rit of e5ecution E25hi*it ,-Recei&ership .as issued to enforce said 6ud%$ent= that
said .rit of e5ecution .as returned *4 the Sheriff of -anila unsatisfied E25hi*it C- Recei&ershipF= that on
Au%ust (, 1'8:, the Insurance Co$$issioner .rote a letter addressed to Alto Suret4 3 Insurance Co., Inc.
E25hi*it 2-Recei&ershipF, the last portion of .hich is @uoted as follo.sA
1inancial Condition J +he e5a$ination disclosed that the Alto Suret4 3 Insurance Co., Inc., had, as
of ?ece$*er 1, 1'8), total ad$itted assets of P)18,!:'.#', as a%ainst total lia*ilities of P!(8,"'!.'( and
capital paid-up of P#8',)""."" .hich .as i$paired in the a$ount of P1:',"').!8, +he co$pan49s net
.orth a$ounted to P)",!"#.8 as of ?ece$*er 1, 1'8). Co$pliance .ith our letter of 0ul4 1:, 1'8:,
re%ardin% the co&erin% of said i$pair$ent is reiterated.
Lour failure to co$pl4 .ith all the fore%oin% re@uire$ents .ithin the ti$e li$it set forth in this letter
.ill co$pel us to suspend or re&oke the certificates of authorit4 to do insurance *usiness issued in fa&or of
the co$pan4, as .ell as all other certificates %ranted to the co$pan49s officers, %eneral a%ents, andGor to
reco$$end the prosecution of its officers.
that on -a4 1!, 1'!", the Insurance Co$$issioner addressed another letter $arked e5hi*it G-
Recei&ership, the last portion of .hich is also @uoted as follo.sA
!. 1inancial Condition as of Septe$*er ", 1'8'. J +he e5a$ination disclosed that the Alto Suret4
3 Insurance Co$pan4 Inc., had, as of Septe$*er ", 1'8', total ad$itted assets of P1!1,1#1.:( as
a%ainst total lia*ilities of P!(',1".:: and total net .orth or capital deficienc4 of P(::,""'."(. +he capital
stock paid-up of P8',)""."" .as i$paired to the e5tent of P)(),)"'."(, .hich is e@ual to the paid-up
capital of P#8',)""."" and capital deficienc4 of P(::,""'."(.
In &ie. of the precarious financial condition of the co$pan4, it is re@uired that the stockholders of
the Alto Suret4 3 Insurance Co., Inc., put up .ithin fifteen E18F da4s fro$ receipt of this letter, the a$ount
of P)(),)"'."( in order to co&er the i$pair$ent or deficit of an e@ual a$ount, and to co$pl4 i$$ediatel4
.ith all the other re@uire$ents $entioned in the fore%oin%.
Receipt of 4our ad&ice .ithin the fifteen-da4 period %i&en 4ou for co$pl4in% .ith the re@uire$ent
stated a*o&e, .ill *e appreciated.
In %rantin% the petition for recei&ership, the court a -uo saidA
1irstl4, plaintiff has offered the pro&isions of Section 1, Rule !1 of the Rules of Court, $ore
particularl4 para%raph EdF thereof. In support of its clai$, plaintiff has cited the case of Philippine +rust Co.
&s. 1rancisco Santa$aria 8 Phil. (!, .herein the Supre$e Court ordered the appoint$ent of a recei&er
of all the properties and assets of a 6ud%$ent de*tor in aid of e5ecution of 6ud%$ent rendered a%ainst it.
+he action a%ainst the 6ud%e$ent de*tor in the said case .as for the reco&er4 of a su$ of
$one4.#awphi1.n.t
Secondl4 plaintiff has cited the pro&isions of Section #, Rule !1 of the Rule of court, @uoted as
follo.sA
5 | P a g e
S2C. #. Creditor or stoc/ho#der may app#y for receiver for corporation. J Bhen a corporation has
*een dissol&ed, or is insol&ent or is in i$$inent dan%er or insol&enc4, or has forfeited its corporate ri%hts,
a recei&er $a4 *e appointed on the co$plaint of a creditor, stockholder, or $e$*er of the corporation.
In relation to this pro&ision of la., 25hi*its 2-Recei&ership and G-Recei&ership tend to sho. that
defendant Alto Suret4 3 Insurance Co., Inc., is in i$$inent dan%er of insol&enc4. As a $atter of fact, no
less than the Insurance Co$$issioner of the Philippines has $anifested in his letter dated -a4 1!, 1'!"
and $arked as 25hi*it G-Recei&ership that the defendant corporation and is in a precarious financial
condition.
+hirdl4, plaintiff has cited the pro&ision of Section Rule ' of the Rules of Court, @uoted as follo.sA
S2C. '. (ppointment and bond of receiver. J +he 6ud%e $a4, *4 order, appoint the sheriff, or
other proper officer or person, recei&er of the propert4 of the 6ud%$ent de*tor= and he $a4 also, *4 order,
for*id a transfer or other disposition of, or an4 interference .ith, the propert4 of the 6ud%$ent de*tor not
e5e$pt fro$ e5ecution. If a *onded officer *e appointed recei&er, he and his sureties shall *e lia*le on his
official *ond as such recei&er, *ut if another person *e appointed he shall %i&e a *ond as recei&er as in
other cases.
It $ust *e re$e$*ered that plaintiff filed the present petition for recei&ership in &ie. of the return of
the Sheriff of -anila E25hi*it C-Recei&ershipF to the effect that the .rit of e5ecution $arked 25hi*it ,-
Recei&ership could not *e satisfied for the reasons stated therein.
It is not disputed *4 the appellant co$pan4 that thou%h in the 4ears 1'88 and 1'8! it .as in a
position to pa4 install$ents, or Septe$*er 1, 1'8: and thereafter, it .as no lon%er in a position to $ark
an4 pa4$ents .hatsoe&er.
In &ie. of all the a*o&e, the issue raised in this appeal is purel4 a @uestion of la.= this appeal is
therefore *e4ond the co$petence of this Court.
ACC7R?INGDL, let this case *e certified, as it is here*4 certified, under the pro&isions of the
0udiciar4 Act of 1'(:, as a$ended, to the Conora*le Supre$e Court for proper disposition.
Accordin%l4, the onl4 issue for resolution *4 this Court in this appeal is .hether or not, in an action
for the collection of a de*t, .here there is alread4 a final and e5ecutor4 6ud%$ent, the Court has the
authorit4 to appoint a recei&er of the properties of the 6ud%$ent de*tor .hich are not in&ol&ed in the action,
in aid of the e5ecution of said 6ud%e$ent.
+his issue is not ne.. Al$ost on all fours .ith the present case is that of )hi#ippine +rust Co. vs.
Santamaria,
1
decided .a4 *ack on Septe$*er (, 1'#'. +here it .as heldA
+his is a petition for mandamus in .hich the petitioner alle%es that it is plaintiff in ci&il cases Nos.
!)#" and !)#1 pendin% in the Court of 1irst Instance of Iloilo. +hat on 7cto*er 1', 1'#), that court in
those actions rendered the follo.in% 6ud%$entsA
CI/ID CAS2 N7. !)#"
Bherefore, 6ud%$ent is rendered in so far as it refers to said case No. !)#", in fa&or of the
Philippine +rust Co. and a%ainst the defendant 1. -. Laptico 3 Co., Dtd., for the su$ of P#8,"""."", .ith
interest thereon at the rate of ' per cent per annu$ fro$ -arch !, 1'#(, until paid, and .ith le%al interest
of ! per cent per annu$ on the accu$ulated interest fro$ the filin% of the co$plaint to the date of the
6ud%$ent, to%ether .ith the costs of the action.
CI/ID CAS2 N7. !)#1
Bherefore, 6ud%$ent is rendered a%ainst 1. -. Laptico 3 Co., Dtd., 6ointl4 .ith the /isa4an General
Suppl4 Co., Inc., for the su$ of P8","""."" .ith interest thereon at the rate of ' per cent per annu$ fro$
1e*ruar4 11, 1'#(, until paid, and .ith le%al interest fro$ the filin% of the co$plaint to the date of the
6ud%$ent. And 6ud%$ent is rendered a%ainst the defendant 1. -. Laptico 3 Co., Dtd., for per cent per
annu$ fro$ -arch 8, 1'#(, plus the le%al interest of ! per cent per annu$ on the accu$$ulated interest
fro$ the date of filin% of the co$plaint to that of the 6ud%$ent, to%ether .ith costs of this action.
It is alle%ed that on such 6ud%$ents there is no. due and o.in% fro$ the defendant to the petitioner
a*out P11","""."". +hat on No&e$*er #8, 1'#), the plaintiff asked the court to issue and e5ecution
pendin% the defendant9s appeal to this court, .hich re@uest .as denied on ?ece$*er 8, 1'#). +hat an
appeal .as taken to this court .hich affir$ed the 6ud%$ents on 7cto*er #8, 1'#:. +hat on No&e$*er #,
1'#:, plaintiff a%ain asked the lo.er court to issue an e5ecution on the 6ud%$ents, and that e5ecution .as
issued on ?ece$*er 1(, 1'#:. +hat the sheriff $ade return that no propert4 of defendant 1.-. Laptico 3
Co., Dtd., could not pa4 the$. +hat on 0anuar4 1:, 1'#', the petitioner asked the lo.er court to appoint a
recei&er of the propert4 of 1. -. Laptico 3 Co., Dtd. +hat on -arch !, 1'#', the court denied that petition.
+hat on April #(, 1'#', the petitioner pra4ed the court for an order to re@uire the $ana%er of 1. -. Laptico
3 Co., Dtd., to appear and ans.er interro%atories as to the assets of 1.-. Laptico 3 Co., Dtd. +hat on 0une
1, 1'#', 1. -. Laptico 3 Co., Dtd., asked the court to suspend the e5ecution of the 6ud%$ents for a period
of four $onths, .hich re@uest .as opposed *4 the petitioner on the %round that the court .as .ithout
6urisdiction, and it a%ain rene.ed its $otion for the court to appoint a recei&er. +hat the $ana%er appear in
court on 0une #', 1'#', fro$ .hich it appeared that the propert4 of the defendant .as *ein% disposed of
to the da$a%e of the petitioner= that 1. -. Laptico 3 Co., Dtd., had rendered the petitioner a false and
$isleadin% state$ent of its assets and lia*ilities= and that after an e5a$ination of the $ana%er and as a
result of the disclosures $ade *4 hi$, petitioner a%ain pra4ed for the appoint$ent if a recei&er. +hat on
0une ", 1'#', the court denied the application, and ;suspended e5ecution of the said 6ud%$ents for a
period of four $onths fro$ and after the "th da4 of 0une, 1'#', to %i&e the respondent 1. -. Laptico 3
Co., Dtd., $ore ti$e to pa4 said 6ud%$ents.; +hat on 0ul4 1#, 1'#', the court a%ain affir$ed its order of
0une thirtieth, and on 0ul4 18, 1'#', denied the $otion for reconsideration.
5 5 5 5 5 5 5 5 5
Be are clearl4 of the opinion that the lo.er court e5ceeded its 6urisdiction in suspendin% the
e5ecution for the period of four $onths fro$ 0une ", 1'#'. Be are also of the opinion that upon the facts
sho.n in this record, it .as the dut4 of the court to appoint a recei&er for the 1. - Laptico 3 Co., Dtd., to
protect and preser&e its propert4 and assets for the use and *enefit of its creditors and, in particular, this
petitioner, under the pro&isions of section (: of the Code of Ci&il Procedure. +he &er4 fact that the
6ud%$ents in @uestion .ere rendered on 7cto*er 1', 1'#), and that no part of the$ has 4et *een paid,
and that 1. -. Laptico 3 Co., Dtd., has so far *een a*le to defeat the petitioner in the collection of its
6ud%$ents, in a &er4 stron% and co%ent reason .h4 a recei&er should *e appointed.
It is the order of the court that a .rit of mandamus *e forth.ith issued as pra4ed for in the petition,
and that the lo.er court at once appoint a recei&er of all the propert4 and assets of 1. -. Laptico 3 Co.,
Dtd., and that petitioner ha&e 6ud%$ents for costs. So ordered.
Bith this precedent, it is o*&ious that the order of recei&ership appealed fro$ should *e affir$ed.
7nl4 one point of procedure need *e clarified no.. In its petition for the appoint$ent of a recei&er,
plaintiff-appellee relied e5pressl4 onl4 on the pro&isions of Section 1EdF of Rule !1 ERules of 1'("F .hich
pro&ided as follo.sA
S2C+I7N 1. When and by whom receiver appointed. J 7ne or $ore recei&er of the propert4, real
or personal, .hich is su*6ect of the action, $a4 *e appointed *4 the 6ud%e of the Court of 1irst Instance in
.hich the action is pendin%, or *4 a 0ustice of the Court of Appeals or of the Supre$e Court, in the
follo.in% casesA
5 5 5 5 5 5 5 5 5
EdF After 6ud%$ent, to preser&e the propert4 durin% the tendenc4 of an appeal or to dispose of it accordin%
to the 6ud%e$ent, or to aid e5ecution .hen the e5ecution has *een returned unsatisfied or the 6ud%$ent
de*tor refuses to appl4 his propert4 in satisfaction of the 6ud%$ent, or other.ise to carr4 the 6ud%e$ent
into effect=
+his specific citation naturall4 %a&e defendant-appellant cause to oppose the petition on the %round
that underline pro&ision thus cited, the recei&ership conte$plated is onl4 that ;of the propert4, real or
personal, .hich is the su*6ect of the action.; It .as onl4 in its $e$orandu$, .hich is not included in the
record on appeal *ut $entioned onl4 in the opposition to the $otion for reconsideration of the order
%rantin% the recei&ership Ep. 8", Record on AppealF, that plaintiff-appellant $ust ha&e referred the court a
-uo to other pro&isions of the Rules, particularl4, Section # of Rule !1 and Section ' of Rule '. +hus, as
$a4 *e seen fro$ the a*o&e-@uoted portions of its order of recei&ership, the said court, $ade reference to
6 | P a g e
all the three pro&isions .hich it said .ere ;offered; or cited *4 the plaintiff-appellee, na$el4A Section 1 EdF,
Rule !1, Section #, Rule !1 and Section ', Rule '. See$in%l4, the court a -uo .as uncertain as to
.hich particular one of these pro&isions .as the proper *asis of authorit4 *ecause it si$pl4 ruled that
;after considerin% the e&idence and the ar%u$ent adduced *4 the parties in relation to plaintiff9s petition for
recei&ership and further considerin% the outstandin% o*li%ations of defendant corporation, the Court is of
the opinion that plaintiff9s $otion for recei&ership is .ell-taken and $ade no co$$it$ent as to .hich rule
or pro&ision it .as rel4in% upon for its action.
It .ill *e noted that in that case of )hi#ippine +rust Co. vs. Santamaria, a*o&e-referred to, this Court
cited Section (: of the Code of Ci&il Procedure EAct 1'"F in holdin% that ;it .as the dut4 of the court to
appoint a recei&er for the 1.-. Laptico 3 Co., Dtd. to protect and preser&e its propert4 and assets for the
use and *enefit of its creditors and, in particular, this petitioner.; +he section cited reads thusA
S2C. (:. ,ud*e may (ppoint "eceiver and )rohibit +ransfers' and so forth. J +he 6ud%e $a4, *4
order, appoint the %o&ernor, or his deput4 of the proper pro&ince, or other suita*le person, a recei&er of the
propert4 of the 6ud%$ent de*tor, and he $a4 also, *4 order, for*id a transfer or other disposition of, or an4
interference .ith, the propert4 of the 6ud%$ent de*tor not e5e$pt *4 la..
+his section .as under Chapter MM entitled ;Proceedin%s Supple$entar4 to the 25ecution;. In other
.ords, it .as part of the rules of proceedin% %o&ernin% aids to the e5ecution of 6ud%$ents. In the Rules of
Court of 1'(", the said section had its counter-part in Section ' of Rule ' readin% as follo.sA
S2C. '. (ppointment and bond of receiver. J +he 6ud%e $a4, *4 order, appoint the sheriff, or
other proper officer or person, recei&er of the propert4 of the 6ud%$ent de*tor= and he $a4 also, *4 order,
for*id the transfer or other disposition of, or an4 interference .ith, the propert4 of the 6ud%$ent de*tor not
e5e$pt fro$ e5ecution. If a *onded officer *e appointed recei&er, he and his sureties shall *e lia*le on his
official *ond as such recei&er *ut if another person *e appointed he shall %i&e a *ond as recei&er as in
other cases.
#
Indeed, this is the pro&ision applica*le to the circu$stances of the case at *ar. Clearl4, Section 1 EdF
of Rule !1

is not applica*le here *ecause, as contended *4 defendant-appellant, all the cases of
recei&ers conte$plated in said section are onl4 cases .herein the propert4 or properties *ein% placed
under recei&ership are those in&ol&ed in the &er4 liti%ation in .hich such recei&ership is ordered. +his is
e&ident fro$ the openin% para%raph of said section .hich sa4s that ;one or $ore recei&ers of the property'
rea# or persona#' which is the sub0ect of the action, $a4 *e appointed ... in the follo.in% cases. [2$phasis
7urs]. In other .ords, this @ualif4in% clause, ;the propert4, real or personal, .hich is the su*6ect of the
action; applies to all the cases specified in the fi&e para%raphs in said Section 1, .hich areA
Section 1. J ....
EaF Bhen a corporation has *een dissol&ed, or is insol&ent, or is in i$$inent dan%er of insol&enc4, or has
forfeited its corporate ri%hts=
E*F Bhen it appears fro$ the co$plaint or ans.er, and such other proof as the 6ud%e $a4 re@uire, that the
part4 appl4in% for the appoint$ent of recei&er has an interest in the propert4 or fund .hich is in dan%er of
*ein% lost, re$o&ed, or $ateriall4 in6ured unless a recei&er *e appointed to %uard and preser&e it=
EcF Bhen it appears in an action *4 the $ort%a%ee for the foreclosure of a $ort%a%e that the propert4 is in
dan%er of *ein% .asted or $ateriall4 in6ured, and that its &alue is pro*a*l4 insufficient to dischar%e the
$ort%a%e de*t, or that the parties ha&e so stipulated in the contract of $ort%a%e=
EdF After 6ud%$ent, to preser&e the propert4 durin% the pendenc4 of an appeal or to dispose of it accordin%
to the 6ud%$ent, or to aid e5ecution .hen the e5ecution has *een returned unsatisfied or the 6ud%$ent
de*tor refuses to appl4 his propert4 in satisfaction of the 6ud%$ent, or other.ise to carr4 the 6ud%$ent into
effect=
EeF Bhene&er in other cases it appears that the appoint$ent of a recei&er is the $ost con&inient and
feasi*le $eans of preser&in%, ad$inisterin%, or disposin% of the propert4 in liti%ation.
And it is undisputed that in the case at *ar, the properties *ein% placed under recei&ership are not
the su*6ect of the action.
Dike.ise, it is @uite plain that Section # of Rule !1
(
is not also applica*le to this case. +his section
refers to a recei&ership, not as an aid to e5ecution of a final 6ud%$ent in an ordinar4 action, *ut as a
conse@uence of the dissolution of a corporation or its forfeiture of its corporate ri%hts= and .ith respect to
cases of insol&enc4 or i$$inent dan%er of insol&enc4 of corporations, the recei&ership conte$plated in
this section $ust *e in relation e5clusi&el4 to such insol&enc4 or i$$inent dan%er thereof placed *efore
the court in an appropriate principal action, and a%ain, not $erel4 as an ordinar4 action.
In an e&ent, it is necessar4 or superfluos to *rin% in Sections 1 and # of Rule !1, .hich, to sa4 the
least, are of dou*tful applica*ilit4, .hen Section ' appears to *e clearl4 and fittin%l4 applica*le. If at all,
the other pro&isions of Rule !1, $a4 *e resorted to onl4 insofar as the4 prescri*e the procedure and the
*ond related to the carr4in% out of such recei&ership. +here *ein% no detailed rules under the authorit4 of
Section !, Rule 1#( Eno. Rule 18F, the pertinent pro&isions of Rule !1 $a4 *e adopted. Said section
pro&idesA
S2C. !. $eans to carry 0urisdiction into effect. J Bhen *4 la. 6urisdiction is conferred on a court or
6udicial officer, all au5iliar4 .rits, processes and other $eans necessar4 to carr4 it into effect $a4 *e
e$plo4ed *4 such court or officer= and if the procedure to *e follo.ed in the e5ercise of such 6urisdiction is
not specificall4 pointed out *4 these rules, an4 suita*le process or $ode of proceedin% $a4 *e adopted
.hich appears $ost confor$a*le to the spirit of said rules.
8
BC2R217R2, .ith the a*o&e clarification that Section ' of Rule ' of the Rules of 1'(", no.
Section ( of Rule ' of the current Rules, is the pro&ision applica*le to the recei&ership herein in
@uestion, the sa$e *ein% in aid for $one4, the disputed orders of the court a @uo dated 7cto*er (, 1'!"
and 7cto*er 18, 1'!" are here*4 affir$ed, .ith costs a%ainst defendant-appellant, Alto Suret4 3
Insurance Co$pan4, Inc.
