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PRELIMINARY ATTACHMENT

ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA


GUINA, respondents.
Facts: Mangila contracted the freight forwarding services of Guina for
shipment of petitioners products. Petitioner agreed to pay private
respondent cash on delivery. On the first shipment, petitioner requested for
seven days within which to pay private respondent. However, for the next
three shipments petitioner failed to pay private respondent. Despite several
demands, petitioner never paid private respondent. Guina sued Mangila
before the RTC of Pasay. The sheriff filed his Sheriffs Return showing that
summons was not served on petitioner. The writ of preliminary attachment
was issued in favor of Guina since the absence of Mangila in the country
was construed as done with fraud. Mangila filed motion to Discharge
Attachment without submitting herself to the jurisdiction of the trial court.
She pointed out that up to then, she had not been served a copy of the
Complaint and the summons. Hence, petitioner claimed the court had not
acquired jurisdiction over her person. The said motion was granted. Guina
applied for alias summons on December 26, 1988, which the trial court
issued on January 19, 1989. It was only on January 26, 1989 that summons
was finally served on petitioner.
Issue: Whether the writ of attachment was improperly issued.
Held: As a preliminary note, a distinction should be made between issuance
and implementation of the writ of attachment. It is necessary to distinguish
between the two to determine when jurisdiction over the person of the
defendant should be acquired to validly implement the writ. This Court has
long settled the issue of when jurisdiction over the person of the defendant
should be acquired in cases where a party resorts to provisional remedies.
A party to a suit may, at any time after filing the complaint, avail of the
provisional remedies under the Rules of Court. Specifically, Rule 57 on
preliminary attachment speaks of the grant of the remedy at the
commencement of the action or at any time thereafter.[21] This phrase
refers to the date of filing of the complaint which is the moment that marks
the commencement of the action. The reference plainly is to a time before
summons is served on the defendant, or even before summons issues. The
grant of the provisional remedy of attachment involves three stages: first,
the court issues the order granting the application; second, the writ of
attachment issues pursuant to the order granting the writ; and third, the writ
is implemented. For the initial two stages, it is not necessary that jurisdiction
over the person of the defendant be first obtained. However, once the
implementation of the writ commences, the court must have acquired
jurisdiction over the defendant for without such jurisdiction, the court has no
power and authority to act in any manner against the defendant. Any order
issuing from the Court will not bind the defendant. In the instant case, the
Writ of Preliminary Attachment was issued on September 27, 1988 and
implemented on October 28, 1988. However, the alias summons was
served only on January 26, 1989 or almost three months after the
implementation of the writ of attachment. In conclusion, we hold that the
alias summons belatedly served on petitioner cannot be deemed to have
cured the fatal defect in the enforcement of the writ. The trial court cannot
enforce such a coercive process on petitioner without first obtaining
jurisdiction over her person. The preliminary writ of attachment must be
served after or simultaneous with the service of summons on the defendant
whether by personal service, substituted service or by publication as
warranted by the circumstances of the case. The subsequent service of
summons does not confer a retroactive acquisition of jurisdiction over her
person because the law does not allow for retroactivity of a belated service.
VICENTE B. CHUIDIAN, petitioner, vs. SANDIGANBAYAN (Fifth
Division) and the REPUBLIC OF THE PHILIPPINES, respondents.
Facts: Chuidian a favored businessman of Marcoses, used false pretenses
to induce Philguarantee in facilitating loan in favor of ARCI which was
allegedly owned by Chuidian. The loan was approved and ARCI defaulted
payments. Philguarantee sued Chuidian and alleged that he misused the
loan proceeds for his personal benefit. Philguarantee, however, entered with
compromise agreement with Chuidian. Pursuant to such agreement,
Chuidian will assign all of its interest to all his companies in favor of the
Philippine Government which in turn Philguarantee will absolve him from all
civil and criminal liability. Further, the Phil. Govt. shall pay Chuidian through
the letters of credit which were issued by PNB in favor of him. The Aquino
government, however, through PCGG made efforts on the Marcoses
properties which were illegally acquired. The assets included in