1i%on' $a/a#inta#' 2a#divar' Sanche%' Castro' Fernando' Capistrano and +eehan/ee' ,,.' concur.
"eyes' ,.3.4.' (ct*. C.,.' concurs and certifies that the Chief ,ustice voted in favor of this opinion before
*oin* on officia# #eave.
HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH
No&e$*er #, 1'18
G.R. No. D-1"1"!
AN#ONIO DE LA RIVA, plaintiff-appellee,
&s.
RA%AEL MOLINA SALVADOR E# AL., defendants-appellants.
4awrence' "oss and 3#oc/ for appe##ants.
(#fredo Chicote and (*ustin (#vare% for appe##ee.
MORELAND J.:
In the 4ear 1'"8 the defendant Rafael -olina Sal&ador *e%an an action a%ainst the plaintiff for the
reco&er4 of a*out P(#,""", and, in that action, secured the appoint$ent of 0oa@uin Na&arro, another of the
defendants in this action, recei&er of real and personal propert4 o.ned *4 ?e la Ri&a in the Island of
Catanduanes. +he recei&er took possession of the propert4 and %a&e a *ond in the su$ of P8","""
conditioned for the faithful perfor$ance of the duties of his office, the other defendants, 0uan Garcia and
1ernando -artine>, *eco$in% sureties thereon. +he recei&er .as appointed in Au%ust, 1'"8, and in
0anuar4, 1'"), the Supre$e Court set aside the order appointin% a recei&er on the %round that, under the
pro&isions of la. relati&e to recei&erships, there .as no authorit4 for the appoint$ent of a recei&er in the
action na$ed. E-olina &s. ?e la Ri&a, ) Phil. Rep., "#F.
+he propert4 .as in&entoried at the ti$e possession .as taken *4 the recei&er and the &alue, as set out in
the in&entor4, .as so$ethin% $ore than P#1,""". After the re&ersal *4 the Supre$e Court of the order
appointin% the recei&er the latter *e%an a proceedin% to account. 7*6ections .ere presented to certain
phases of the account, *ut none touchin% the condition of the propert4. +he record does not disclose .hat
*eca$e of this proceedin%s or of the o*6ections presented therein and .e find nothin% further in
connection there.ith. It appears, ho.e&er, that the propert4, *oth real and personal, .hich the recei&er
had in his possession at the ter$ination of the recei&ership .as sei>ed *4 the sheriff of Al*a4 under
7 | P a g e
e5ecutions issued on 6ud%$ents a%ainst ?e la Ri&a, in fa&or of Gi**s, Gale 3 Carr and 2nri@ue 1. So$es,
and .as dul4 sold at pu*lic sale under said e5ecutions. It further appears that the proceeds of the sale of
such propert4 .ere not sufficient to pa4 the 6ud%$ent under .hich the le&ies .ere $ade.
+he present action .as *e%un in 1'":. In the first cause of action the plaintiff seeks to reco&er P:,""" for
the deterioration of the propert4, durin% the recei&ership, due to the ne%li%ence of the recei&er= the su$ of
P",""" for the ne%li%ent failure of the recei&er to continue the *usiness .hich, it is alle%ed, .as in
operation ta the ti$e the recei&er .as appointed= and P8",""" da$a%es resultin% fro$ an alle%ed
conspirac4 *et.een the recei&er and the defendant Rafael -olina Sal&ador, .here*4 he latter .as
per$itted to appropriate to hi$self, in part at least, the *usiness of ?e la Ri&a, and *4 .hich the use of a
considera*le portion of the propert4 in the hands of the recei&er .as per$itted to said -olina .ithout
co$pensation, or .ith a co$pensation &er4 inade@uate.
+he second cause of action is *ased on the .ron%ful appoint$ent of the recei&er, it *ein% alle%ed that the
appoint$ent .as procured *4 -olina .ithout 6ust cause. +he co$plaint, so far as this cause of action is
concerned, .as dis$issed *4 the trial court and no appeal .as taken fro$ that dis$issal.
+he defendants de$urred to the co$plaint on the %round that there .as a $is6oinder of parties defendant
and the de$urrer .as o&erruled and e5ception taken. If the de$urrer had *een .ell fra$ed, .e .ould
ha&e no hesitation in sa4in% that it .as i$properl4 o&erruled. +here is clearl4 a $is6oinder of parties
defendant and, on proper o*6ection, the court should ha&e re$edied that condition. +he de$urrer ha&in%
*een dis$issed, ho.e&er, .e are *ound to sustain the courtNs action if there is an4 le%al %rounds on .hich
it $a4 *e done, .hether it *e specificall4 stated *4 the lo.er court as a %round or not. <nder the decision
of this court in the case of 4i%arra*a 5ermanos vs. &ap +ico E#( Phil. Rep., 8"(, a de$urrer, to *e a
proper pleadin%, $ust not onl4 set out the Oo*6ections to the co$plaint,P *ut it O$ust distinctl4 specif4 the
%rounds upon .hich an4 of the o*6ections to the co$plaint Q are taken.P +he de$urrer in this case si$pl4
states the o*6ections to the co$plaint .ithout specif4in% the %rounds of the o*6ection= and, in that
condition, or could *e dis$issed *4 the court on its o.n initiati&e. Co.e&er, that @uestion is acade$ic in
&ie. of the fact that .e ha&e co$e to the conclusion that the plaintiff cannot reco&er.
Concernin% the cause of action *ased on the %round that the defendant -olina had procured the
appoint$ent of the recei&er .ithout sufficient cause, .e ha&e alread4 said that it .as, in effect, dis$issed
and that no appeal .as taken fro$ the order of dis$issal. Be $i%ht add, ho.e&er, that the facts .hich
$ust *e found to e5ist *efore an action .ill lie under section 1)) of the Code of Ci&il Procedure .ere not
present in the case *efore us. +he application for the recei&er .as not e6 parteand no *ond .as %i&en to
protect the defendant fro$ the effects of an appoint$ent .ithout cause= and no *ond ha&in% *een %i&en no
lia*ilit4 e5isted. E-olina &s. So$es, #( Phil. Rep., ('.F -oreo&er, if da$a%es .ere to *e sou%ht for such
appoint$ent, the4 should ha&e *een de$anded in the action in .hich the recei&er .as appointed and not
in action *e%un separatel4 for that purpose. ELap <nki &s. Chua 0a$co, 1( Phil. Rep., !"#.F In spite of all
this, ho.e&er, in sustainin% plaintiffNs alle%ed ri%ht to reco&er as set out in certain other alle%ations of the
co$plaint, the court sa4s in partA O+he defendants, Rafael -olina and 0oa@uin Na&arro, are lia*le for all the
da$a%es arisin% to plaintiff fro$ the appoint$ent of a recei&er, caused *4 the i$proper perfor$ance of his
duties *4 the recei&er= e&en thou%h -olina had %i&en no *ond hi$self directl4, there .as an i$plied
contract in o*tainin% the appoint$ent of a recei&er, under .hich he .as o*li%ated to pa4 the defendant in
that action the da$a%es .hich he $i%ht suffer fro$ such appoint$ent, no $atter ho. the4 ca$e a*out,
that appoint$ent *ein% i$proper.P It is apparent that the trial court confused the da$a%es resultin% fro$
the appoint$ent of the recei&er, .here the appoint$ent .as procured .ithout 6ust cause, and the
da$a%es .hich arise after the recei&er has *een appointed, due to his ne%li%ence or $is$ana%e$ent.
+he lia*ilit4 in these t.o cases rests in different principles. +he ri%ht to da$a%es for procurin% the
appoint$ent of a recei&er .ithout 6ust cause Ethere *ein% no $alicious prosecutionF is statutor4 E1)), Code
Ci&. Proc.F .hile the ri%ht to da$a%es *ased on the ne%li%ence or $isconduct of the recei&er arises under
the %eneral principles of the la.. E-olina &s. So$es, #( Phil. Rep., ('F. In the for$er case the da$a%es,
or part of the$, $a4 *e caused *efore the recei&er @ualifies or takes possession of the propert4, .hile in
the latter, the in6ur4 occurs onl4 after the recei&er has @ualified and taken possession of the propert4. In
the for$er case the lia*ilit4 rests on statute .hile in the other it rests on the ne%li%ence or $isconduct of
the recei&er. In the for$er the person o*tainin% the appoint$ent of the recei&er is responsi*le for the
da$a%es, if he has si%ned the *ond descri*ed in section 1)) of the Code of Ci&il Procedure. E-olina &s.
So$es, #( Phil. Rep., ('.F In the latter he is not responsi*le in an4 e&ent. +he *ond is %i&en *4 the
recei&er, and not *4 the person procurin% his appoint$ent, and the lia*ilit4 of the recei&er, if an4, arises
fro$ his o.n ne%li%ence, and in&ol&es in no .a4 the person .ho o*tained his appoint$ent. 1or the acts of
the recei&er after his appoint$ent no one is responsi*le *ut hi$self and his sureties. -olina cannot, in this
action, therefore, *e $ade to respond for the acts of the recei&er, it not ha&in% *een de$onstrated that he
e5ercised control o&er or that he conni&ed .ith the recei&er.
+akin% up the cause of action *ased on an alle%ed conspirac4 *et.een the defendant -olina and the
recei&er, the trial court .as Ouna*le to find that an actual conspirac4 e5isted to e5ploit and %et all of
plaintiffNs *usiness a.a4=P *ut, .hile it found that the e&idence .as insufficient to esta*lish the conspirac4,
it ne&ertheless held that Othe action of defendants taken alto%ether caused %reat in6ur4 to plaintiffNs
propert4 ri%hts, and .as in &iolation of the o*li%ation of each one of the defendants in connection .ith their
relation to the appoint$ent of the recei&er.P It is so$e.hat difficult to har$oni>e these t.o positions unless
.e assu$e that the court, *4 the t.o state$ents, a*andoned the theor4 of a conspirac4, *ut held,
ne&ertheless, that the recei&er did not properl4 perfor$ his duties for the reason that he fa&ored -olina at
the e5pense of the recei&ership, thus co$*inin% the different ele$ents of the first cause of action and
foundin% the$ on the ne%li%ence of the recei&er in handlin% the propert4 and $ana%in% the *usiness,
instead of *asin% that cause of action, as did the plaintiff, on an acti&e conspirac4 *et.een hi$ and
-olina.
?ealin%, then, .ith the action as *ased solel4 on the ne%li%ence of the recei&er in the perfor$ance of his
duties, .e are $et at the outset .ith a failure of proof on the part of the plaintiff, *oth .ith respect to the
ne%li%ence of the recei&er and the a$ount of da$a%es .hich the plaintiff alle%es he sustained *4 reason
thereof.
It has *een sho.n, there is no dou*t, that so$e of the propert4 deteriorated, *oth in for$ and &alue, durin%
the ti$e that the recei&er held it in his possession, and that so$e of it .as considera*l4 da$a%ed= *ut it
also appears, *4 the .ei%ht of the e&idence, that such deterioration and da$a%e .ere due to force o&er
.hich the recei&er had no control and concernin% .hich he .as in no .a4 responsi*le. So$e of the
.arehouses and *uildin%s .ere in6ured *4 t4phoons useless *4 ordinar4 .ear and tear. It .as pro&ed that
the launch, .hich is referred to fre@uentl4 in the e&idence, foundered *efore it .as deli&ered to the
recei&er and .as ne&er raised= .hile the s$aller *oats .ere in *ad condition at the ti$e the recei&er .as
appointed, $an4 of the$ *ein% under .ater.
As to the &alue of the propert4, speakin% %enerall4, there is no relia*le e&idence. +he in&entor4 $ade at
the ti$e the recei&er took possession sho.s the &alue of the propert4 and *ills recei&a*le, as in&entoried,
to ha&e *een a*out P#1,""". 7f this su$ a*out P11",""" .as *ills recei&a*le. It does not appear in the
record ho. the &alue of the propert4 .as fi5ed in the in&entor4 or .hether that .as the $arket &alue
thereof at the ti$e the in&entor4 .as $ade. 7n that su*6ect there is no e&idence e5cept the in&entor4
itself. In the sa$e .a4, there is no e&idence *efore us of the &alue of the propert4 at the ti$e the
recei&ership ter$inated, or at the ti$e the recei&er presented his account in 1'"), or .hen the propert4
.as sei>ed under the e5ecutions issued on the 6ud%$ents in fa&or of Gi**s, Gale 3 Carr and 2nri@ue 1.
So$es. Bhat its &alue .as at that ti$e .e ha&e no $eans of kno.in%. Bhether the propert4 in %eneral
had deteriorated or had *een da$a%ed .e are not infor$ed fro$ an4 source, particularl4 as the record is
silent .ith respect to da$a%es caused to said propert4 *4 reason of acts or o$issions of the recei&er.
Su*stantiall4 all the testi$on4 there is in the record as to the &alue of the propert4 in @uestion at an4 ti$e
is that %i&en *4 the plaintiff hi$self. Bith respect to his e&idence it $ust *e noted that he did not see the
propert4 fro$ 1'"8 until a*out the 4ear 1'1". Bhat its condition .as in 1'"), .hen it .as sei>ed under
the e5ecutions referred to, plaintiff does not kno.. It had *een taken out of the hands of the recei&er and
had *een in the hands of the purchasers under the e5ecution sale for nearl4, if not @uite, three 4ears
*efore the plaintiff sa. it. 2&idence of its &alue at that ti$e .ould *e .orth &er4 little in an action a%ainst
8 | P a g e
the recei&er *ased on its &alues in 1'"8 and 1'"). -oreo&er, plaintiff testified in 1'1" that the &alue of the
propert4 in @uestion at that ti$e .as a*out P18",""". 7f that a$ount P8",""" .as the &alue of the
propert4 and P1"",""" *ills recei&a*le. +his state$ent should *e taken in connection .ith plaintiffNs
co$plaint in the present action, .hich .as *e%un in 1'":, in .hich, as .e ha&e seen, it is alle%ed that, at
the ti$e of the dissolution of the recei&ership, the propert4 and *usiness .ere of &er4 little &alue.
As to the alle%ation that the plaintiff suffered da$a%es on account of the fact that the recei&er did not
continue the *usiness as he found it, the record sho.s that, at the ti$e of the appoint$ent of the recei&er,
there .as &er4 little *usiness= and .hat there .as .as not profita*le. It appears, ho.e&er, that the recei&er
did continue the *usiness as *est he could for such ti$e as he dee$ed ad&isa*le and for the *est
interests of the recei&ership. +hat the *usiness .as not in a flourishin% condition $a4, in a $easure, *e
inferred fro$ the fact that the action in .hich the recei&er .as appointed .as co$$enced *4 -olina
a%ainst ?e la Ri&a to reco&er P(#,""" or therea*outs .hich .as a part of the purchase price of the
propert4 and *usiness .hich .as the o*6ect of the recei&ership. ?e la Ri&a had *ou%ht the propert4 and
*usiness of -olina so$e ti$e *efore the *e%innin% of the action referred to and had failed to $ake the
pa4$ents re@uired *4 the contract of purchase.
1inall4, .e are of the opinion that an action a%ainst the recei&er and his sureties cannot *e $aintained
under the circu$stances sho.n to ha&e e5isted in this case. Bhen this action .as *rou%ht there .as
pendin% *efore the court in the action in .hich the recei&er .as appointed a proceedin% .herein the
recei&er .as accountin% for the propert4 .hich he had in his possession. +here had *een certain
o*6ections presented to such account *4 the plaintiff herein *ut *ased on %rounds entirel4 apart fro$ the
ne%li%ence or $isconduct of the recei&er. +hat proceedin% is still pendin%, so far as .e kno.. Be do not
*elie&e it to *e the polic4 of the la. to per$it actions to *e *rou%ht a%ainst a recei&er *ased on his
$ana%e$ent of the recei&ership propert4 .ithout lea&e of the court .hich appointed hi$. As .e ha&e
alread4 inti$ated, a recei&er is to *e re%arded as the ar$, officer, or representati&e of the court appointin%
hi$. +he custod4 of the recei&er is the custod4 of the court. Cis acts and possession are the acts and
possession of the court, and his contracts and lia*ilities are, in conte$plation of la., the contracts and
lia*ilities of the court. As a necessar4 conse@uence, a recei&er is su*6ect to the control and super&ision of
the court at e&er4 step in his $ana%e$ent of the propert4 or funds placed in his hands. 7n the other hand,
it is the dut4 of the court to protect the possession of its recei&er and to pre&ent all interference .ith hi$ in
the perfor$ance of his official functions and duties. So thorou%hl4 is this reco%ni>ed, that it is .ell settled
that an4 unauthori>ed interference .ith a recei&erNs possession of the propert4 co$$itted to his char%e, or
.ith the recei&er in the dischar%e of his official duties, is a conte$pt of the court *4 .hich he .as
appointed. It is the relationship .hich e5ists *et.een the court and the recei&er .hich has led to the
%eneral rule, follo.ed in 6urisdiction .here statutes ha&e not *een passed to the contrar4, that no action
can *e *rou%ht a%ainst a recei&er .ithout lea&e of the court appointin% hi$. And this rule applies as .ell
.here suit is *rou%ht to reco&er a $one4 6ud%$ent $erel4 as .here it is to take fro$ the recei&er specific
propert4 .hereof he is in possession *4 order of the court. ESee %enerall4 C4s., Recei&ers and authorities.F
If actions a%ainst hi$ are per$itted indiscri$inatel4, the interest of those concerned in the propert4 held *4
the recei&er .ill suffer and court .ill *e ha$pered and li$ited in its control o&er hi$. 7ne .ho feels hi$self
sufficientl4 a%%rie&ed *4 acts of a recei&er to .arrant acti&e inter&ention should take the $atter into the
court .hich appointed the recei&er and ask either for an accountin% or take so$e other proceedin%, and
ask for the conse@uent 6ud%$ent of the court on the acts co$plained of, or for lea&e to *rin% action
directl4. If, under the facts presented, it is the 6ud%$ent of the court that the interests of all concerned .ill
*e *est o*ser&ed *4 such a suit or *4 an4 other proceedin%, per$ission .ill *e %i&en to *rin% it.
1or these reasons the 6ud%$ent appealed fro$ is re&ersed and the action dis$issed on the $erits, .ithout
costs to either part4 in this instance. So ordered.
HHHHHHHHHHHHHHHHHH
RULE ?0 REPLEVIN
G.R. No. 102998. Ju18 5 199?"
)A %INANCE CORPORA#ION petitioner vs. HON. COUR# O% APPEALS 'n( RO)ER#O M.
RE+ESrespondents.
D E C I S I O N
VI#UG J.:
+he case at *ar is a suit for reple&in and da$a%es. +he petition for re&ie. on certiorari assails the
decision of the Court of Appeals
[1]
in CA- G.R. C/ No. #!"8 affir$in% that of the Re%ional +rial Court of
-anila, ,ranch MM,
[#]
.hich has disposed of its Ci&il Case No. :)-(##)" in this .iseA
;BC2R217R2, the case a%ainst defendant-spouses EsicF Re4naldo -anahan is here*4 dis$issed .ithout
pre6udice, for failure to prosecute. Plaintiff ha&in% failed to sho. the lia*ilit4 of defendant 0ohn ?oe in the
person of Ro*erto -. Re4es, the case a%ainst the latter should like.ise *e dis$issed. -oreo&er, plaintiff
is here*4 directed to return the &ehicle sei>ed *4 &irtue of the order of sei>ure issued *4 this Court .ith all
its accessories to the said Ro*erto -. Re4es.;
[]
+he decisions of *oth the appellate court and the court a -uo are *ased on a like findin% of the facts
hereinafter *riefl4 narrated.
+he spouses Re4naldo and 1lorencia -anahan e5ecuted, on 18 -a4 1':", a pro$issor4 note
[(]
*indin%
the$sel&es to pa4 Car$asters, Inc., the a$ount of P:,":"."" in thirt4-si5 $onthl4 install$ents
co$$encin% "1 0ul4 1':". +o secure pa4$ent, the -anahan spouses e5ecuted a deed of chattel
$ort%a%e
[8]
o&er a $otor &ehicle, a 1ord Cortina 1.! GD, .ith $otor and serial nu$*er C<,1B2-
:"1"1". Car$asters later assi%ned
[!]
the pro$issor4 note and the chattel $ort%a%e to petitioner ,A
1inance Corporation .ith the confor$it4 of the -anahans. Bhen the latter failed to pa4 the due
install$ents, petitioner sent de$and letters. +he de$ands not ha&in% *een heeded, petitioner, on "#
7cto*er 1':), filed a co$plaint for reple&in .ith da$a%es a%ainst the spouses, as .ell as a%ainst a 0ohn
?oe, pra4in% for the reco&er4 of the &ehicle .ith an alternati&e pra4er for the pa4$ent of a su$ of $one4
should the &ehicle not *e returned. <pon petitioner9s $otion and the filin% of a *ond in the a$ount of
P1!',1!1."", the lo.er court issued a .rit of reple&in. +he court, ho.e&er, cautioned petitioner that
should su$$ons *e not ser&ed on the defendants .ithin thirt4 E"F da4s fro$ the .rit9s issuance, the case
.ould *e dis$issed for failure to prosecute.
[)]
+he .arnin% .as *ased on .hat the court percei&ed to *e
the deplora*le practice of so$e $ort%a%ees of ;free>in% EtheF foreclosure or reple&in cases; .hich the4
.ould so ;con&enientl4 utili>e as a le&era%e for the collection of unpaid install$ents on $ort%a%ed
chattels.;
[:]
+he ser&ice of su$$ons upon the spouses -anahan .as caused to *e ser&ed *4 petitioner at No. 8
Dantana St., Cu*ao, Rue>on Cit4. +he ori%inal of the su$$ons had the na$e and the si%nature of pri&ate
respondent Ro*erto -. Re4es indicatin% that he recei&ed, on 1( 7cto*er 1':), a cop4 of the su$$ons
and the co$plaint.
[']
1orth.ith, petitioner, throu%h its De%al Assistant, ?anilo 2. Solano, issued a
certification to the effect that it had recei&ed fro$ 7rson R. Santia%o, the deput4 sheriff of the Re%ional
+rial Court of -anila, ,ranch #", the 1ord Cortina sei>ed fro$ pri&ate respondent Ro*erto -. Re4es, the
0ohn ?oe referred to in the co$plaint,
[1"]
in Sorso%on, Sorso%on.
[11]
7n #" 7cto*er 1':), the lo.er court
ca$e out .ith an order of sei>ure.
Alle%in% possession in %ood faith, pri&ate respondent filed, on #! 7cto*er 1':), a $otion for an e5tension
of ti$e .ithin .hich to file his ans.er andGor a $otion for inter&ention. +he court %ranted the $otion.
A fe. $onths later, or on 1: 1e*ruar4 1'::, the court issued an order .hich, in part, statedA
;Perusal of the record sho.s that an order for the sei>ure of personal propert4 .as issued on 7cto*er #",
1':) in pursuance to a pre&ious order of the Court dated 7cto*er 1, 1':). Co.e&er, to date, there is no
sho.in% that the principal defendants .ere ser&ed .ith su$$ons inspite of the lapse of four E(F $onths.
;Considerin%, this is a reple&in case and to forestall the e&ils that arise fro$ this practice, plaintiff failin% to
heed the 7rder dated 7cto*er 1, 1':), particularl4 second para%raph thereof, the a*o&e-entitled case is
here*4 ordered ?IS-ISS2? for failure to prosecute and further orderin% the plaintiff to return the propert4
sei>ed .ith all its accessories to defendant 0ohn ?oe in the person of Ro*erto -. Re4es.
;S7 7R?2R2?.;
[1#]
9 | P a g e
7n #! 1e*ruar4 1'::, petitioner filed a notice of dis$issal of the case ;.ithout pre6udice and .ithout
pronounce$ent as to costs, *efore ser&ice of Su$$ons and Ans.er, under Section 1, Rule 1), of the
Rules of Court.;
[1]
It also sou%ht in another $otion the .ithdra.al of the reple&in *ond. In &ie. of the
earlier dis$issal of the case Efor petitioner9s failure to prosecuteF, the court, on "# -arch 1'::, $erel4
noted the notice of dis$issal and denied the $otion to .ithdra. the reple&in *ond considerin% that the .rit
of reple&in had $ean.hile *een i$ple$ented.
[1(]
7n "' -arch 1'::, pri&ate respondent filed a $otion pra4in% that petitioner *e directed to co$pl4 .ith the
court order re@uirin% petitioner to return the &ehicle to hi$. In turn, petitioner filed, on 1( -arch 1'::, a
$otion for the reconsideration of the orders of 1: 1e*ruar4 1':: and "# -arch 1':: contendin% thatA EaF
the dis$issal of the case .as tanta$ount to ad6udication on the $erits that there*4 depri&ed it .ith the
re$ed4 to enforce the pro$issor4 note, the chattel $ort%a%e and the deed of assi%n$ent, under Section
, Rule 11), of the Rules of Court= E*F the order to return the &ehicle to pri&ate respondent .as a departure
fro$ 6urisprudence reco%ni>in% the ri%ht of the $ort%a%or to foreclose the propert4 to respond to the
unpaid o*li%ation secured *4 the chattel $ort%a%e, and EcF there .ere no le%al and factual *ases for the
court9s &ie. that the filin% of the reple&in case .as ;characteri>ed E*4F e&il practices.;
[18]
7n #" April 1'::, the court %ranted petitioner9s $otion for reconsideration and accordin%l4 recalled the
order directin% the return of the &ehicle to pri&ate respondent, set aside the order dis$issin% the case,
directed petitioner ;to cause the ser&ice of su$$ons to%ether .ith a cop4 of the co$plaint on the principal
defendants .ithin fi&e E8F da4s fro$ receipt;
[1!]
thereof at petitioner9s e5pense, and ordered pri&ate
respondent to ans.er the co$plaint.
A fe. $onths later, or on "# Au%ust 1'::, petitioner filed a $otion to declare pri&ate respondent in
default. +he court %ranted the $otion on that sa$e da4 and declared pri&ate respondent ;in default for his
failure to file the 5 5 5 ans.er .ithin the re%le$entar4 period.;
[1)]
+he court like.ise %ranted petitioner9s
$otion to set the case for the presentation, e6 parte, of e&idence. Petitioner, thereupon, su*$itted the
pro$issor4 note, the deed of chattel $ort%a%e, the deed of assi%n$ent, a state$ent of account in the
na$e of 1lorencia -anahan and t.o de$and letters.
7n #) 1e*ruar4 1':', the trial court rendered a decision dis$issin% the co$plaint a%ainst the -anahans
for failure of petitioner to prosecute the case a%ainst the$. It also dis$issed the case a%ainst pri&ate
respondent for failure of petitioner to sho. an4 le%al *asis for said respondent9s lia*ilit4. +he court
ratiocinatedA
;5 5 5. Ro*erto -. Re4es is $erel4 ancillar4 de*tor in this case. +he defendant spouses -anahan *ein%
the principal de*torEsF and as there is no sho.in% that the latter has *een *rou%ht *efore the 6urisdiction of
this court, it $ust necessaril4 follo. that the plaintiff has no cause of action a%ainst said Ro*erto -. Re4es
herein *efore referred to as defendant 0ohn ?oe. <nder the circu$stances, it is incu$*ent upon the
plaintiff to return the sei>ed &ehicle unto the said Ro*erto -. Re4es.;
[1:]
In its appeal to the Court of Appeals, petitioner has asserted that a suit for reple&in ai$ed at the
foreclosure of the chattel is an action -uasi in rem .hich does not necessitate the presence of the principal
o*li%ors as lon% as the court does not render an4 personal 6ud%$ent a%ainst the$. +his ar%u$ent did not
persuade the appellate court, the latter holdin% that-
;5 5 5. In action -uasi in rem an indi&idual is na$ed as defendant and the purpose of the proceedin% is to
su*6ect his interest therein to the o*li%ation or lien *urdenin% the propert4, such as proceedin%s ha&in% for
their sole o*6ect the sale or disposition of the propert4 of the defendant, .hether *4 attach$ent,
foreclosure, or other for$ of re$ed4 ESande6as &s. Ro*les, :1 Phil. (#1F. In the case at *ar, the court
cannot render an4 6ud%$ent *indin% on the defendants spouses for ha&in% alle%edl4 &iolated the ter$s
and conditions of the pro$issor4 note and the contract of chattel $ort%a%e on the %round that the court
has no 6urisdiction o&er their persons, no su$$ons ha&in% *een ser&ed on the$. +hat 6ud%$ent, if
rendered, is &oid for ha&in% denied the defendants spouses due process of la. .hich conte$plates notice
and opportunit4 to *e heard *efore 6ud%$ent is rendered, affectin% one9s person or propert4 E-aca*in%kil
&s. Latco, #! SCRA 18", 18)F.
;It is ne5t contended *4 appellant that as *et.een appellant, as $ort%a%ee, and 0ohn ?oe, .hose ri%ht to
possession is du*ious if not totall4 non-e5istent, it is the for$er .hich has the superior ri%ht of possession.
;Be cannot a%ree.
;It is an undisputed fact that the su*6ect $otor &ehicle .as taken fro$ the possession of said Ro*erto -.
Re4es, a third person .ith respect to the contract of chattel $ort%a%e *et.een the appellant and the
defendants spouses -anahan.
;+he Ci&il Code e5pressl4 pro&ides that e&er4 possessor has a ri%ht to *e respected in his possession EArt.
8', Ne. Ci&il CodeF= that %ood faith is al.a4s presu$ed, and upon hi$ .ho alle%es *ad faith on the part
of a possessor rests the *urden of proof EArt. 8#), i*id.F= and that the possession of $o&a*le propert4
ac@uired in %ood faith is e@ui&alent to a title= ne&ertheless, one .ho has lost an4 $o&a*le or has *een
unla.full4 depri&ed thereof, $a4 reco&er it fro$ the person in possession of the sa$e EArt. 88',
i*id.F. +hus, it has *een held that a possessor in %ood faith is entitled to *e respected and protected in his
possession as if he .ere the true o.ner thereof until a co$petent court rules other.ise EChus Cai vs.
Kapunan, 1"( Phil. 11"= Lu, et al. vs. Con. Conrado, etc., et al., '' SCRA #)F. In the case at *ar, the
trial court did not err in holdin% that the co$plaint does not state an4 cause of action a%ainst Ro*erto -.
Re4es, and in orderin% the return of the su*6ect chattel to hi$.;
[1']
+he appellate court, su*se@uentl4, denied petitioner9s $otion for reconsideration.
In the instant appeal, petitioner insists that a $ort%a%ee can $aintain an action for reple&in a%ainst an4
possessor of the o*6ect of a chattel $ort%a%e e&en if the latter .ere not a part4 to the $ort%a%e.
Reple&in, *roadl4 understood, is *oth a for$ of principal re$ed4 and of a pro&isional relief. It $a4 refer
either to the action itself, i.e., to re%ain the possession of personal chattels *ein% .ron%full4 detained fro$
the plaintiff *4 another, or to the pro&isional re$ed4 that .ould allo. the plaintiff to retain the thin% durin%
the pendenc4 of the action and hold it pendente #ite.
[#"]
+he action is pri$aril4 possessor4 in nature and
%enerall4 deter$ines nothin% $ore than the ri%ht of possession. Reple&in is so usuall4 descri*ed as a
$i5ed action, *ein% partl4 in rem and partl4 in personam-in rem insofar as the reco&er4 of specific propert4
is concerned, and in personam as re%ards to da$a%es in&ol&ed. As an ;action in re$,; the %ist of the
reple&in action is the ri%ht of the plaintiff to o*tain possession of specific personal propert4 *4 reason of his
*ein% the o.ner or of his ha&in% a special interest therein.
[#1]
Conse@uentl4, the person in possession of
the propert4 sou%ht to *e reple&ied is ordinaril4 the proper and onl4 necessar4 part4 defendant, and the
plaintiff is not re@uired to so 6oin as defendants other persons clai$in% a ri%ht on the propert4 *ut not in
possession thereof. Rule !" of the Rules of Court allo.s an application for the i$$ediate possession of
the propert4 *ut the plaintiff $ust sho. that he has a %ood le%al *asis, i.e., a clear title thereto, for seekin%
such interim possession.
Bhere the ri%ht of the plaintiff to the possession of the specific propert4 is so conceded or e&ident, the
action need onl4 *e $aintained a%ainst hi$ .ho so possesses the propert4. In rem actio est per -uam
rem nostram -uae ab a#io possidetur petimus' et semper adversus eum est -ui rem possidet. In 7orthern
$otors' Inc. vs. 5errera,
[##]
the Court has saidA
;+here can *e no @uestion that persons ha&in% a special ri%ht of propert4 in the %oods the reco&er4 of
.hich is sou%ht, such as a chattel $ort%a%ee, $a4 $aintain an action for reple&in therefor. Bhere the
$ort%a%e authori>es the $ort%a%ee to take possession of the propert4 on default, he $a4 $aintain an
action to reco&er possession of the $ort%a%ed chattels fro$ the $ort%a%or or fro$ an4 person in .hose
hands he $a4 find the$.;
[#]
In effect then, the $ort%a%ee, upon the $ort%a%or9s default, is constituted an attorne4-in-fact of the
$ort%a%or ena*lin% such $ort%a%ee to act for and in *ehalf of the o.ner. Accordin%l4, that the defendant
is not pri&4 to the chattel $ort%a%e should *e inconse@uential. ,4 the fact that the o*6ect of reple&in is
traced to his possession, one properl4 can *e a defendant in an action for reple&in. It is here assu$ed
that the plaintiff9s ri%ht to possess the thin% is not or cannot *e disputed.
In case the ri%ht of possession on the part of the plaintiff, or his authorit4 to clai$ such possession or that
of his principal, is put to %reat dou*t Ea contendin% part4 $i%ht contest the le%al *ases for plaintiff9s cause
of action or an ad&erse and independent clai$ of o.nership or ri%ht of possession is raised *4 that part4F,
10 | P a g e
it could *eco$e essential to ha&e other persons in&ol&ed and accordin%l4 i$pleaded for a co$plete
deter$ination and resolution of the contro&ers4. 1or instance, in Ser&ice.ide Specialists, Inc., &s. Court of
Appeals, et al., G.R. No. 1""1, ": ?ece$*er 1''8, this Court ruledA
;Bhile, in its present petition for re&ie. on certiorari, Ser&ice.ide has raised a nu$*er of points, the
crucial issue still re$ains, ho.e&er, to *e .hether or not an action filed *4 the $ort%a%ee for reple&in to
effect a foreclosure of the propert4 co&ered *4 the chattel $ort%a%e .ould re@uire that the $ort%a%or *e
so i$pleaded as an indispensa*le part4 thereto.
;Rule !" of the Rules of Court allo.s a plaintiff, in an action for the reco&er4 of possession of personal
propert4, to appl4 for a .rit of reple&in if it can *e sho.n that he is Sthe o.ner of the propert4 clai$ed 5 5 5
or is entit#ed to the possession thereof. +he plaintiff need not *e the o.ner so lon% as he is a*le to specif4
his ri%ht to the possession of the propert4 and his le%al *asis therefor. +he @uestion then, insofar as the
$atter finds relation to the instant case, is .hether or not the plaintiff Eherein petitionerF .ho has
predicated his ri%ht on *ein% the $ort%a%ee of a chattel $ort%a%e should i$plead the $ort%a%or in his
co$plaint that seeks to reco&er possession of the encu$*ered propert4 in order to effect its foreclosure.
;+he ans.er has to *e in the affir$ati&e. In a suit for reple&in, a clear ri%ht of possession $ust *e
esta*lished. A foreclosure under a chattel $ort%a%e $a4 properl4 *e co$$enced onl4 once there is
default on the part of the $ort%a%or of his o*li%ation secured *4 the $ort%a%e. +he reple&in in the instant
case has *een sou%ht to pa&e the .a4 for the foreclosure of the o*6ect co&ered *4 the chattel
$ort%a%e. +he conditions essential for that foreclosure .ould *e to sho., firstl4, the e5istence of the
chattel $ort%a%e and, secondl4, the default of the $ort%a%or. +hese re@uire$ents $ust *e esta*lished
since the &alidit4 of the plaintiff9s e5ercise of the ri%ht of foreclosure are ine&ita*l4 dependent thereon. It
.ould thus see$, considerin% particularl4 an ad&erse and independent c#aim of ownership *4 pri&ate
respondent, that the lo.er court acted i$pro&identl4 .hen it %ranted the dis$issal of the co$plaint a%ainst
?ollente, a#beit on petitioner9s Ethen plaintiffF plea, on the %round that the Tnon-ser&ice of su$$ons upon
2rnesto ?ollente E.ouldF onl4 dela4 the deter$ination of the $erits of the case, to the pre6udice of the
parties9 In Imson v. Court of (ppea#s, .e ha&e e5plainedA
TO5 5 5. An indispensa*le part4 is one .hose interest .ill *e affected *4 the court9s action in the liti%ation,
and .ithout .ho$ no final deter$ination of the case can *e had. +he part49s interest in the su*6ect $atter
of the suit and in the relief sou%ht are so ine5trica*l4 intert.ined .ith the other parties that his le%al
presence as a part4 to the proceedin% is an a*solute necessit4. In his a*sence there cannot *e a
resolution of the dispute of the parties *efore the court .hich is effecti&e, co$plete, or e@uita*le.
SCon&ersel4, a part4 is not indispensa*le to the suit if his interest in the contro&ers4 or su*6ect $atter is
distinct and di&isi*le fro$ the interest of the other parties and .ill not necessaril4 *e pre6udiced *4 a
6ud%$ent .hich does co$plete 6ustice to the parties in court. Ce is not indispensa*le if his presence
.ould $erel4 per$it co$plete relief *et.een hi$ and those alread4 parties to the action or .ill si$pl4
a&oid $ultiple liti%ation.9
;Bithout the presence of indispensa*le parties to a suit or proceedin%, a 6ud%$ent of a court cannot attain
real finalit4.; E1ootnotes o$itted.F
A chattel $ort%a%ee, unlike a pled%ee, need not *e in, nor entitled to, the possession of the propert4
unless and until the $ort%a%or defaults and the $ort%a%ee thereupon seeks to foreclose thereon. Since
the $ort%a%ee9s ri%ht of possession is conditioned upon the actual fact of default .hich itself $a4 *e
contro&erted, the inclusion of other parties, like the de*tor or the $ort%a%or hi$self, $a4 *e re@uired in
order to allo. a full and conclusi&e deter$ination of the case. Bhen the $ort%a%ee seeks a reple&in in
order to effect the e&entual foreclosure of the $ort%a%e, it is not onl4 the e5istence of, *ut also the
$ort%a%or9s default on, the chattel $ort%a%e that, a$on% other thin%s, can properl4 uphold the ri%ht to
reple&4 the propert4. +he *urden to esta*lish a &alid 6ustification for that action lies .ith the plaintiff. An
ad&erse possessor, .ho is not the $ort%a%or, cannot 6ust *e depri&ed of his possession, let alone *e
*ound *4 the ter$s of the chattel $ort%a%e contract, si$pl4 *ecause the $ort%a%ee *rin%s up an action
for reple&in.
+he appellate court, accordin%l4, acted .ell in arri&in% at its no. @uestioned 6ud%$ent.
BC2R217R2, the decision of the Court of Appeals is A11IR-2?. No costs.
S7 7R?2R2?.
HHHHHHHHHHHHHHHHH
G.R. No. LA!05! O02o:e- 29 195B
MACHINER+ $ ENGINEERING SUPPLIES INC. ,e2/2/one-
;3.
#HE HONORA)LE COUR# O% APPEALS HON. PO#ENCIANO PECSON JUDGE O% #HE COUR# O%
%IRS# INS#ANCE O% MANILA IPO LIMES#ONE CO. INC. 'n( AN#ONIO VILLARAMA respondents.
Vicente ,. Francisco for petitioner.
Capistrano and Capistrano for respondents.
CONCEPCION J.:
+his is an appeal *4 certiorari, taken *4 petitioner -achiner4 and 2n%ineerin% Supplies Inc., fro$ a
decision of the Court of Appeals den4in% an ori%inal petition for certiorari filed *4 said petitioner a%ainst
Con. Potenciano Pecson, Ipo Di$estone Co., Inc., and Antonio /illara$a, the respondents herein.
+he pertinent facts are set forth in the decision of the Court of Appeals, fro$ .hich .e @uoteA
7n -arch 1, 1'8, the herein petitioner filed a co$plaint for reple&in in the Court of 1irst Instance of
-anila, Ci&il Case No. 1'"!), entitled ;-achiner4 and 2n%ineerin% Supplies, Inc., Plaintiff, &s. Ipo
Di$estone Co., Inc., and ?r. Antonio /illara$a, defendants;, for the reco&er4 of the $achiner4 and
e@uip$ent sold and deli&ered to said defendants at their factor4 in *arrio ,i%ti, Nor>a%ara4, ,ulacan. <pon
application e5-parte of the petitioner co$pan4, and upon appro&al of petitioner9s *ond in the su$ of
P18,)!'."", on -arch 1,1'8, respondent 6ud%e issued an order, co$$andin% the Pro&incial Sheriff of
,ulacan to sei>e and take i$$ediate possession of the properties specified in the order EAppendi5 I,
Ans.erF. 7n -arch 1', 1'8, t.o deput4 sheriffs of ,ulacan, the said Ra$on S. Roco, and a cre. of
technical $en and la*orers proceeded to ,i%ti, for the purpose of carr4in% the court9s order into effect.
Deonardo Contreras, -ana%er of the respondent Co$pan4, and Pedro +orres, in char%e thereof, $et the
deput4 sheriffs, and Contreras handed to the$ a letter addressed to Att4. Deopoldo C. Palad, e5-oficio
Pro&incial Sheriff of ,ulacan, si%ned *4 Att4. Adolfo Garcia of the defendants therein, protestin% a%ainst
the sei>ure of the properties in @uestion, on the %round that the4 are not personal properties. Contendin%
that the Sheriff9s dut4 is $erel4 $inisterial, the deput4 sheriffs, Roco, the latter9s cre. of technicians and
la*orers, Contreras and +orres, .ent to the factor4. Roco9s attention .as called to the fact that the
e@uip$ent could not possi*l4 *e dis$antled .ithout causin% da$a%es or in6uries to the .ooden fra$es
attached to the$. As Roco insisted in dis$antlin% the e@uip$ent on his o.n responsi*ilit4, alle%in% that the
*ond .as posted for such e&entualit4, the deput4 sheriffs directed that so$e of the supports thereof *e cut
EAppendi5 #F. 7n -arch #", 1'8, the defendant Co$pan4 filed an ur%ent $otion, .ith a counter-*ond in
the a$ount of P18,)!', for the return of the properties sei>ed *4 the deput4 sheriffs. 7n the sa$e da4, the
trial court issued an order, directin% the Pro&incial Sheriff of ,ulacan to return the $achiner4 and
e@uip$ent to the place .here the4 .ere installed at the ti$e of the sei>ure EAppendi5 F. 7n -arch #1,
1'8, the deput4 sheriffs returned the properties sei>ed, *4 depositin% the$ alon% the road, near the
@uarr4, of the defendant Co$pan4, at ,i%ti, .ithout the *enefit of in&entor4 and .ithout re-installin% he$ in
their for$er position and replacin% the destro4ed posts, .hich rendered their use i$practica*le. 7n -arch
#, 1'8, the defendants9 counsel asked the pro&incial Sheriff if the $achiner4 and e@uip$ent, du$ped on
the road .ould *e re-installed to$ their for$er position and condition Eletter, Appendi5 (F. 7n -arch #(,
1'8, the Pro&incial Sheriff filed an ur%ent $otion in court, $anifestin% that Roco had *een asked to
furnish the Sheriff9s office .ith the e5penses, la*orers, technical $en and e@uip$ent, to carr4 into effect
the court9s order, to return the sei>ed properties in the sa$e .a4 said Roco found the$ on the da4 of
sei>ure, *ut said Roco a*solutel4 refused to do so, and askin% the court that the Plaintiff therein *e
ordered to pro&ide the re@uired aid or relie&e the said Sheriff of the dut4 of co$pl4in% .ith the said order
dated -arch #", 1'8 EAppendi5 8F. 7n -arch ", 1'8, the trial court ordered the Pro&incial Sheriff and
the Plaintiff to reinstate the $achiner4 and e@uip$ent re$o&ed *4 the$ in their ori%inal condition in .hich
the4 .ere found *efore their re$o&al at the e5pense of the Plaintiff EAppendi5 )F. An ur%ent $otion of the
11 | P a g e
Pro&incial Sheriff dated April 18, 1'8, pra4in% for an e5tension of #" da4s .ithin .hich to co$pl4 .ith the
order of the Court Eappendi5 1"F .as denied= and on -a4 (, 1'8, the trial court ordered the Plaintiff
therein to furnish the Pro&incial Sheriff .ithin 8 da4s .ith the necessar4 funds, technical $en, la*orers,
e@uip$ent and $aterials to effect the repeatedl4 $entioned re-installation EAppendi5 1F. EPetitioner9s
*rief, Appendi5 A, pp. I-I/.F
+hereupon petitioner instituted in the Court of Appeals ci&il case G.R. No. 11#(:-R, entitled ;-achiner4
and 2n%ineerin% Supplies, Inc. &s. Conora*le Potenciano Pecson, Pro&incial Sheriff of ,ulacan, Ipo
Di$estone Co., Inc., and Antonio /illara$a.; In the petition therein filed, it .as alle%ed that, in orderin% the
petitioner to furnish the pro&incial sheriff of ,ulacan ;.ith necessar4 funds, technical $en, la*orers,
e@uip$ent and $aterials, to effect the installation of the $achiner4 and e@uip$ent; in @uestion, the Court
of 1irs Instance of ,ulacan had co$$itted a %ra&e a*use if discretion and acted in e5cess of its
6urisdiction, for .hich reason it .as pra4ed that its order to this effect *e nullified, and that, $ean.hile, a
.rit of preli$inar4 in6unction *e issued to restrain the enforce$ent o said order of $a4 (, 1'8. Althou%h
the afore$entioned .rit .as issued *4 the Court of Appeals, the sa$e su*se@uentl4 dis$issed *4 the
case for lack of $erit, .ith costs a%ainst the petitioner, upon the follo.in% %roundsA
Bhile the sei>ure of the e@uip$ent and personal properties .as ordered *4 the respondent Court, it is,
ho.e&er, lo%ical to presu$e that said court did not authori>e the petitioner or its a%ents to destro4, as the4
did, said $achiner4 and e@uip$ent, *4 dis$antlin% and un*oltin% the sa$e fro$ their concrete *ase$ents,
and cuttin% and sa.in% their .ooden supports, there*4 renderin% the$ unser&icea*le and *e4ond repair,
unless those parts re$o&ed, cut and sa.ed *e replaced, .hich the petitioner, not .ithstandin% the
respondent Court9s order, ada$antl4 refused to do. +he Pro&incial Sheriff9 s tortious act, in o*edience to
the insistent proddin%s of the president of the Petitioner, Ra$on S. Roco, had no 6ustification in la.,
not.ithstandin% the Sheriffs9 clai$ that his dut4 .as $inisterial. It .as the *ounden dut4 of the respondent
0ud%e to %i&e redress to the respondent Co$pan4, for the unla.ful and .ron%ful acts co$$itted *4 the
petitioner and its a%ents. And as this .as the true o*6ect of the order of -arch ", 1'8, .e cannot hold
that sa$e .as .ithin its 6urisdiction to issue. +he $inisterial dut4 of the Sheriff should ha&e its li$itations.
+he Sheriff kne. or $ust ha&e kno.n .hat is inherentl4 ri%ht and inherentl4 .ron%, $ore so .hen, as in
this particular case, the deput4 sheriffs .ere sho.n a letter of respondent Co$pan49s attorne4, that the
$achiner4 .ere not personal properties and, therefore, not su*6ect to sei>ure *4 the ter$s of the order.
Bhile it $a4 *e conceded that this .as a @uestion of la. too technical to decide on the spot, it .ould not
ha&e costs the Sheriff $uch ti$e and difficult4 to *rin% the letter to the court9s attention and ha&e the
e@uip$ent and $achiner4 %uarded, so as not to frustrate the order of sei>ure issued *4 the trial court. ,ut
actin% upon the directi&es of the president of the Petitioner, to sei>e the properties at an4 costs, in issuin%
the order sou%ht to *e annulled, had not co$$itted a*use of discretion at all or acted in an ar*itrar4 or
despotic $anner, *4 reason of passion or personal hostilit4= on the contrar4, it issued said order, %uided *4
the .ell kno.n principle that of the propert4 has to *e returned, it should *e returned in as %ood a
condition as .hen taken E,achrach -otor Co., Inc., vs. ,ona, (( Phil., ):F. If an4 one had %one *e4ond
the scope of his authorit4, it is the respondent Pro&incial Sheriff. ,ut considerin% that fact that he acted
under the pressure of Ra$on S. Roco, and that the order i$pu%ned .as issued not *4 hi$, *ut *4 the
respondent 0ud%e, Be si$pl4 declare that said Sheriff9 act .as $ost unusual and the result of a poor
6ud%$ent. -oreo&er, the Sheriff not *ein% an officer e5ercisin% 6udicial functions, the .rit $a4 not reach
hi$, forcertiorari lies onl4 to re&ie. 6udicial actions.
+he Petitioner co$plains that the respondent 0ud%e had co$pletel4 disre%arded his $anifestation that the
$achiner4 and e@uip$ent sei>ed .ere and still are the Petitioner9s propert4 until full4 paid for and such
ne&er *eca$e i$$o&a*le. +he @uestion of o.nership and the applica*ilit4 of Art. (18 of the ne. Ci&il
Code are i$$aterial in the deter$ination of the onl4 issue in&ol&ed in this case. It is a $atter of e&idence
.hich should *e decided in the hearin% of the case on the $erits. +he @uestion as to .hether the
$achiner4 or e@uip$ent in liti%ation are i$$o&a*le or not is like.ise i$$aterial, *ecause the onl4 issue
raised *efore the trial court .as .hether the Pro&incial Sheriff of ,ulacan, at the Petitioner9s instance, .as
6ustified in destro4in% the $achiner4 and in refusin% to restore the$ to their ori%inal for$ , at the e5pense
of the Petitioner. Bhate&er $i%ht *e the le%al character of the $achiner4 and e@uip$ent, .ould not *e in
an4 .a4 6ustif4 their 6ustif4 their destruction *4 the Sheriff9s and the said Petitioner9s. EPetitioner9s *rief,
Appendi5 A, pp. I/-/II.F
A $otion for reconsideration of this decision of the Court of Appeals ha&in% *een denied , petitioner has
*rou%ht the case to <s for re&ie. *4 .rit of certiorari. <pon e5a$ination of the record, Be are satisfied,
ho.e&er that the Court of Appeals .as 6ustified in dis$issin% the case.
+he special ci&il action kno.n as reple&in, %o&erned *4 Rule !# of Court, is applica*le onl4 to ;personal
propert4;.
7rdinaril4 reple&in $a4 *e *rou%ht to reco&er an4 specific personal propert4 unla.full4 taken or detained
fro$ the o.ner thereof, pro&ided such propert4 is capa*le of identification and deli&er4= but rep#evin wi##
not #ie for the recovery of rea# property or incorporeal personal propert4. E)) C. 0. S. 1)F E2$phasis
supplied.F
Bhen the sheriff repaired to the pre$ises of respondent, Ipo Di$estone Co., Inc., $achiner4 and
e@uip$ent in @uestion appeared to *e attached to the land, particularl4 to the concrete foundation of said
pre$ises, in a fi5ed $anner, in such a .a4 that the for$er could not *e separated fro$ the latter ;.ithout
*reakin% the $aterial or deterioration of the o*6ect.; Cence, in order to re$o&e said outfit, it *eca$e
necessar4, not onl4 to un*olt the sa$e, *ut , also, to cut so$e of its .ooden supports. -oreo&er, said
$achiner4 and e@uip$ent .ere ;intended *4 the o.ner of the tene$ent for an industr4; carried on said
i$$o&a*le and tended.; 1or these reasons, the4 .ere alread4 i$$o&a*le propert4 pursuant to para%raphs
and 8 of Article (18 of Ci&il Code of the Philippines, .hich are su*stantiall4 identical to para%raphs and
8 of Article ( of the Ci&il Code of Spain. As such i$$o&a*le propert4, the4 .ere not su*6ect to reple&in.
In so far as an article, includin% a fi5ture anne5ed *4 a tenant, is re%arded as part of the realt4, it is not the
su*6ect for personalit4= . . . .
. . . the action of reple&in does not lie for articles so anne5ed to the realt4 as to *e part as to *e part
thereof, as, for e5a$ple, a house or a tur*ine pu$p constitutin% part of a *uildin%9s coolin% s4ste$= . . . E!
C. 0. S. 1""" 3 1""1F
-oreo&er, as the pro&incial sheriff hesitated to re$o&e the propert4 in @uestion, petitioner9s a%ent and
president, -r. Ra$on Roco, insisted ;on the dis$antlin% at his own responsibi#ity,; statin% that., precisel4,
;that is the reason .h4 plaintiff posted a *ond .; In this $anner, petitioner clearl4 assu$ed the
correspondin% risks.
Such assu$ption of risk *eco$es $ore apparent .hen .e consider that, pursuant to Section 8 of Rule !#
of the Rules of Court, the defendant in an action for reple&in is entitled to the return of the propert4 in
dispute upon the filin% of a counter*ond, as pro&ided therein. In other .ords, petitioner kne. that the
restitution of said propert4 to respondent co$pan4 $i%ht *e ordered under said pro&ision of the Rules of
Court, and that, conse@uentl4, it $a4 *eco$e necessar4 for petitioner to $eet the lia*ilities incident to
such return.
Dastl4, althou%h the parties ha&e not cited, and Be ha&e not found, an4 authorit4 s@uarel4 in point J
o*&iousl4 real propert4 are not su*6ect to reple&in J it is .ell settled that, .hen the restitution of .hat has
*een ordered, the %oods in @uestion shall *e returned in su*stantiall4 the sa$e condition as .hen taken
E8( C.0., 8'"-!"", !("-!(1F. Inas$uch as the $achiner4 and e@uip$ent in&ol&ed in this case .ere dul4
installed and affi5ed in the pre$ises of respondent co$pan4 .hen petitioner9s representati&e caused said
propert4 to *e dis$antled and then re$o&ed, it follo.s that petitioner $ust also do e&er4thin% necessar4 to
the reinstallation of said propert4 in confor$it4 .ith its ori%inal condition.
Bherefore, the decision of the Court of Appeals is here*4 affir$ed, .ith costs a%ainst the petitioner. So
ordered.
HHHHHHHHHHHHHHHHHHHHH
G.R. No. 115902 Se,2e7:e- 2! 1995
%ILINVES# CREDI# CORPORA#ION petitioner,
&s.
HON. COUR# O% APPEALS 'n( SPOUSES EDIL)ER#O 'n( MARCIANA #ADIAMAN respondents.
12 | P a g e

DAVIDE JR. J.:
+his petition for re&ie. on certiorari seeks to set aside the decision of the Court of Appeals in CA-G.R. C/
No. "#1
1
affir$in% in toto the decision of the Re%ional +rial Court ER+CF of San 1ernando EPa$pan%aF,
,ranch (!, in Ci&il Case No. !8''.
2
+he antecedent facts are su$$ari>ed *4 the Court of Appeals as follo.sA
?efendants-appellees, spouses 2dil*erto and -arciana +adia$an, residents of Ca*anatuan Cit4,
purchased a 1"-.heeler I>usu car%o truck fro$ 0ordan 2nterprises, Inc., in Rue>on Cit4, in install$ents.
Said spouses e5ecuted a pro$issor4 note for P1'!,!:"."" pa4a*le in #( $onthl4 install$ents in fa&or of
0ordan 2nterprises, Inc., and a Chattel -ort%a%e o&er the $otor &ehicle purchased to secure the pa4$ent
of the pro$issor4 note. 0ordan 2nterprises, Inc. assi%ned its ri%hts and interests o&er the said instru$ents
to 1ilin&est 1inance and Deasin% Corporation, .hich in turn assi%ned the$ to plaintiff-appellant 1ilin&est
Credit Corporation.
Su*se@uentl4, the spouses +adia$an defaulted in the pa4$ent of the install$ents due on the pro$issor4
note, and plaintiff-appellant filed an action for reple&in and da$a%es a%ainst the$ .ith the court *elo..
<pon $otion of the plaintiff-appellant, a .rit of reple&in .as issued, and the truck .as sei>ed in the
pro&ince of Isa*ela, *4 persons .ho represented the$sel&es to *e special sheriffs of the court, *ut .ho
turned out to *e e$plo4ees of the plaintiff-appellant. +he truck .as *rou%ht *4 such persons all the .a4
*ack to -etro -anila.
+hereafter, defendant spouses filed a counter*ond, and the lo.er court ordered the return of the truck.
+his .as not i$$ediatel4 i$ple$ented *ecause the defendant spouses .ere $et .ith dela4in% tactics of
the plaintiff-appellant, and .hen the4 finall4 reco&ered the truck, the4 found the sa$e to *e ;canni*ali>ed;.
+his .as %raphicall4 recounted in the report E25hi*it ;;F of ?eput4 Sheriff Anastacio ?i>on, .ho assisted
the spouses in reco&erin% the &ehicle, e5cerpts of .hich are as follo.sA
7n 1e*ruar4 1(, 1':, the undersi%ned contacted -r. /illanue&a, ,ranch -ana%er of the 1IDIN/2S+ at
,o. ?olores, San 1ernando, Pa$pan%a and he %a&e the infor$ation that the said Isu>u Car%o +ruck,
su*6ect of the aforesaid Court 7rder, .as alread4 deli&ered to their $ain %ara%e at ,o. +alon, Das PiIas=
-etro -anila. -r. /illanue&a further told the undersi%ned that in order to effecti&el4 enforce the
afore$entioned Court 7rder, the undersi%ned should discuss the $atter .ith -r. +elesforo E0unF Isidro,
Collection in-char%e, and -r. Gaspar Antonio delos Santos, /ice President for ,ranch Ad$inistration of
the 1IDIN/2S+ $ain office at -akati, -etro -anila.
7n 1e*ruar4 1:, 1':, defendant -arciana +adia$an, Att4. ,enites and the undersi%ned contacted
-essrs. Gaspar Antonio delos Santos and +elesforo E0unF Isidro at the $ain office, 1IDIN/2S+ at Paseo
de Ro5as, -akati, -etro -anila and .e discussed the s$ooth retakin% of possession *4 the defendants of
the 1"-.heeler Isu>u Car%o +ruck .ith $otor No. 2 1#"-##"(1, Serial No. SP- )1"1!(:!(. -essrs.
?elos Santos and Isidro alternati&el4 ar%ued that the +ra&eler9s Insurance Co$pan4 is one of the *lack
listed Insurance fir$, so $uch so, it is onl4 the co$pan49s la.4er .ho can direct the deli&er4 of the a*o&e-
cited Car%o +ruck to us. +he4 told us to .ait for the arri&al of their Da.4er at 8A(" p.$., and .e a%reed that
in the $eanti$e that their la.4er is not around, the said &ehicle .ould not *e transferred to an4 other
place.
Ca$e 8A" P.-., *ut the co$pan49s la.4er ne&er arri&ed and .e .ere told to %o *ack on 1e*ruar4 #1,
1':. -r. delos Santos finall4 told us that the co$pan4 .ill not deli&er to us the said Car%o +ruck until and
after their co$pan4 la.4er .ould sa4 so.
7n 1e*ruar4 1', 1':, -r. 1elicisi$o Co%aldo, Att4. ,enites, defendant -arciana +adia$an, three
police$en of Das Pinas, -etro -anila, and the undersi%ned .ent directl4 to the 1IDIN/2S+ %ara%e at ,o.
+alon, Das Pinas, -etro -anila and there contracted -r. Is$ael Pascual, Custodian of all repossessed
&ehicles of the said co$pan4, and -r. Pedro Ger&acio, Securit4 Guard of the co$pan4 assi%ned *4 the
Allied In&esti%ation ,ureau at !th 1loor, Ra$on Santos ,ld%. +he4 told us that the 1"-.heeler Car%o
+ruck su*6ect of the a*o&e-cited court order is not one of the &ehicles listed in their in-co$in% and out-
%oin% led%er *ooks and the4 told us to e5a$ine their *ooks.
?efendant -arciana +adia$an told -essrs. Pedro Ger&acio and Is$ael Pascual that she sa. the a*o&e-
$entioned Car%o-+ruck last 1e*ruar4 1(, 1': at the end corner of the %ara%e. And for that purpose she
re@uested us, includin% -r. Pascual and the Securit4 Guard, to inspect the site .here the said truck .as
supposed to ha&e *een placed .hen she for the first ti$e sa. it on 1e*ruar4 1(, 1':.
<ne5pectedl4, she sa. and pointed to us on the site oil leaks on the %round .hich she *elie&ed ca$e fro$
the &ehicle .e .ere lookin% for. Be also sa. skid $arks of tires of a truck startin% fro$ the site .here the
car%o truck .as pre&iousl4 placed as pointed to *4 defendant -arciana +adia$an up to around #" $eters
*efore reachin% the %ate of the co$pound. +he other skid larks of tires of a truck .as also seen on a
portion of a road leadin% to a co$pound o.ned *4 other person.
-r. Ger&acio and Pascual stron%l4 insisted that the4 do not kno. the .herea*outs of the said Car%o
+ruck. +he undersi%ned re@uested the Police$en of Das Pinas, -etro -anila, Att4. ,enites and defendant
-arciana +adia$an to see for oursel&es the road leadin% to a co$pound o.ned *4 another fir$, a*out 1G
of the Den%th of .hich road is co$pletel4 *locked *4 a *i% and tall *uildin%. It .as at this portion .here the
su*6ect Car%o +ruck .as placed.
-r. Is$ael Pascual called their $ain office, 1IDIN/2S+, *4 telephone a*out the disco&er4 of the
.herea*outs of said car%o truck *4 the undersi%ned. ?efendant -arciana +adia$an to
-r. Pascual that there .ere $issin% parts and that other parts of the truck .ere co$pletel4 chan%ed .ith
.orn-out spare parts.
-r. Pascual told the undersi%ned that he .ill onl4 affi5 his si%nature on the ackno.led%$ent receipt, *elo.
the line ;GI/2N ,L;, if the $issin% parts and replaced parts .ere not $entioned in said receipt.
It .as *ecause of the said actuations of the plaintiff-appellant that the defendants-appellee [sic] filed a
counterclai$ for da$a%es. . . .
<
After trial, the trial court rendered a decision the dispositi&e portion of .hich reads as follo.sA
BC2R217R2, 6ud%$ent is here*4 rendered on the $ain action, in fa&or of plaintiff and a%ainst
defendants, orderin% the latter, 6ointl4 and se&erall4, to pa4 the plaintiff the follo.in% su$sA
EaF +he su$ of P::,.# .hich is the *alance of the pro$issor4 note as of Septe$*er #!, 1':#, .ith
interest thereon at 1(U per annum fro$ said date.
E*F +he su$ e@ui&alent to #8U of the a$ount sued upon, as and for attorne49s fees, that is P::,.#
plus the stipulated interest= and
EcF +he costs of suit.
7n the Counterclai$A
Plaintiff not ha&in% successfull4 re*utted the defendants9 e&idence respectin% da$a%es caused to the$ *4
&irtue of the ille%al sei>ure of the propert4, and hidin% the truck in so$e other place not their %ara%e,
fei%nin% kno.led%e that the sa$e had *een recorded in their inco$in% led%er *ooks, the ;canni*ali>in%;
done .hile the truck .as in the custod4 of plaintiff9s %ara%e, the frustrations .hich the defendants had to
under%o for t.o .eeks *efore the truck .as finall4 placed in the hands of Sheriff ?i>on, all point to the
lia*ilit4 of plaintiff for its failure intentionall4 or other.ise ;to o*ser&e certain nor$s that sprin% fro$ the
fountain of %ood conscience and %uide hu$an conduct to the end that la. $a4 approach its supre$e
ideal, .hich is the s.a4 and do$inance of 6ustice.
BC2R217R2, 6ud%$ent is rendered in fa&or of counter-clai$ants defendants and a%ainst plaintiff,
orderin% the latter to pa4 to the defendants the follo.in% su$sA
E1F Actual da$a%es representin% lost spare parts .hile in the custod4 of plaintiff in its %ara%e *ein% hidden
fro$ defendants, in the su$ of P8",""".""=
E#F P8","""."" as $oral da$a%es=
EF P#","""."" as e5e$plar4 da$a%es=
E(F P#","""."" as attorne49s fee= and
E8F Proportionate part of the costs ad6ud%ed a%ainst plaintiff.
S7 7R?2R2?.
B
13 | P a g e
Petitioner 1ilin&est Credit Corporation Ehereinafter Fi#investF appealed that portion of the 6ud%$ent on the
counterclai$ to the Court of Appeals ECA-G.R. C/ No. "#1F and assi%ned the follo.in% errors of the
lo.er courtA
I
+C2 +RIAD C7<R+ 2RR2? IN ABAR?ING ?A-AG2S= AC+<AD, -7RAD, 2M2-PDARL AN?
A++7RN2L9S 122S AN? PR7P7R+I7NA+2 PAR+ 71 +C2 C7S+S IN 1A/7R 71 +C2 ?212N?AN+S
IN +C2IR C7<N+2R-CDAI-S IN +C2 A,S2NC2 71 ANL AC+I7NA,D2 D7SS S<S+AIN2? ,L +C2-
17R I+ BAS +C2 ?212N?AN+S BC7 /I7DA+2? +C2IR PR7-ISS7RL N7+2 AN? CCA++2D
-7R+GAG2 BI+C +C2 PDAIN+I11.
II
+C2 +RIAD C7<R+ 2RR2? IN C7D?ING +CA+ +C2 PDAIN+I11 7R ANL 71 I+S R2PR2S2N+A+I/2S
CA? N7 RIGC+ +7 +AK2 +C2 -7R+GAG2? PR7P2R+L A1+2R +C2 ,R2ACC 71 +C2
C7N?I+I7NS IN +C2 PR7-ISS7RL N7+2 AN? CCA++2D -7R+GAG2 ,L +C2 ?212N?AN+S.
5
In its decision of #! -a4 1''(, the Court of Appeals affir$ed in toto the decision of the trial court. It found
no $erit in the appeal. +husA
+he plaintiff-appellant ar%ues that it had the ri%ht to sei>e the truck fro$ the $o$ent that the defendants-
appellees defaulted in the pa4$ent of the $onthl4 install$ents, and to institute an action for reple&in
preli$inar4 to effectin% a foreclosure of the propert4 $ort%a%ed e5tra6udiciall4. +he plaintiff-appellant
$isses the point entirel4. In the first place, it has not *een held lia*le for filin% an action for reple&in in
order to reco&er possession of the truck prior to its foreclosure, *ut for the $anner in .hich it carried out
the sei>ure of the &ehicle. It is ironic that, in spite of plaintiff-appellant9s apparent reco%nition of the
necessit4 of le%al $eans for the reco&er4 of the truck, in the end, it utili>ed ille%al $eans in the actual
sei>ure of the &ehicle *4 ha&in% its e$plo4ees pose as special a%ents of the court in effectin% the sa$e.
Plaintiff-appellant e&en .ent to the e5tent of askin% the appoint$ent of a special sheriff to enforce the
order of sei>ure, *ut still had the truck sei>ed *4 its o.n people instead. It is as if the plaintiff-appellant
utili>ed the court onl4 to clothe its e$plo4ees .ith apparent authorit4 to sei>e the &ehicle concerned.
In the second place, plaintiff-appellant .as held lia*le for hidin% the truck and $akin% it difficult for the
defendants-appellees to reco&er the sa$e. ?efendants-appell[ees] .ere a*le to ha&e the .rit of sei>ure
@uashed on the *asis of a counter*ond. Plaintiff-appellant should ha&e *een the first to o*e4 the order for
the return of the sei>ed truck, considerin% its a&o.ed adherence to la. and order. And 4et, it $ade it
difficult for the defendants-appellees to actuall4 reco&er the &ehicle, as reported *4 the deput4 sheriff
a*o&e.
In the third place, there is unre*utted e&idence that the truck .as ;canni*ali>ed; .hile in the custod4 of the
plaintiff-appellant. +he latter ar%ues that such e&idence is not credi*le, *ecause, if the truck .as stripped
of &ital parts, it could not ha&e *een dri&en *4 the defendants-appellees all the .a4 *ack to Ca*anatuan
Cit4. Plaintiff-appellant con&enientl4 o&erlooks the testi$on4 of defendant-appellee -rs. +adia$an that
the4 had to *u4 the $issin% parts in order to $ake the truck run Et.s.n., p. (", 7cto*er #, 1':!, 25hi*its
;9';, ;1"; and ;11;F.
?
1ilin&est no. co$es to us alle%in% that the Court of AppealsA
EaF . . . ?2CI?2? A R<2S+I7N 71 S<,S+ANC2 IN A BAL N7+ IN ACC7R? BI+C DAB AN? +C2
APPDICA,D2 ?2CISI7NS 71 +CIS C7N7RA,D2 C7<R+ BC2N I+ R2/2RS2? +C2 ?2CISI7N 71
+C2 R2GI7NAD +RIAD C7<R+ 71 -ANIDA, ,RANCC '=
E*F . . . AC+2? BI+C GRA/2 A,<S2 71 ?ISCR2+I7N A-7<N+ING +7 DACK 71 0<RIS?IC+I7N
BC2N I+ S<S+AIN2? +C2 2RR7N27<S ?2CISI7N 71 +C2 C7N7RA,D2 R2GI7NAD +RIAD C7<R+
,RANCC (! 71 SAN 12RNAN?7, PA-PANGA=
EcF . . . AC+2? BI+C GRA/2 A,<S2 71 ?ISCR2+I7N AN? C7N+RARL +7 2MIS+ING DAB AN?
0<RISPR<?2NC2 BC2N [I+] S<S+AIN2? +C2 SP2C<DA+I/2 1IN?ING 71 +C2 R+C +CA+ +C2
P2+I+I7N2R ;CANNI,ADIV2?; +C2 -7R+GAG2? /2CICD2=
EdF . . . 2RR2? GRI2/7<SDL BC2N I+ 2M7N2RA+2? PRI/A+2 R2SP7N?2N+S 1R7- PALING +C2
P2+I+I7N2R 7N +C2 DA++2R9S D2GI+I-A+2 CDAI-S <N?2R +C2 C7-PDAIN+ PAR+IC<DARDL 7N
+C2 <NPAI? PR7-ISS7RL N7+2 -A?2 ,L +C2 PRI/A+2 R2SP7N?2N+S=
EeF . . . AC+2? C7N+RARL +7 DAB BC2N I+ IGN7R2? +C2 PDAIN A?-ISSI7NS IN +C2 ANSB2R
EA+ PARAGRAPC #, 3 , PAG2 1F 71 +C2 ?212N?AN+S EPRI/A+2 R2SP7N?2N+SF +CA+ +C2L
CA/2 ?<DL 2M2C<+2? A PR7-ISS7RL N7+2 S2C<R2? ,L A ?22? 71 CCA++2D -7R+GAG2
AN? +CA+ +C2 PRI/A+2 R2SP7N?2N+S /I7DA+2? +C2 +2R-S 71 +C2 PR7-ISS7RL N7+2 IN
1AIDING +7 PAL +C2 INS+ADD-2N+S ?<2 +C2R27N 17R N7/. 18, 1':1 AN? +C2 S<,S2R<2N+
' INS+ADD-2N+S 7R <P +7 A<G<S+ 18, 1':#=
EfF . . . 2RR2? IN R21<SING +7 APPDL +C2 +2R-S AN? C7N?I+I7NS 71 +C2 PR7-ISS7RL
N7+2 AN? +C2 ?22? 71 CCA++2D -7R+GAG2 SIGN2? ,L +C2 P7NC2S ;AS +C2 DAB
,2+B22N +C2 PAR+I2S; +7 +C2 C7N+RAC+ S<,02C+ 71 +C2 S<I+ IN +C2 R+C.
!
Additionall4, 1ilin&est $aintains thatA
E%F +C2R2 IS N7 PR771 +7 S<S+AIN +C2 ABAR? 71 -7RAD ?A-AG2S 17R P8",""".""
ACC7R?INGDL +C2R2 IS N7 ,ASIS 17R +C2 ABAR? 71 2M2-PDARL ?A-AG2S.
8
Be %a&e due course to the petition and re@uired the parties to su*$it their respecti&e $e$oranda after
the filin% of the co$$ent to the petition *4 the pri&ate respondents and of the repl4 thereto *4 1ilin&est.
+he parties su*se@uentl4 filed their $e$oranda .hich $erel4 reiterated the ar%u$ents in their respecti&e
initiator4 pleadin%s.
+he onl4 rele&ant issue in this petition is .hether or not the Court of Appeals co$$itted re&ersi*le error in
dis$issin% 1ilin&est9s appeal fro$ the decision of the trial court on the pri&ate respondents9 counterclai$
and in affir$in% in toto the said decision. +he first %round raised herein *4 1ilin&est is *aseless since the
discussions or ar%u$ents in 1ilin&est9s petition and $e$orandu$ fail to disclose .hat the decision of
,ranch ' of the R+C of -anila is all a*out. So is the fourth %round, for, the unappealed portion of the trial
court9s decision did in fact order the pri&ate respondents to pa4 1ilin&est the unpaid *alance of the
pro$issor4 note, .ith interest and attorne49s fees. All the other %rounds are dee$ed .ai&ed for not ha&in%
*een raised in the appeal to the Court of Appeals. In an4 e&ent, 1ilin&est9s dis@uisitions on such irrele&ant
issues are confounded.
As to the sole issue defined a*o&e, the Court of Appeals correctl4 ruled that 1ilin&est is lia*le for da$a%es
not *ecause it co$$enced an action for reple&in to reco&er possession of the truck prior to its foreclosure,
*ut *ecause of the manner it carried out the sei>ure of the &ehicle. Sections and (, Rule !" of the Rules
of Court are &er4 clear and direct as to the procedure for the sei>ure of propert4 under a .rit of reple&in,
thusA
Sec. . 8rder. J <pon the filin% of such affida&it and *ond .ith the clerk or 6ud%e of the court in .hich the
action is pendin%, the 6ud%e of such court shall issue an order descri*in% the personal propert4 alle%ed to
*e .ron%full4 detained, and re@uirin% the sheriff or other proper officer of the court forthwith to ta/e such
property into his custody.
Sec. (. 1uty of the officer. J <pon recei&in% such order the officer $ust ser&e a cop4 thereof on the
defendant to%ether .ith a cop4 of the application, affida&it and *ond, and $ust forthwith ta/e the property'
if it be in the possession of the defendant or his a*ent' and retain it in his custody. . . . Ee$phasis suppliedF
In the instant case, it .as not the sheriff or an4 other proper officer of the trial court .ho i$ple$ented the
.rit of reple&in. ,ecause it .as a.are that no other person can i$ple$ent the .rit, 1ilin&est asked the trial
court to appoint a special sheriff. Let, it used its o.n e$plo4ees .ho $isrepresented the$sel&es as
deput4 sheriffs to sei>e the truck .ithout ha&in% *een authori>ed *4 the court to do so. 1ilin&est 6ustified its
sei>ure *4 citin% a state$ent in 3achrach $otor Co. vs. Summers,
9
to .it, ;the onl4 restriction on the
$ode *4 .hich the $ort%a%ee shall secure possession of the $ort%a%ed propert4 after *reach of condition
is that he $ust act in an orderl4 $anner and .ithout creatin% a *reach of the peace, su*6ectin% hi$self to
an action for trespass.;
+his 6ustification is $isplace and $isleadin% for ,achrach itself had ruled that if a $ort%a%ee cannot o*tain
possession of a $ort%a%ed propert4 for its sale on foreclosure, it $ust *rin% a ci&il action either to reco&er
14 | P a g e
such possession as a preli$inar4 step to the sale or to o*tain 6udicial foreclosure. Pertinent portions
of 3achrach read as follo.sA
Bhere, ho.e&er, de*tor refuses to 4ield up the propert4, the creditor $ust institute an action, either to
effect a 6udicial foreclosure directl4, to secure possession as a preli$inar4 to the sale conte$plated in the
pro&ision a*o&e @uoted. Ce cannot la.full4 take the propert4 *4 force a%ainst the .ill of the de*tor. <pon
this point the A$erican authorities are e&en $ore har$onious that the4 are upon the point that the creditor
is entitled to possession. As .as said $a4 4ears a%o *4 the .riter of this opinion in a $ono%raphic article
contri*uted to an enc4clopedic le%al treatise, ;if possession cannot *e peacea*l4 o*tained the $ort%a%ee
$ust *rin% an action.; E+rust ?eeds and Po.er of Sale -ort%a%es, #: A$. 3 2n%. 2nc4c. of Da., #d ed.,
):.F In the Article of Chattel -ort%a%es, in Corpus 0uris, .e find the follo.in% state$ent of the la. on the
sa$e pointA ;+he onl4 restriction on the $ode *4 .hich the $ort%a%ee shall secure possession of the
$ort%a%ed propert4 after *reach of condition is that he $ust act in an orderl4 $anner and .ithout creatin%
a *reach of the peace, su*6ectin% hi$self to an action to trespass. E11 C.,., 8!"= see a#so 8 R.C.D., (!#.F
+he reason .h4 the la. does not allo. the creditor to possess hi$self of the $ort%a%ed propert4 .ith
&iolence and a%ainst the .ill of the de*tor is to *e found in the fact that the creditor9s ri%ht of possession is
conditioned upon the fact of default, and the e5istence of this fact $a4 naturall4 *e the su*6ect of
contro&ers4. +he de*tor, for instance, $a4 clai$ in %ood faith, and ri%htl4 or .ron%l4, that the de*t is paid,
or that for so$e other reason the alle%ed default is none5istent. Cis possession in this situation is as full4
entitled to protection as that of an4 other person, and in the lan%ua%e of article ((! of the Ci&il Code he
$ust *e respected therein. +o allo. the creditor to sei>e the propert4 a%ainst the .ill of the de*tor .ould
$ake the for$er to a certain e5tent *oth 6ud%e and e5ecutioner in his o.n cause J a thin% .hich is
inad$issi*le in the a*sence of une@ui&ocal a%ree$ent in the contract itself or e5press pro&ision to that
effect in the statute.
It .ill *e o*ser&ed that the la. places the responsi*ilit4 of conductin% the sale upon ;a pu*lic officer=; and it
$i%ht *e supposed that an officer, such as the sheriff, can sei>e the propert4 .here the creditor could not.
+his su%%estion is, .e think, .ithout force, as it is $anifest that the sheriff or other officer proceedin%
under the authorit4 of the lan%ua%e alread4 @uoted fro$ section 1( of the Chattel -ort%a%e Da.,
*eco$es pro hac vice the $ere a%ent of the creditor. +here is nothin% in this pro&ision .hich creates a
specific dut4 on the part of the officer to sei>e the $ort%a%ed propert4= and no intention on the part of the
la.-$akin% *od4 to i$pose such a dut4 can *e i$plied. +he conclusion is clear that for the reco&er4 of
possession, .here the ri%ht is disputed, the creditor $ust proceed alon% the usual channels *4 action in
court. Bhether the sheriff, upon *ein% inde$nified *4 the creditor, could safel4 proceed to take the
propert4 fro$ the de*tor, is a point upon .hich .e e5press no opinion. . . .
,ut .hate&er conclusion $a4 *e dra.n in the pre$ises .ith respect to the true nature of a chattel
$ort%a%e, the result $ust in this case *e the sa$e= for .hether the $ort%a%ee *eco$es the real o.ner of
the $ort%a%ed propert4 J as so$e suppose J or ac@uires onl4 certain ri%hts therein, it is none the less
clear that he has after default the ri%ht of possession= thou%h it cannot *e ad$itted that he $a4 take the
la. into his o.n hands and .rest the propert4 &iolentl4 fro$ the possession of the $ort%a%or. Neither can
he do throu%h the $ediu$ of a pu*lic officer that .hich he cannot directl4 do hi$self. +he conse@uence is
that in such case the creditor $ust either resort to a ci&il action to reco&er possession as a preli$inar4 to a
sale, or prefera*l4 he $a4 *rin% an action to o*tain a 6udicial foreclosure in confor$it4, so far as .ith the
pro&isions of the Chattel to -ort%a%e Da..
10
Reple&in is, of course, the appropriate action to reco&er possession preli$inar4 to the e5tra6udicial
foreclosure of a chattel $ort%a%e. 1ilin&est did in fact institute such an action and o*tained a .rit of
reple&in. And, *4 filin% it, 1ilin&est ad$itted that it cannot ac@uire possession of the $ort%a%ed &ehicle in
an orderl4 or peaceful $anner. Accordin%l4, it should ha&e left the enforce$ent of the .rit in accordance
.ith Rule !" of the Rules of Court .hich it had &oluntaril4 in&oked.
Parentheticall4, it $ust *e o*ser&ed that the trial court erred in holdin% that the action for reple&in .as ;not
in order as [1ilin&est] is not the o.ner of the propert4 ESec, # par. EaF Rule !"F.;
11
It is not onl4 the o.ner
.ho can institute a reple&in suit. A person ;entitled to the possession; of the propert4 also can, as pro&ided
in the sa$e para%raph cited *4 the trial court, .hich readsA
Sec. #. (ffidavit and bond. J <pon appl4in% for such order the plaintiff $ust sho. . . .
EaF +hat the plaintiff is the o.ner of the propert4 clai$ed, particularl4 descri*in% it, or is entit#ed to the
possession thereof9 . . . Ee$phasis suppliedF
<pon the default *4 the $ort%a%or in his o*li%ations, 1ilin&est, as a $ort%a%ee, had the ri%ht to the
possession of the propert4 $ort%a%ed preparator4 to its sale in a pu*lic auction.
12
Co.e&er, for e$plo4in%
su*terfu%e in sei>in% the truck *4 $isrepresentin% its e$plo4ees as deput4 sheriffs and then hidin% and
canni*ali>in% it, 1ilin&est co$$itted *ad faith in &iolation of Article 1' of the Ci&il Code .hich pro&idesA
2&er4 person $ust, in the e5ercise of his ri%hts and in the perfor$ance of his duties, act .ith 6ustice, %i&e
e&er4one his due, and o*ser&e honest4 and %ood faith.
In co$$on usa%e, *ood faith is ordinaril4 used to descri*e that state of $ind denotin% honest4 of purpose,
freedo$ fro$ intention to defraud, and, %enerall4 speakin%, $eans *ein% faithful to one9s dut4 or
o*li%ation.
1<
It consists of the honest intention to a*stain fro$ takin% an unconsciona*le and unscrupulous
ad&anta%e of another.
1B
+his lea&es us to the issue of da$a%es and attorne49s fees.
In their ans.er .ith counterclai$, the pri&ate respondents asked for EaF actual da$a%es of P8","""."" for
the spare parts found $issin% after their reco&er4 of the truck and another P8","""."" for unearned profits
due to the failure to use the truck in their rice$ill *usiness= E*F $oral da$a%es of P8","""."" for ;the
$ental an%uish, serious an5iet4, ph4sical sufferin%, .ounded feelin%s, social hu$iliation, $oral shock,
sleepless ni%hts and other si$ilar in6ur4; .hich the4 suffered as a ;pro5i$ate result of the [petitioner9s
ille%al, .ron%ful and unla.ful acts;= EcF no$inal da$a%es of P",""".""= EdF e5e$plar4 da$a%es of
P#",""".""= and EeF attorne49s fees of P#","""."" .hich the4 incurred ;as a direct result of [petitioner9s]
ille%al and un.arranted actuations and in connection .ith the defense of this action.;
15
As to actual da$a%es, the petitioner ad$its that per 25hi*its ;1,; ;',; and ;1"; of the pri&ate respondents,
onl4 the su$ of P,###."" J and not P8","""."" J .as ;supposedl4 spent for the alle%ed lost spare
parts.;
1?
+he petitioner $a4 thus *e held lia*le onl4 for such a$ount for actual or co$pensator4 da$a%es.
Anent the $oral da$a%es, the trial court ruled that the acts of the petitioner .ere in total disre%ard of
Articles 1', #", and #1 of the Ci&il Code.
1!
It added that the petitioner had not onl4 caused actual da$a%es
in lost earnin%s, *ut had also caused the pri&ate respondents to suffer indi%nities at the hands of the
petitioner9s personnel in hidin% the truck in @uestion, $isleadin% the$, and $akin% the$ .ork for the
release of the truck for a*out t.o .eeks, there*4 6ustif4in% the a.ard of $oral da$a%es alon% .ith the
e5e$plar4 and other da$a%es in fa&or of the pri&ate respondents.
18
Be a%ree .ith this findin% of the trial court. +he petitioner9s acts clearl4 fall .ithin the conte$plation of
Articles 1' and #1 of the Ci&il Code.
19
+he acts of fraudulentl4 takin% the truck, hidin% it fro$ the pri&ate
respondents, and re$o&in% its spare parts sho. nothin% *ut a .illful intention to cause loss to the pri&ate
respondents that is punctuated .ith *ad faith and is o*&iousl4 contrar4 to %ood custo$s. +hus, the pri&ate
respondents are entitled to the $oral da$a%es the4 pra4ed for, for under Article ##1' of the Ci&il Code,
$oral da$a%es $a4 *e reco&ered in cases in&ol&in% acts referred to in Article #1 of the sa$e Code.
+he pri&ate respondents pra4ed for no$inal da$a%es of P","""."" .hich the trial court did not a.ard
the$. Ca&in% failed to appeal this o$ission *4 the trial court, .e cannot $ake an4$ore such a.ard at this
point.
+he a.ard of e5e$plar4 da$a%es is in order in &ie. of the .anton, fraudulent, and oppressi&e $anner *4
.hich the petitioner sou%ht to enforce its ri%ht to the possession of the $ort%a%ed &ehicle. Article ### of
the Ci&il Code pro&idesA
In contracts and -uasi-contracts, the court $a4 a.ard e5e$plar4 da$a%es if the defendant acted in a
.anton, fraudulent, reckless, oppressi&e, or $ale&olent $anner.
7f course, a plaintiff need not pro&e the actual e5tent of e5e$plar4 da$a%es, for its deter$ination is
addressed to the sound discretion of the court upon proof of the plaintiff9s entitle$ent to $oral, te$perate,
or actual or co$pensator4 da$a%es. Article ##( of the Ci&il Code thus pro&ides in part as follo.sA
15 | P a g e
Bhile the a$ount of the e5e$plar4 da$a%es need not *e pro&ed, the plaintiff $ust sho. that he is entitled
to $oral, te$perate or co$pensator4 da$a%es *efore the court $a4 consider the @uestion of .hether or
not e5e$plar4 da$a%es should *e a.arded. . . .
+he a.ard for attorne49s fees $ust, ho.e&er, *e set aside. +here is no @uestion that the petitioner filed in
%ood faith its co$plaint for reple&in and da$a%es to protect its ri%hts under the pro$issor4 note and the
chattel $ort%a%e. +hat the pri&ate respondents had defaulted in its o*li%ation under the pro$issor4 note
there*4 authori>in% the petitioner to seek enforce$ent of its clai$ thereunder and proceed a%ainst the
$ort%a%e of the &ehicle .as dul4 reco%ni>ed *4 the trial court *4 its 6ud%$ent a%ainst the pri&ate
respondents incorporated in the first part of the dispositi&e portion. +he pri&ate respondents did not appeal
therefro$. +here .ould then *e no *asis for a.ardin% attorne49s fees in fa&or of the pri&ate respondents
for .hate&er ph4sical sufferin%, $ental an%uish, serious an5iet4, *es$irched reputation, .ounded feelin%s,
$oral shock, social hu$iliation, or an4 other si$ilar in6ur4 the4 had suffered, e&en if pro&en, .ere onl4
such as are usuall4 caused to parties haled into court as a defendant and .hich are not co$pensa*le, for
the la. could not ha&e $eant to i$pose a penalt4 on the ri%ht to liti%ate.
20
BC2R217R2, the assailed 6ud%$ent of the Court of Appeals in CA-G.R. C/ No. "#1 as .ell as that of
the Re%ional +rial Court of San 1ernando, Pa$pan%a, ,ranch (! in Ci&il Case No. !8'' on the
counterclai$ is A11IR-2?, su*6ect to the $odifications a*o&estated. As so $odified, the petitioner is
here*4 ordered to pa4 the pri&ate respondents onl4 the follo.in%A
EaF actual da$a%es in the reduced a$ount of P,###.""=
E*F $oral da$a%es in the a$ount of P8",""".""= and
EcF e5e$plar4 da$a%es in the a$ount of P#","""."".
No pronounce$ent as to costs.
S7 7R?2R2?.
HHHHHHHHHHHHHHHHHHHHHHHHH
[G.R. No. 12158!. M'-04 9 1999"
SOLEDAD D+ (o/n5 :u3/ne33 un(e- 24e n'7e 'n( 3281e RON>OOD LUM)ER petitioner,
vs. COUR# O% APPEALS 'n( ODEL )ERNARDO LAUSA respondent.
D E C I S I O N
MENDO&A J.:
+his is a petition for re&ie. of the decision
[1]
of the Court of Appeals in CA G.R. SP "'' settin% aside t.o
orders of the Re%ional +rial Court of ,utuan Cit4 E,ranch 8F and the appellate courtNs resolution den4in%
petitionerNs $otion for reconsideration.
+he facts are as follo.s.
7n -a4 1, 1'', the -a4or of ,utuan Cit4 issued 25ecuti&e 7rder No. '-"1 creatin% +ask 1orce
Kalikasan to co$*at Oille%al lo%%in%, lo% s$u%%lin% or possession of andGor transport of ille%all4 cut or
produced lo%s, lu$*er, flitches and other forest productsP in that cit4.
[#]
+he tea$ .as co$posed of
personnel of the Philippine Ar$4, Philippine National Police EPNPF, the ?epart$ent of Natural Resources
E?2NRF, and the 7ffice of the Cit4 -a4or of ,utuan. Respondent 7del ,ernardo Dausa, .ho .as the
actin% chief of ci&ilian securit4 in the $a4orNs office, .as a $e$*er of the tea$.
7n 0ul4 1, 1'', the $e$*ers of the task force recei&ed confidential infor$ation that t.o truckloads of
ille%all4 cut lu$*er .ould *e *rou%ht to ,utuan Cit4 fro$ the A$pa4on-+a%ui*e-+ini.isan area.
Accordin%l4, the tea$ set up a check-point alon% kilo$eter ( in ,aan, ,utuan Cit4.
[]
Bhat happened
thereafter is su$$ari>ed in the follo.in% portion of the decision of the Court of AppealsA
[(]
At around 1"A"" p.$., t.o trucks .ith Plate Nos. KAK-8(# and K,D-#1( and loaded .ith lu$*er
approached the checkpoint. +he4 .ere fla%%ed do.n *4 the operati&es *ut instead of stoppin%, the4
accelerated their speed hence, the task force %a&e chase. +he4 finall4 cau%ht up .ith the t.o &ehicles at
the co$pound of Loun% -etalcraft and Peter.ood A%ro-1orest Industries at ,aan, ,utuan Cit4, a*out t.o
kilo$eters fro$ the checkpoint. Bhen re@uested *4 the operati&es, Pulcita Ducero, caretakerGin char%e of
the co$pound could not produce an4 docu$ent as proof of the le%alit4 of the ori%inGpossession of the
forest products.
1orester Resurreccion -a5ilo$ of the ?2NR issued a te$porar4 sei>ure order and a sei>ure receipt for
the t.o &ehicles and their car%o consistin% of se&eral pieces of lu$*er of different si>es and di$ensions,
*ut Ducero, the caretaker of the co$pound .here the4 .ere sei>ed, refused to accept the$. +he sei>ed
lu$*er and &ehicles .ere then taken to the Cit4 $otorpool and placed in the custod4 of respondent Dausa.
+he ne5t da4, 0ul4 #, 1'', -a5ilo$ su*$itted a $e$orandu$-report to the Co$$unit4 2n&iron$ent and
Natural Resources 7fficer EC2NR7F of ,utuan Cit4 on the sei>ure of the lu$*er and the t.o &ehicles.
[8]
7n 0ul4 !, the C2NR7 issued a notice of confiscation .hich .as dul4 posted for three da4s.
1or lack of clai$ants, ?2NR Re%ional +echnical ?irector Raoul Geolle%ue reco$$ended to the Secretar4
on 0ul4 #', 1'' the forfeiture of the lu$*er and the t.o &ehicles.
[!]
Accordin%l4, on 0ul4 ", 1'', ?2NR
Re%ional ?irector ?e la Rosa ordered the C2NR7 of ,utuan Cit4 to issue the re@uisite forfeiture orders,
[)]
.hich C2NR7 An%elita 7rcasitas issued on Au%ust 18, 1''.
[:]
7n 7cto*er #", 1'', $ore than t.o $onths after the lu$*er had *een forfeited, petitioner, clai$in% to *e
the o.ner of the lu$*er, filed a suit for reple&in in the Re%ional +rial Court of ,utuan Cit4 E,ranch 8F for its
reco&er4. +he ne5t da4, 7cto*er #1, 1'', the trial court issued a preli$inar4 .rit of reple&in.
7n 7cto*er #', 1'', respondent Dausa filed a $otion for the appro&al of a counter*ond. ,efore the court
could act on his $otion, he $o&ed to dis$iss andGor @uash the .rit of reple&in on the %round that the
lu$*er in @uestion, ha&in% *een sei>ed and forfeited *4 the ?2NR pursuant to P.?. No. )"8, as a$ended
ERe&ised 1orestr4 CodeF, .as under its custod4 and, therefore, resort should first *e $ade to the ?2NR.
7n No&e$*er #', 1'', the trial court denied respondent DausaNs application for the appro&al of the
counter*ond as .ell as his $otion to dis$iss andGor @uash the suit for reple&in. 1or this reason,
respondent filed a petition for certiorari in the Court of Appeals in .hich he sou%ht the appro&al of his
counter*ond and the nullification of the t.o orders, dated 7cto*er #1, 1'' and No&e$*er #', 1'',
%rantin% petitionerNs pra4er for a preli$inar4 .rit of reple&in and den4in% his -otion to ?is$iss Case andGor
Ruash Brit of Reple&in.
7n 0anuar4 1', 1''8, the Court of Appeals rendered a decision, the dispositi&e portion of .hich readsA
BC2R217R2, the petition is here*4 GRAN+2?, and
a. +he 7rders dated #1 7cto*er 1'' and #' No&e$*er 1'' are S2+ ASI?2.
*. Respondent 6ud%e is directed to appro&e a dul4 @ualified counter*ond to *e filed *4 petitioner, e&en .ith
a period of at least one 4ear.
No pronounce$ents as to costs.
S7 7R?2R2?.
[']
PetitionerNs su*se@uent $otion for reconsideration .as denied in a resolution, dated 0ul4 #!, 1''8. Cence,
this petition. Petitioner alle%es thatA
1IRS+ 2RR7R
BI+C ?<2 R2SP2C+ R2SP7N?2N+ C7<R+ 71 APP2ADS 2RR2? IN R<DING +CA+ +C2
/2RI1ICA+I7N -A?2 ,L D7R2NCI7 ?L AN? N7+ ,L P2+I+I7N2R S7D2?A? L. ?L BAS
INS<11ICI2N+ +7 0<S+I1L +C2 ISS<ANC2 71 +C2 R2PD2/IN BRI+.
[1"]
S2C7N? 2RR7R
+C2 R2SP7N?2N+ C7<R+ 71 APP2ADS 2RR2? IN R<DING +CA+ A C7<N+2R,7N? IN R2PD2/IN
BCICC IS 2112C+I/2 17R 7NDL 7N2 L2AR IS /ADI? +7 CA<S2 +C2 R2+<RN 71 +C2
PR7P2R+L +7 ?212N?AN+.
[11]
+CIR? 2RR7R
+C2 R2SP7N?2N+ C7<R+ 71 APP2ADS 2RR2? IN GI/ING ?<2 C7<RS2 +7 PRI/A+2
R2SP7N?2N+NS P2+I+I7N 17R C2R+I7RARI.
[1#]
+he appeal is .ithout $erit. +he threshold @uestion is .hether the Re%ional +rial Court could in fact take
co%ni>ance of the reple&in suit, considerin% that the o*6ect .as the reco&er4 of lu$*er sei>ed and forfeited
*4 la. enforce$ent a%ents of the ?2NR pursuant to P.?. No. )"8 ERe&ised 1orestr4 CodeF, as a$ended
*4 25ecuti&e 7rder No. #)).
16 | P a g e
+he rule is that a part4 $ust e5haust all ad$inistrati&e re$edies *efore he can resort to the courts. In a
lon% line of cases, .e ha&e consistentl4 held that *efore a part4 $a4 *e allo.ed to seek the inter&ention of
the court, it is a pre-condition that he should ha&e a&ailed hi$self of all the $eans afforded *4 the
ad$inistrati&e processes. Cence, if a re$ed4 .ithin the ad$inistrati&e $achiner4 can still *e resorted to *4
%i&in% the ad$inistrati&e officer concerned e&er4 opportunit4 to decide on a $atter that co$es .ithin his
6urisdiction then such re$ed4 should *e e5hausted first *efore a courtNs 6udicial po.er can *e sou%ht. +he
pre$ature in&ocation of a courtNs inter&ention is fatal to oneNs cause of action. Accordin%l4, a*sent an4
findin% of .ai&er or estoppel, the case is suscepti*le of dis$issal for lack of cause of action.
[1]
Section : of P.?. No. )"8, as a$ended, pro&idesA
S2C. :. "eview. W All actions and decisions of the ?irector are su*6ect to re&ie., motu propio or upon
appeal of an4 person a%%rie&ed there*4, *4 the ?epart$ent Cead .hose decision shall *e final and
e5ecutor4 after the lapse of thirt4 E"F da4s fro$ receipt *4 the a%%rie&ed part4 of said decision, unless
appealed to the President in accordance .ith 25ecuti&e 7rder No. 1', series of 1'!!. +he ?ecision of the
?epart$ent Cead $a4 not *e re&ie.ed *4 the courts e5cept throu%h a special ci&il action for certiorari or
prohi*ition.
In )aat v. Court of (ppea#s'
[1(]
.here, as in the case at *ar, the trial court issued a .rit of reple&in a%ainst
the ?2NR, thus allo.in% the clai$ant to o*tain possession of the con&e4ance used in transportin%
undocu$ented forest products, this Court statedA
?is$issal of the reple&in suit for lack of cause of action in &ie. of the pri&ate respondentsN failure to
e5haust ad$inistrati&e re$edies should ha&e *een the proper cause of action *4 the lo.er court instead of
assu$in% 6urisdiction o&er the case and conse@uentl4 issuin% the .rit orderin% the return of the
truck. 25haustion of the re$edies in the ad$inistrati&e foru$, *ein% a condition precedent prior to oneNs
recourse to the courts and $ore i$portantl4, *ein% an ele$ent of pri&ate respondentsN ri%ht of action, is too
si%nificant to *e .a4laid *4 the lo.er court.
[18]
As petitioner clearl4 failed to e5haust a&aila*le ad$inistrati&e re$edies, the Court of Appeals correctl4 set
aside the assailed orders of the trial court %rantin% petitionerNs application for a reple&in .rit and den4in%
pri&ate respondentNs $otion to dis$iss. Ca&in% *een forfeited pursuant to P.?. No. )"8, as a$ended, the
lu$*er properl4 ca$e under the custod4 of the ?2NR and all actions seekin% to reco&er possession
thereof should *e directed to that a%enc4.
+he appellate courtNs directi&e to the trial court 6ud%e to allo. the respondent a%ent of the ?2NR to file a
counter*ond in order to reco&er custod4 of the lu$*er should *e disre%arded as *ein% contrar4 to its order
to dis$iss the reple&in suit of petitioner. 1or, indeed, .hat it should ha&e done .as to dis$iss the case
.ithout pre6udice to petitioner filin% her clai$ *efore the ?epart$ent of Natural Resources E?2NRF.
In &ie. of the conclusion reached in this case, it is unnecessar4 to discuss the errors assi%ned
*4 petitioner. +hese pertain to the @uestions .hether petitionerNs co$plaint *elo. .as properl4 &erified
and .hether pri&ate respondentNs counter*ond should *e appro&ed. ,oth are *ased on the pre$ise that
the trial court can take co%ni>ance o&er the case. As sho.n a*o&e, ho.e&er, such is not the case.
>HERE%ORE, the decision of the Court of Appeals, dated 0anuar4 1', 1''8, and its Resolution, dated
0ul4 #!, 1''8, in CA-G.R. SP "'' are A11IR-2? .ith the $odification that the co$plaint for reco&er4
of personal propert4 is ?IS-ISS2?.
SO ORDERED.
HHHHHHHHHHHHH
G.R. No. 889<8 June 8 1992
LA #ONDE@A DIS#ILLERS INC. petitioner,
&s.
COUR# O% APPEALS NA#IVIDAD ADDURU SAN#ILLAN Ju(5e )-'n04 <8 R#C M'n/1' DEPU#+
SHERI%% REGIO RUE%A 'n( #EE CHIN HO respondents.

NARVASA J.:
+he appellate proceedin%s at *ar ori%inated fro$ an action of ;rep#evin .ith da$a%es; instituted in the
Re%ional +rial Court of -anila *4 Da +ondeIa ?istillers, Inc. a%ainst a person na$ed ;+e +ien Co,;
descri*ed in the co$plaint as a ;6unk dealer; or o.ner of a ;second hand store; .ith ;office *ode%a at
1""8 2strada St., Sin%alon%, -anila.; +he action .as docketed as Ci&il Case No. :'-())!: and assi%ned
to ,ranch : of the -anila R+C, presided o&er *4 Con. Nati&idad G. Adduru-Santillan.
In its &erified co$plaint,
1
Da +ondeIa ?istillers, Inc. Ehereafter, si$pl4 Da +ondeIaF set out the follo.in%
facts, to .itA
1F that ;it $anufactures and sells . . . a %in popularl4 kno.n as ;Gine*ra San -i%uel,; .hich is contained in
8" c.c. .hite flint *ottles .ith the $arks of o.nership ;DA +7N?2XA, INC.; and ;GIN2,RA SAN
-IG<2D; sta$ped or *lo.n-in to the *ottles .hich . . . Eit [Da +ondeIa]F speciall4 ordered fro$ the *ottle
$anufactures for its e5clusi&e use=;
#F that said .hite flint *ottles .ere re%istered .ith the Philippine Patent 7ffice *4 Da +ondeIa9s
predecessor-in-interest in accordance .ith Repu*lic Act No. !#,
2
as a$ended,
<
the re%istration ha&in%
thereafter *een rene.ed and *ein% &alid and su*sistin%=
F that use of the re%istered *ottles *4 an4 one .ithout .ritten per$ission of the o.ner is declared
unla.ful *4 Section # of R.A. !#, as a$ended, pertinentl4 readin% as follo.sA
S2C. #. It shall *e unla.ful for an4 person, .ithout the .ritten consent, of the $anufacturer, *ottler, or
seller, .ho has successfull4 re%istered the $arks of o.nership in accordance .ith the pro&isions of the
ne5t precedin% section, to fill such *ottles . . . for the purpose of sale or to sell, dispose of, *u4 or traffic in
or .antonl4 destro4 the sa$e, .hether filled or not . . .
(F that, the sale of the %in in the re%istered .hite flint, *ottles does not include the sale of the *ottles
the$sel&es= in fact, Da +ondeIa9s ;sales in&oices ne&er specified that the sale of the *e&era%e includes
the sale of the container=; and
8F that the defendant ;+e +ien Co; has in his possession a @uantit4 of the re%istered *ottles .orth
P#","""."",
and on the *asis of these facts, pra4ed thatA
EaF <pon the fillin% and appro&al of a *ond in the a$ount of P(","""."", . . . EtheF Court, issue an order
directin% the, Sheriff or other proper officer . . . to take into his custod4 all the 8" c.c. *ottles of the plaintiff
in the possession of the defendant . . . and to dispose of the sa$e in accordance .ith the rules of court=
E*F After trial plaintiff *e ad6ud%ed the la.ful o.ner possessor of the said *ottles and . . . 6ud%$ent E*e
renderedF in the alternati&e a%ainst the defendant for the deli&er4 thereof to plaintiff, or for the pa4$ent . . .
of the &alue thereof in case deli&er4, cannot *e $ade=; and
EcF ?efendant, *e $ade to pa4, actual, no$inal and te$perate and e5e$plar4 da$a%es in specific stated
a$ounts Ea%%re%atin% P)8,("".""F, as .ell as attorne49s fees in the a$ount of P8","""."".
0ud%e Santillan issued the .rit of deli&er4 pra4ed for on 1e*ruar4 1, 1':' upon Da +ondeIa9s postin% of a
*ond in the a$ount of P(","""."". In i$ple$entation of the .rit, ?eput4 Sheriff Re%io Ruefa sei>ed on
1e*ruar4 ##, 1':' #",#8" *ottles .ith the *lo.n-in $arks, ;Da +ondeIa Inc.; and ;Gine*ra San -i%uel;
fro$ 7o. 11:; <strada St. Sin*a#on*.
B
7n that occasion -r. Ruefa e5ecuted a hand.ritten ;Receipt; of
the follo.in% tenorA
5
R2C2I/2? 1R7- -R. +2 +I2N C7 ("8 ,7M2SG8" . . . E#",#8"F *ottles, pieces 8" c.c. *ottles, $arks
,D7BN-IN ;DA +7N?2XA INC. and GIN2,RA San -i%uel; su*6ect of the 7rder of sei>ure in Ci&il Case
No. :'-())!: entitled ;DA +7N?2XA INC. &s. +2 +I2N C7 located at 11"8 2strada St. Sin%alon%, -anila.
. . . . . 1e*. ##, 1':'.
17RA +C2 SC2RI11 71 -ANIDA
NoteA
E("8 *o5esG8" 7K 2-P+L
#",#8" *ottlesF
BI+N2SS ,LA
EsF AD2MAN?2R 2DD2/2
?
Plaintiff
17 | P a g e
EsF +<< C5I7 58
!
?efendant
It is note.orth4 that +ee Chin Co, deno$inated ;defendant,; si%ned Sheriff Ruefa9s receipt as a .itness.
Ce does not den4 his inter&ention in the receipt and in fact, as .ill shortl4 *e narrated, insists that it .as
fro$ hi$ that the *ottles .ere sei>ed. 1urther$ore, Sheriff Ruefa9s return dated -arch , 1':' attests that
prior to sei>in% the *ottles, he ser&ed su$$ons, cop4 of the co$plaint and its anne5es, cop4 of the *ond,
and the .rit of sei>ure personall4 on defendant +e +ien Co, 8 .ho re@uested his .ife Perla ?iolesa to si%n
his na$e on the ori%inal cop4 of the su$$ons and the .rit of sei>ure for and in his o.n *ehalf, such
ser&ice and i$ple$entation of the .rit of sei>ure ha&in% *een effected ;at 11"8 2strada St., Sin%alon%,
-anila and not at 1""8 2strada St., Sin%alon%, -anila, as e&idenceEdF *4 the si%nature appearin% on the
ori%inal su$$ons and .rit.;
9
+he fi&e-da4 period prescri*ed *4 la. .ithin .hich the sufficienc4 of the rep#evin *ond $i%ht *e o*6ected
to or the return of the propert4 sei>ed
re@uired
10
e5pired .ithout an4 person o*6ectin% to the *ond or seekin% the return of the *ottles. Instead an
indi&idual identif4in% hi$self as ;+ee Chin Co; filed on -arch 1, 1':' a pleadin% deno$inated ;ANSB2R
E.ith preli$inar4 in6unction and co$pulsor4 counterclai$F,;
11
.hich opened .ith a plea that he *e %i&en
;lea&e to inter&ene as part4 .ho has le%al interest in the $atter in liti%ation; such that he .ould *e
ad&ersel4 affected *4 a distri*ution or disposition of the propert4 in liti%ation and a declaration that he .as
su*$ittin% the ans.er ;as part4-inter&enor.; +he ans.er asserted that J
1F all purchases of Da +ondeIa9s %in necessaril4 included the *ottles containin% the %in= hence o.nership
of the *ottles did not re$ain in Da +ondeIa *ut .as transferred to the purchasers=
#F it .as fro$ hi$, +ee Chin Co, and not fro$ +e +ien Co, that the *ottles in @uestion had *een taken *4
Sheriff Ruefa, and the takin% had occurred at 11"8 2strada Street Ehis [+ee Chin Co9s] place of *usinessF
and not at 1""8 2strada Street the address %i&en in the co$plaint= and
F Da +ondeIa had ;$aster$inded and caused two instances of sei%ure a%ainst inter&enor, first throu%h
and *4 the -anila Cit4, police, and second throu%h the Court9s sheriff Ecopies of the receipts of
sei>ures . . . E*ein% attached to and $ade parts of the ans.erF as Anne5es ;8; and
;!;
12
F;.
1<
Parentheticall4, the te5t of the receipt, Anne5 !, has alread4 *een set out herein, supra
1B
+he
other receipt, dra.n up on 7cto*er !, 1':: J a*out four $onths earlier J and referred to as Anne5 8 J
reads as follo.sA
?A+2 8C+. =' 1>??
+I-2 >@;: ($
1R7-A +22 CCIN C7 0<NK SC7P
I+2-SA R<AN+I+LA
(# 5 8" Epcs. #1,!""F
G-S R7<N? 8" $l
G-S 1RASC7 )"" $l
G-S . . . 8" $l
AX207 1DA+ )8 $l
AX207 7/AD )8" $l
ISS<2? ,LA EsF PA+. ,2NI+7 ?2 D27N
R2C2I/2? ,LA EsF 1. DAVAR7 1"G!G::
and, on the *asis of the fore%oin% alle%ations, pra4ed ;for the issuance forth.ith of a .rit of preli$inar4
in&esti%ation and prohi*itor4 in6unction . . . and, after due proceedin%s, that said .rits *e $ade per$anent
and that 6ud%$ent *e issued dis$issin% the co$plaint and, .ith respect to inter&enor9s co$pulsor4
counterclai$, that a.ards *e $ade for actual da$a%es in the su$ of P"","""."", $oral da$a%es in the
su$ of P1,""","""."", e5e$plar4 da$a%es in the su$ of P#,""","""."", and P1"","""."" to co&er
attorne49s fees and liti%ation e5penses . . .;
7n -arch , 1':' the Sheriff deli&ered the #",#8" e$pt4 *ottles sei>ed *4 hi$ to Da +ondeIa.
15
+he Court set +ee Chin Co9s application for in6unction for hearin% on -arch 1), 1':' *ut *4 7rder of the
sa$e date, reset the hearin% to April , 1':' to %i&e Da +ondeIa ti$e to file a repl4. It ho.e&er issued on
the sa$e da4, April , 1':', a te$porar4 restrainin% order ;to preser&e the status -uo and to pre&ent
further da$a%es, . . . Een6oinin%F the plaintiff, or other reasons actin% for and in its *ehalf, fro$ sei>in% or
other.ise confiscatin% an4 *ottles su*6ect of the .rit of sei>ure dated 1e*ruar4 #", 1':' fro$ the $o&ant
+ee Chin Co of 11"8 2strada Street, Sin%alon%, -anila, until further orders . . .
1?
Da +ondeIa filed its Repl4 on -arch 1, 1':' and its opposition to the application for in6unction on April ,
1':'
1!
C .hich latter date, as aforestated, .as the date to .hich +ee Chin Co9s application for in6unction
.as reset. Da +ondeIa also filed, under date of April 8, 1':', a ;-otion to Ad$it Attached A$ended
Co$plaint .ith -otion to ?is$iss -otion for Inter&ention and Petition for Preli$inar4 In6unction,; .hich it
set for hearin% on April 1", 1':' at :A" A.-.
18
In this $otion Da +ondeIa alle%ed inter a#ia that +ee Chin
Co9s ans.er-in-inter&ention had not 4et *een ad$itted Ethe i$plication clearl4 *ein% that it still could
a$end its co$plaint as a $atter of ri%ht
19
F= that the a$end$ent it .ished to $ake in its co$plaint
consisted $erel4 in correctin% the ;spellin% in the na$e of the defendant as .ell as his address,;
considerin% that as sho.n *4 the receipts anne5ed to the ans.er-in- inter&ention, ;+ee Chin Co .ith
address at 11"8 2strada St., Sin%alon%, -anila and +e +ien Co .ith address at 1""8 2strada St.,
Sin%alon%, -anila, . . . EareF one and the sa$e person=; and that +ee Chin Co had ;.ai&ed his ri%ht to
@uestion the incorrect spellin% of the na$e . . . and . . . address .hen he &oluntaril4 si%ned the sheriffs
receipt dated 1e*ruar4 ##, 1':' throu%h his .ife . . .;
7n April ), 1':', 0ud%e Adduru-Santillan pro$ul%ated an 7rder rulin% ;for inter&enor +ee Chin Co; and
directin% issuance of ;a .rit of preli$inar4 prohi*itor4 in6unction and a .rit of preli$inar4 $andator4
in6unction . . . as pra4ed for in the ans.er in inter&ention, upon inter&enor9s filin% a *ond in the a$ount of
1ort4-1i&e +housand Pesos EP(8,""".""F.; +he 7rder .as $ade to rest on the follo.in% findin%s, to .itA
. . . that the sei>ure authori>ed *4 the Court9s .rit of rep#evin is onl4 a%ainst the person .hose na$e and
address is pleaded in the co$plaint na$el4 +2 +I2N C7 at No. 1""8 2strada St., Sin%alon%, -anila= the
t.o truckloads e$pt4 *ottles sei>ed *4 the -anila Police E25hi*it ;(;F and *4 the Sheriff of -anila E25hi*it
;8;F fro$ inter&enor +ee Chin Co, is i$proper and unla.ful= inter&enor +ee Chin Co possessor of the t.o
truckloads of e$pt4 *ottles is presu$ed under the ci&il la. as the o.ner thereof EArticle ( and 8(1, Ci&il
CodeF= that e&en under Repu*lic Act !#, as a$ended *4 Repu*lic Act 8)"", the fact that the la. pro&ides
that the sale of the *ottled products does not ipso 0ure carr4 .ith it the sale of the *ottle 4et the sa$e la.
ne%ates an4 ri%ht of action of plaintiff $anufacturer and seller to reco&er the e$pt4 *ottles fro$ ;an4
person to .ho$ the re%istered $anufacturer . . . seller has transferred . . . an4 of the containers ESection
8F and, $oreo&er, the statute e5pressl4 e5e$pts fro$ its co&era%e the use of *ottles as containers for
;sisi,; ;*a%oon%,; ;patis,; and si$ilar nati&e products; ESection !F= and that the due process clause protects
inter&enor in his ri%ht to earn his li&elihood throu%h en%a%e$ent in his 6unk shop *usiness ERuisu$*in%
and 1ernando, Philippine Constitutional Da., p. :"F.
+hen 0ud%e Adduru-Santillan issued the ;.rit, of $andator4 and prohi*itor4 in6unction; on April 11, 1':' J
1F ;orderin% plaintiff Da +ondeIa ?istillers, Inc., its a%ents, dul4 authori>ed representati&es or other
persons actin% for and in its *ehalf to return and restore unto inter&enor +ee Chin Co at his address at
11"8 2strada St., Sin%alon%, -anila, all (1,:8" e$pt4 *ottlesGcontainers .ith *lo.n up $ark ;Da +ondeIa
Inc.; and ;Gine*ra San -i%uel; sei>ed fro$ inter&enor $entioned in Anne5es ;(; and ;8; of the ans.er-in-
inter&ention=; and
#F en6oinin% plaintiff fro$ usin%, e$plo4in%, inducin%, corruptin% or other.ise causin% $e$*ers of the
-anila Police 1orce andGor other persons for the purpose of sei>in% *ottlesGcontainers *earin% the $ark=
;Da +ondeIa Inc.; or ;Gine*ra San -i%uel; found in inter&enor9s possession at his address at 11"8
2strada St., Sin%alon%, -anila, until further orders . . .
2arlier, on April 1", 1':', at the hearin% of Da +ondeIa 9s $otions EaF to dis$iss application for in6unction
and E*F to a$end its co$plaint 0ud%e Adduru-Santillan infor$ed the parties that the $otion to a$end
co$plaint .as dee$ed ;su*$itted for resolution *ut that EsFhe had alread4 %ranted the petition for the
issuance of preli$inar4 $andator4 and prohi*itor4 in6unction, . . . Eand thatF effecti&e April #!, 1':', she
18 | P a g e
.ill not *e holdin% trial due to her application for retire$ent.;
20
Da +ondeIa learned on the sa$e da4 that
*4 7rder dated April ), 1':', the 0ud%e had ad$itted +ee Chin Co9s ans.er in inter&ention.
21
+his 7rder Da +ondeIa assailed in the Court of Appeals. 7n April 1', 1':', it filed .ith that Court a
petition ;forCertiorari' Prohi*ition and $andamus .ith Preli$inar4 Prohi*itor4 and $andator4 In6unction
andGor +e$porar4 Restrainin% 7rder.;
22
In its petition, it alle%ed that 0ud%e Santillan had in effect
ad6udicated the case on the $erits .ithout trial= she has i%nored and failed to appl4, or %rossl4
$isconstrued, the rele&ant pro&isions of R.A. !#, as a$ended= she had disre%ard circu$stances on
record sho.in% that +e +ien Co and +ee Chin Co are one and the sa$e person= she had, al*eit utterl4
.ithout authorit4, taken co%ni>ance of and passed upon the alle%ed sei>ure *4 the -anila Police of *ottles
fro$ +ee Chin Co on another, earlier occasion= and she ;should ha&e dis@ualified herself fro$ actin% on
the petition or at least re@uested that it *e transferred to her pairin% 6ud%e.; Da +ondeIa thus pra4ed for
6ud%$ent ;declarin% null and &oid and of no effect and force the order dated April ), 1':' . . . includin% the
.rit of prohi*itor4, $andator4 in6unction dated April 11, 1':' and directin% respondent sheriff Rufio
2<
Ruefa
to refrain fro$ enforcin% the said .rit, co$$andin% the respondent 6ud%e to desist fro$ conductin% an4
further proceedin%s in ci&il case no. :'-())!: . . .; It also pra4ed for a te$porar4 restrainin% order, .hich
the Court of Appeals %ranted *4 Resolution dated April #1, 1':' ;in order not to render $oot and
acade$ic the issueGissues raised . . .;
2B
+he Court of Appeals pro$ul%ated its 6ud%$ent on these case on -a4 1:, 1':'.
25
It dis$issed Da
+ondeIa9s petition. It declared that the petition did ;not prima facie; re&eal such sufficienc4 in su*stance as
.ould $erit its *ein% %i&en due course=; that e&en ;%rantin% ar*uendo that the errors pointed out *4
petitioner had indeed attended respondent 0ud%e9s issuance of the assailed 7rder, these errors cannot *e
corrected *4 $eans ofcertiorari, . . . the appropriate re$ed4 . . . *ein% a ti$el4 appeal fro$ the 6ud%$ent
on the $erits=; and that the ;solidl4 %rounded and .ell-reasoned discussion of respondent 0ud%e Ein her
challen%ed orderF . . . cannot *e consistent .ith a findin% . . . that she indul%ed in a .hi$sical and
capricious or ar*itrar4 and despotic e5ercise of 6ud%$ent, characteristic of the %ra&e a*use of discretion
callin% for
certiorari,;
2?
Da +ondeIa filed a $otion for reconsideration of the decision
2!
.hich .as denied *4 Resolution dated
0une #', 1':'.
28
It then seasona*l4 appealed to this Court in certiorari= and here it ascri*es se&eral errors
to the Court of Appeals, i.e., in not findin% that J
1.F . . . the Respondent 0ud%e acted .ithout 6urisdiction and .ith %ra&e a*use of discretion in includin%
in . . . EherF order the return of #1,!"" re%istered *ottles alle%edl4 sei>ed *4 the -anila Police on 7cto*er
!, 1'::, .hich .ere not the su*6ect of the case and not .ithin the 6urisdiction of the trial court=
#F the respondent 0ud%e had &iolated funda$ental rules on in6unctions, vi%.@
aF that, a $andator4 in6unction shall not issue in fa&or of a part4 .hose ri%hts are not clear=
*F that no ad&anta%e $a4 *e %i&en E*4 an in6unction to one Epart4F to the pre6udice of the other=;
cF that, Ean in6unction9sF pri$ar4 purpose is to preser&e the status -uo=
F . . . the Respondent 0ud%e &iolated a rule on "ep#evin that the disposition of a propert4 sei>ed under
a rep#evinorder upon the defendant shall *e done onl4 .ithin 8 da4s fro$ date of sei>ure=
(F . . . the Respondent 0ud%e utterl4 failed to appl4 the la. in @uestion, RA !# as a$ended *4 RA 8)""=
8F . . . the act of Respondent 0ud%e in . . . %rantin% the preli$inar4 in6unction .as tainted .ith procedural
infir$ities=; and
!F +ee Chin Co and +e +ien Co are one and the sa$e person.
I
A defendant or other part4 in a rep#evin proceedin% a%ainst .ho$ a .rit of sei>ure has the follo.in%
alternati&e re$edies set forth in Section 8, Rule !" of the Rules of Court, vi%.@
S2C. 8. "eturn' of property. J If the defendant o*6ects to the sufficienc4 of the plaintiff9s *ond, or of the
suret4 or sureties thereon, he cannot re@uire the return of the propert4 as in this section pro&ided= *ut if he
does not so o*6ect $a4, at an4 ti$e *efore the deli&er4 of the propert4 to the plaintiff re@uire the return
thereof, *4 filin% .ith the clerk or 6ud%e of the court a *ond e5ecuted to the plaintiff in dou*le the &alue of
the propert4 as stated in the plaintiff affida&it, for the deli&er4 of the propert4 to the plaintiff, if such deli&er4
*e ad6ud%ed, for the pa4$ent of such su$ to hi$ as $a4 *e reco&ered a%ainst the defendant, and *4
ser&in% a cop4 of such *ond on the plaintiff or his attorne4.
+he defendant $a4 a&ail of these alternati&e options onl4 .ithin fi&e E8F da4s after the takin% of the
propert4 *4 the officer. +his .as $ade plain al*eit i$pliedl4 *4 Section ! of the sa$e Rule, pro&idin% as
follo.sA
29
S2C. ! 1isposition of property by officer. J If within five ;! days after the ta/in* of the property by the
officer, the defendant does not o*6ect to the sufficienc4 of the *ond, or of the suret4 or sureties thereon, or
re@uire the return of the propert4 as pro&ided in the last precedin% section= or if the defendant so o*6ects,
and the plaintiff9s first or ne. *ond is appro&ed= or if the defendant so re@uires, and his *ond is o*6ected to
and found insufficient and he does not forth.ith file an appro&ed *ond, the propert4 shall *e deli&ered to
the plaintiff. If for an4 reason, the propert4 is not deli&ered to the plaintiff, the officer $ust return it to the
defendant.
+hus if a defendant in a rep#evin action .ishes to ha&e the propert4 taken *4 the sheriff restored to hi$, he
should .ithin fi&e da4s fro$ such takin%, E1F post a counter-*ond in dou*le the &alue of said
propert4,
<0
and E#F ser&e plaintiff .ith a cop4 thereof *oth re@uire$ents J as .ell as co$pliance there.ith
.ithin the fi&e-da4 period $entioned J *ein% $andator4.
<1
Alternati&el4, ;the defendant $a4 o*6ect to the sufficienc4 of the plaintiff9s *ond, or of the suret4 or sureties
thereon=; *ut if he does so, ;he cannot re@uire the return of the propert4; *4 postin% a counter-*ond
pursuant to Sections 8 and !.
In other .ords, the la. does not allo. the defendant to file a $otion to dissol&e or dischar%e the .rit of
sei>ure Eor deli&er4F J on the %round of insufficienc4 of the co$plaint or of the %rounds relied upon
therefor, as in proceedin%s on preli$inar4 attach$ent or in6unction
<2
and there*4 put at issue the $atter of
the title or ri%ht, of possession o&er the specific chattel *ein% rep#evied, the polic4 apparentl4 *ein% that
said $atter should *e &entilated and deter$ined onl4 at the trial on the $erits.
7n the other hand, a stran*er to the action, i.e., a person not a part4 to the action, or as the la. puts it,
;an4 other person than the defendant or his a%ent,; .hose propert4 is sei>ed pursuant to the .rit of
deli&er4, is accorded the re$ed4 kno.n as terceria, a third part4 clai$, to .itA
S2C. ). +hird-party c#aim. J If the propert4 taken *e clai$ed *4 an4 other person then the defendant or
his a%ent, and such person $akes an affida&it of his title thereto or ri%ht to the possession thereof, statin%
the %rounds of such ri%ht or title, and ser&es the sa$e upon the officer .hile he has possession of the
propert4, and a cop4 thereof upon the plaintiff, unless the plaintiff or his a%ent, on de$and of the officer,
inde$nifies hi$ a%ainst such clai$ *4 a *ond in a su$ not %reater than the &alue of the propert4, and in
case disa%ree$ent as to such &alue the sa$e shall *e decided *4 the court issuin% the order. +he officer
is not lia*le for da$a%es for takin% or keepin% of such propert4, to an4 other person than the defendant or
his a%ent, unless such clai$ is so $ade and the action upon the *ond *rou%ht .ithin one hundred and
t.ent4 E1#"F da4s fro$ the date of filin% of the said *ond. ,ut nothin% herein contained shall pre&ent such
third person fro$ &indicatin% his clai$ to the propert4 *4 an4 proper action. Co.e&er, .hen the plaintiff, or
the person in .hose *ehalf the order of deli&er4 .as issued, is the Repu*lic of the Philippines, or an4
officer dul4 representin% it, the filin% of *ond shall not *e re@uired, and in case the sheriff or the officer
e5ecutin% the order is sued for da$a%es as a result of such e5ecution, he shall *e represented *4 the
Solicitor General, and if held lia*le therefor, the actual da$a%es ad6ud%ed *4 the court shall *e paid *4 the
National +reasurer out of the funds to *e appropriated for the purpose.
+he re$ed4 is identical to that %ranted to stran%ers in a proceedin% on preli$inar4 attach$ent or e5ecution
of 6ud%$ents.
<<
In lieu of, or in addition to the filin% of a terceria, the third part4 $a4, as Section ) points out, &indicate ;his
clai$ to the propert4 *4 an4 proper action.; +his effort at &indication $a4 take the for$ of a separate action
for reco&er4 of the propert4, or inter&ention in the rep#evin action itself.
<B
It .as thus i$perati&e for the +rial 0ud%e, *efore ulti$atel4 resol&in% the $otion for lea&e to inter&ene as
part4 defendant of the person identif4in% hi$self as ;+ee Chin Co,; to deter$ine the precise status of said
19 | P a g e
;+ee Chin CoA; .hether he .as indeed a stran%er to the action, as he clai$s, and could therefore a&ail of
the re$ed4 of inter&ention as a part4 defendant, or he .as in truth a proper part4 defendant, .ho had
*een $istakenl4 and inad&ertentl4 referred to as ;+e +ien Co;, and .ho therefore onl4 had the alternati&e
re$edies afore$entioned of either EaF o*6ectin% to the rep#evin *ond or the suret4 or sureties thereof or E*F
postin% a counter-*ond to co$pel return of the propert4.
As of April 11, 1':', .hen the +rial 0ud%e issued the ;.rit of $andator4 and prohi*itor4 in6unction,; she
.as a.are, or should ha&e kno.n, of certain facts in the record *earin% stron%l4 on the identit4 of ;+ee
Chin Co,; na$el4A J
1F that ;+ee Chin Co; .as actuall4 ser&ed .ith su$$ons at his 6unk shop at 2strada Street=
#F that the *ottles descri*ed in Da +ondeIa9s co$plaint and the .rit of deli&er4 .ere actuall4 found at his
esta*lish$ent, and .ere there sei>ed=
F that +ee Chin Co9s shop is the onl4 6unk shop on 2strada Street=
(F that ;+ee Chin Co; did not then protest to the sheriff he .as not the defendant na$ed in the su$$ons,
;+e +ien Co,; or that his address .as different fro$ that indicated in the process= instead he asked his .ife
to si%n his na$e on the sheriff9s receipt .herein he .as descri*ed as ;defendant,; as .ell ;on the ori%inal
cop4 of the su$$ons and the .rit of sei>ure for and in his o.n *ehalf=;
<5
8F that ;+ee Chin Co; is not phoneticall4 all that different fro$ ;+ee +ien Co=;
!F that ;+ee Chin Co; ad$itted that earlier, he had *een found in possession of e$pt4 *ottles $arked ;Da
+ondeIa, Inc.,; and ;Gine*ra San -i%uel,; .hich had *een sei>ed *4 -anila police officers= and
)F that Da +ondeIa had filed a ;$otion to ad$it attached a$ended co$plaint .ith $otion to dis$iss
$otion for inter&ention and petition for preli$inar4 in6unction; dated April 8, 1':', in .hich it alle%ed inter
a#ia, in relation to the a$end$ent of its co$plaint, that J
aF the ;na$e of defendant +ee Chin Co and his address at 11"8 2strada St., Sin%alon%, -anila . . . Ehad
*eenF inad&ertentl4 indicated as +e +ien Co .ith address at 1""8 2strada St., Sin%alon%, -anila in the
co$plaint=;
*F the a$end$ent consisted $erel4 in the correction of ;the spellin% in the na$e of the defendant as .ell
as his address . . =;
cF the error in Da +ondeIa9s identification of the defendant .as not a fatal one since the principal o*6ect of
the rep#evin suit .as the reco&er4 of identifia*le *ottles in the .ron%ful possession of another= and
dF in an4 case, +ee Chin Co had .ai&ed his ri%ht to o*6ect such an error.
+here .ere thus circu$stances of record, of .hich Cer Conor .as char%ed .ith kno.led%e, that tended to
sho. that Da +ondeIa9s proffered thesis .as not entirel4 far-fetchedA that the real tar%et of its rep#evin suit
.as a 6unk dealer at 2strada Street, Sin%alon%, -anila, .ho .as in unla.ful possession of a lar%e nu$*er
of its e$pt4 *ottles, .hose na$e and address had *een $istakenl4 stated in the ori%inal co$plaint *ut
could nonetheless *e ascertained. At the &er4 least, therefore, it .as a $atter of preferential priorit4 for the
0ud%e to deter$ine .hether ;+ee Chin Co; is in fact ;+e +ien Co,; and thus ena*le her to kno. in turn,
.hether or not the re$ed4 of inter&ention .as proper in the pre$ises, instead of that pro&ided in Section 8
of Rule !", supra. In other .ords, unless there .ere a prior deter$ination *4 Cer Conor of .hether or not
;+ee Chin Co; .as a proper party defendant or a stran*er to the action, she .as in no position to ad6ud%e
that this inter&ention as part4 defendant .as correct. ,ut this is .hat respondent 0ud%e did. Bithout first
$akin% that prior deter$ination, she proceeded to pass upon the $otion for inter&ention= she 6ust si$pl4
assu$ed and declared that +ee Chin Co .as not +e +ien Co. She thus appears to ha&e acted .ithout
foundation, rashl4, .hi$sicall4, oppressi&el4.
II
Also o&erlooked *4 respondent 0ud%e .as that the a$end$ent sou%ht *4 Da +ondeIa .as one of those
e5plicitl4 $entioned, and could, in the pre$ises, *e $ade as a $atter of ri%ht, in accordance .ith Section
1 and #, Rule 1" of the Rules of Court, vi%.@
<?
Sec. 1. (mendments in *enera#. J Pleadin%s $a4 *e a$ended *4 addin% or strikin% out an alle%ation or
the na$e of an4 part4, or *4 correctin* a mista/e in the name of a party or a mista/en or inade-uate or
description in any other respect' so that the actual $erits of the contro&ers4 $a4 speedil4 *e deter$ined,
.ithout re%ard to technicalities, and in the $ost e5peditious and ine5pensi&e $anner.
Sec. #. When amendments a##owed as a matter of ri*ht. J A part4 $a4 a$end his pleadin% once as a
$atter of course at an4 ti$e *efore a responsi&e pleadin% is ser&ed or, if the pleadin% is one to .hich no
responsi&e pleadin% is per$itted and the action has not *een placed upon the trial calendar, he $a4 so
a$end it at an4 ti$e .ithin ten E1"F da4s after it is ser&ed.
It is plain fro$ the record that at the ti$e that Da +ondeIa $o&ed to a$end its co$plaint to correct ;a
$istake in the na$e of a part4; and ;a $istaken or inade@uate alle%ation or description; of that part49s
place of residence or *usiness, no effecti&e ;responsi&e pleadin%; Ei.e., the ans.erF had *een ser&ed on it
*4 the person i$pleaded in the action as defendant= for the ad$ission of +ee Chin Co9s ans.er-in-
inter&ention E.ith per$issi&e counterclai$F .as 4et han%in% fire and no notice of the Court9s action thereon
had *een ser&ed on Da +ondeIa. Clearl4, then, the a$end$ent .hich Da +ondeIa .ished to $ake .as
a matter of ri*ht in accordance .ith Section #, Rule 1". ,ein% directed at a ;defect in the desi%nation of the
parties,; it .as in truth a correction that could *e su$$aril4 $ade at an4 sta%e of the action pro&ided no
pre6udice is caused there*4 to the ad&erse part4,; as Section ( of the sa$e Rule 1" further pro&ides.
It is si$pl4 a$a>in% .h4 in li%ht of all these factual and le%al consideration, respondent 0ud%e did not
@uickl4 ad$it the a$end$ent in @uestion to correct the $istaken reference to +ee Chin Co as +e +ien Co,
*ut .hat is .orse, first %ranted lea&e to +ee Chin Co9s inter&ention, and then indefinite#y deferred the
matter of the amendment of the comp#aint *4 si$pl4 declarin% it; su*$itted for resolution; and
co$$endin% it to the attention of the 0ud%e .ho .ould succeed her in her sa#a in &ie. of her i$pendin%
retire$ent. +he 0ud%e thus appears to ha&e acted in disre%ard of the plain pro&isions of the Rules,
.hi$sicall4, oppressi&el4.
III
It is a$a>in%, too, .h4 +ee Chin Co J .ho .as alread4 actuall4 a defendant *ecause he had *een ser&ed
.ith su$$ons and had i$plicitl4 ackno.led%ed his status as such *4 si%nin% or causin% the si%nin% of his
na$e to certain papers in .hich he .as descri*ed as defendant J should thereafter still ha&e $o&ed to
inter&ene in the action as defendant in intervention. +he $ore direct step indicated under the
circu$stances, since he had alread4 *een *rou%ht into the action as defendant, althou%h a%ainst his .ill,
.as $erel4 to dra. the court9s attention, *4 so$e appropriate $otion or pleadin%, to the lack of an4 cause
of action a%ainst hi$ *ecause he .as not the person i$pleaded as defendant in the co$plaint and, of
course, seek relief fro$ the .rit of sei>ure and reco&er4 as such da$a%es as $i%ht ha&e *een cause to
hi$ *4 the enforce$ent thereof. Co.e&er, +ee Chin Co chose the $ore circuitous pathA althou%h alread4
technicall4 a defendant, he still filed a $otion to inter&ene as defendant, and also .ith the sa$e *asic
o*6ecti&eA to tell the Court he .as not the person na$ed in the co$plaint, and to reco&er the propert4
sei>ed fro$ hi$ as .ell as da$a%es.
,4 this $aneu&er, +ee Chin Co .as a*le to e&ade the le%al conse@uences of the e5piration of the fi&e-da4
period prescri*ed *4 Section 8 Ein relations to Section !F of Rule 1", supra= he succeeded in reco&erin% the
*ottles in @uestion e&en after the e5pir4 of said period, and .hat is $ore, as defendant in intervention, he
.as a*le to put at issue the propriet4 of the %round relied upon for a .rit of deli&er4, J .hich he .ould
ha&e *een dis@ualified to do as defendant. It .as seriousl4 .ron%A for the Court to ha&e sanctioned such a
$aneu&er.
I/
A%ain, the su*6ect of Da +ondeIa9s rep#evin suit, as alread4 stated, are the 2:'2;: *ottles sei>ed fro$ +ee
Chin Co on 1e*ruar4 ##, 1':' on the stren%th of the .rit of deli&er4 of 1e*ruar4 1, 1':'.
,ut the +rial Court9s 7rder of April ), 1':', directed Da +ondeIa to ;return and restore unto inter&enor +ee
Chin Co . . . all A1'?;: e$pt4 *ottlesGcontainers .ith *lo.n up $ark ;Da +ondeIa Inc.; and ;Gine*ra San
-i%uel; sei>ed fro$ inter&enor $entioned in Anne5es ;(; and ;8; of the ans.er-in-inter&ention; J $ore
particularl4, in the per$issi&e counterclai$ set out in said ans.er-in-inter&ention. In other .ords, the Court
ordered the return not onl4 of the #",#8" *ottles sei>ed pursuant to its .rit of deli&er4 on 1e*ruar4 1,
20 | P a g e
1':', *ut, also the @uantit4 of *ottles clai$ed *4 +ee Chin Co to ha&e *een sei>ed fro$ hi$ *4 -anila
Police officers at an earlier date.
No., as re%ards these *ottles earlier taken into custod4 *4 the -anila Police, certain circu$stances
are *ermane, na$el4A
1F the clai$ therefor .as $ade in a per$issi&e counterclai$, it not appearin% that said clai$ ;arises out of
or is necessaril4 connected .ith, the transaction or occurrence that is the su*6ect $atter of the opposin%
part49s . . . clai$ and does not re@uire for its ad6udication the presence of third parties of .ho$ the court
cannot ac@uire 6urisdiction=;
<!
and
#F the onl4 e&idence on record is the receipt issued *4 the officers in&ol&ed in the sei>ure EAnne5 8,
ans.er-in-inter&entionF= the police officers .ere not i$pleaded as parties defendant on +ee Chin Co9s
counterclai$ nor re@uired to appear and %i&e e&idence of said sei>ure= no proof .as e&er adduced *4 +ee
Chin Co of the reason for the confiscation of the *ottles, or .hether or not the *ottles had *een turned o&er
to Da +ondeIa.
It does not appear that an4 docketin% fees .ere paid *4 +ee Chin Co for his per$issi&e counterclai$. At
no point has +ee Chin Co e&er stated that he had indeed paid an4 filin% or other fees thereon. +he +rial
Court, therefore, should not ha&e ad$itted the per$issi&e counterclai$, $uch less issued preli$inar4
$andator4 and prohi*itor4 in6unctions founded on the a&er$ents thereof.
<8
+he +rial Court also re@uired Da +ondeIa to return to +ee Chin Co the *ottles sei>ed fro$ the latter *4
-anila police officers not.ithstandin% the a*sence of an4 sho.in% .hate&er that the confiscation of those
*ottles had *een had at Da +ondeIa9s instance or, $ore i$portantl4, that the *ottles had *een turned o&er
to Da +ondeIa, and .ithout re@uirin% the police officers concerned to %i&e e&idence of the facts
surroundin% the sei>ure of those *ottles.
It *ein% presu$ed that ;official dut4 has *een re%ularl4 perfor$ed; and ;the la. has *een o*e4ed,;
<9
the
act of sei>ure of the police officers cannot initiall4 *e dee$ed unla.ful upon its face, in the a*sence of
e&idence of the circu$stances under .hich the4 effected the sei>ure. Indeed, since re%ularit4 $a4 *e
assu$ed in the act of the police officers in @uestion, it $a4 not unreasona*l4 *e supposed that the4 acted
in &irtue of a search .arrant or so$e order of a co$petent Court J a court other than respondent 0ud%e9s,
.hich .ould conse@uentl4 ha&e 6urisdiction, to the e5clusion of the Court a -uo, to release the *ottles.
Prudence thus dictated that the respondent 0ud%e at the &er4 least re@uire e&idence on this $atterA as to
.h4 sei>ure .as $ade and .hether or not, the *ottles had *een surrendered to Da +ondeIa J so that it
could *e ordered to return the$ to +ee Chin Co ,ut this the respondent 0ud%e did not do. Bithout kno.in%
if 6urisdiction o&er the *ottles sei>ed *4 the -anila Police .as in another court, .ithout re@uirin% the
officers concerned to appear and shed li%ht on the issue, .ithout kno.in%, if the *ottles .ere indeed, in
possession of Da +ondeIa , she re@uired Da +ondeIa to restore possession. thereof to +ee Chin Co. In
doin% so, Cer Conored acted @uite i$prudentl4, recklessl4, capriciousl4, oppressi&el4.
/
1inall4, it .ould appear that respondent 0ud%e, in resol&in% an application for a pro&isional re$ed4, in the
process alread4 disposed of the case on the $erits. +he *asic issue in the action at *ar is .hether or not
Da +ondeIa has a ri%ht of action to pre&ent the use *4 +ee Chin Co Eor as he .as $istakenl4 na$ed in the
co$plaintA +e +ien CoF of the *ottles especiall4 $anufactured for it pursuant to its specifications. +his
issue .as resol&ed *4 respondent 0ud%e in her challen%ed 7rder of April ), 1':' in the follo.in% $annerA
. . . e&en under Repu*lic Act !#, as a$ended *4 Repu*lic Act 8)"", the fact that the la. pro&ides that the
sale of the *ottled products does not ipso 0ure carr4 .ith it the sale of the *ottle, 4et the sa$e la. ne%ates
an4 ri%ht of action of plaintiff $anufacturer and seller to reco&er the e$pt4 *ottles fro$ ;an4 person to
.ho$ the re%istered $anufacturer . . . seller it has transferred . . . an4 of the containers ESection 8F and,
$oreo&er, the statute e5pressl4, e5e$pts fro$ its co&era%e the use of *ottles as containers for ;sisi,;
;*a%oon%,; ;patis,; and si$ilar nati&e products; ESection !F= and that the due process clause protects
inter&enor in his ri%ht to earn his li&elihood throu%h en%a%e$ent in his 6unk shop *usiness ERuisu$*in%
and 1ernando, Philippine Constitutional Da., p, :"F.
It is of pu*lic kno.led%e that .hen a person purchase a drink, .hate&er it $a4 *e the *u4er is re@uired to
deposit an a$ount for the *ottles and if the e$pt4 *ottles, after consu$in% its contents, is not returned,
then the *u4er is ans.era*le for the e$pt4 *ottle, there*4 con&ertin% the transaction to one of a sale to
include the *ottle thereof and the seller .ould not and shall not *e per$itted to co$plaint and reco&er the
said *ottles until and unless the correspondin% deposit is returned to the *u4er in e5chan%e of the *ottle.
Such a rulin% ha&in% *een handed do.n, .hat else, it $a4 *e asked, .ould still ha&e to *e resol&ed at the
trial, and stated in its final 6ud%$ent, as re%ards the $erits of the actionY
Said rulin% $oreo&er, does not see$ to correct, *ein% in conflict .ith Section of Repu*lic Act No. !#,
.hich readsA
B0
Sec. . +he use *4 an4 person other then the re%istered $anufacturer, *ottler or seller, .ithout .ritten
per$ission of the latter of an4 such *ottle, cask, *arrel, ke%, *o5, steel c4linders, tanks, flasks,
accu$ulators, or other si$ilar containers, or the possession thereof without any written permission of the
manufacturer' by any 0un/ dea#er or dealer in casks, *arrels, ke%s, *o5es, steel c4linders, tanks, flasks,
accu$ulators, or other si$ilar containers, the sa$e *ein% dul4 $arked or sta$ped and re%istered as
herein pro&ided, sha## *ive rise to a prima facie presumption that such use of possession is un#awfu#.
Since +ee Chin Co ne&er denied *ein% a 6unk dealer J indeed, his re%istered *usiness na$e descri*es
hi$ as one such
B1
J or that he did not ha&e Da +ondena9s .ritten per$ission to possess the *ottles in
@uestion, a correct application of the la. called for in&okin% the presu$ption created *4 the confluence of
these t.in circu$stances to den4 said respondent an4 ri%ht to the possession or use of the *ottles, instead
of orderin% their return to hi$, ho.soe&er pro&isionall4. And lackin% an4 sho.in% that Da +ondeIa
con&e4ed the *ottles, sans contents, to +ee Chin Co, or that the latter is a *ottler of ;sisi,; ;ba*oon*,; or
si$ilar products, no ar%u$ent can *e $ade for e5tendin% to hi$ the e5e$pti&e pro&isions of Section 8 and
! of the sa$e Act cited in the @uestioned 7rder of the Re%ional +rial Court.
/I
All the fore%oin% considered= the Court is satisfied that the %ra&e errors ascri*ed to the Re%ional +rial
Court .ere in fact co$$itted= and that it .as @uite .ron% for the Court of Appeals to ha&e failed to declare
those errors as constitutin% %ra&e a*use of discretion, and to ha&e upheld the 7rder assailed in these
proceedin%s.
BC2R217R2, the petition is GRAN+2?. +he ?ecision of the Court of Appeals co$plained of is
R2/2RS2?. +he 7rder of April ), 1':' of the Re%ional +rial Court of -anila in Ci&il Case No. :'-())!:
and the Brit of -andator4 and Prohi*itor4 In6unction of April 11, 1':' issued pursuant thereto are
N<DD2? and S2+ ASI?2. +he status -uoo*tainin% prior to the issuance of said 7rder and Brit is
7R?2R2? R2S+7R2?, and the proceedin%s in said case shall continue as if the4 had ne&er *een
issued. Costs a%ainst the pri&ate respondent.
S7 7R?2R2?.