sequestration were that of Chuidian. The complaint was filed before


sandiganbayan against Chuidian for having in conspiracy with the Marcoses
spouses. PCGG averred that Chuidian and other defendants committed
unlawful concert such as violation of public trust and fiduciary obligations.
The writ of attachment was issued while the case was pending over the
letter of credit for violation for violation of Ruled 57 sec. 1 b,c,d,e. In
defense, Chuidian averred that he has no fiduciary relationship with the
plaintiff, fraud must be present at the time the contract was entered into, and
has not disposed of his property with no intention to defraud private
respondent. Further, he is a non-resident that time. Chuidian filed motion to
lift the said order after four years but was denied.
Issue: whether PA against LC should be lifted.
Held: As has been consistently ruled by this Court, the determination of the
existence of grounds to discharge a writ of attachment rests in the sound
discretion of the lower courts. There are two grounds to quash PA: 1. To file
a counterbond in accordance with Rule 57, Section 12; and quash the
attachment on the ground that it was irregularly or improvidently issued, as
provided for in Section 13 of the same Rule. Chuidian assailed Sec. 13. The
rule , however, contemplates that the defect must be in the very issuance of
the attachment writ. The attachment may be discharged under Sec. 13 of
Rule 57 when it is proven that the allegations of the complaint were
deceptively framed, or when the complaint fails to state a cause of action.
The issue of fraud, however, touches on the very merits of the main case
which accuses petitioner of committing fraudulent acts in his dealings with
the government. In fine, fraud was not only one of the grounds for the
issuance of the preliminary attachment, it was at the same time the
governments cause of action in the main case. when the preliminary
attachment is issued upon a ground which is at the same time the
applicants cause of action; e.g., an action for money or property
embezzled or fraudulently misapplied or converted to his own use by a
public officer, or an officer of a corporation, or an attorney, factor, broker,
agent, or clerk, in the course of his employment as such, or by any other
person in a fiduciary capacity, or for a willful violation of duty, or an action
against a party who has been guilty of fraud in contracting the debt or
incurring the obligation upon which the action is brought, the defendant is
not allowed to file a motion to dissolve the attachment under Section 13 of
Rule 57 by offering to show the falsity of the factual averments in the
plaintiffs application and affidavits on which the writ was based and
consequently that the writ based thereon had been improperly or irregularly
issued the reason being that the hearing on such a motion for dissolution
of the writ would be tantamount to a trial of the merits of the action. In other
words, the merits of the action would be ventilated at a mere hearing of a
motion, instead of at the regular trial. When the writ of attachment is issued
upon a ground which is at the same time the applicants cause of action, the
only other way the writ can be lifted or dissolved is by a counterbond, in
accordance with Section 12 of the same rule. This recourse, however, was
not availed of by petitioner.
Torres vs Satsatin
Facts: The siblings Sofia, Fructosa, and Mario Torres each own
adjacent 20,000 square meters track of land situated at Barrio
Lankaan, Dasmarias, Cavite. Sometime in 1997, Nicanor Satsatin
asked petitioners mother, Agripina Aledia, if she wanted to sell their
lands. Agripina agreed to sell the properties. Petitioners, thus,
authorized Nicanor, through a Special Power of Attorney, to negotiate for the
sale of the properties. Sometime in 1999, Nicanor offered to sell the
properties to Solar Resources, Inc. (Solar). Solar allegedly agreed to
purchase the three parcels of land, together with the 10,000-squaremeter property owned by a certain Rustica Aledia. Petitioners alleged that
Nicanor was supposed to remit to them the total amount of
P28,000,000.00 or P9,333,333.00 each to Sofia, Fructosa, and the heirs
of Mario. Petitioners claimed that Solar has already paid the entire
purchase price of P35,000,000.00 to Nicanor in Thirty-Two (32) postdated checks which the latter encashed/deposited on their respective due
dates and during the period from January 2000 to April 2002, Nicanor
allegedly acquired a house and lot at Vista Grande BF Resort Village, Las
Pias City and a car, which he registered in the names of his unemployed
children. Nicanor only remitted the total amount of P9,000,000.00,
leaving an unremitted balance of P19,000,000.00. Despite repeated
verbal and written demands, Nicanor failed to remit to them the
balance of P19,000,000.00. Consequently, on October 25, 2002, petitioners
filed before the regional trial court (RTC) a Complaint for sum of money and
damages, against Nicanor, Ermilinda Satsatin, Nikki Normel Satsatin, and

Nikki Norlin Satsatin. On October 30, 2002, petitioners filed an Ex-Parte


Motion for the Issuance of a Writ of Attachment and on the said date, the
trial court issued an Order directing the petitioners to post a bond in the
amount of P7,000,000.00 before the court issues the writ of attachment.
Thereafter, the RTC issued a Writ of Attachment dated November 15, 2002,
directing the sheriff to attach the estate, real or personal, of the
respondents. On November 19, 2002, a copy of the writ of attachment was
served upon the respondents. On the same date, the sheriff levied the real
and personal properties of the respondent, including household appliances,
cars, and a parcel of land located at Las Pias, Manila. On November 21,
2002, summons, together with a copy of the complaint, was served upon
the respondents and on the same day respondents filed their answer,
they also filed a Motion to Discharge Writ of Attachment anchored on
the following grounds: the bond was issued before the issuance of the
writ of attachment; the writ of attachment was issued before the
summons was received by the respondents. On March 11, 2003, after
the parties filed their respective pleadings, the RTC issued an Order denying
the motion. Respondents argued that the subject writ was improper and
irregular having been issued and enforced without the lower court acquiring
jurisdiction over the persons of the respondents. They maintained that the
writ of attachment was implemented without serving upon them the
summons together with the complaint. They also argued that the bond
issued in favor of the petitioners was defective, because the bonding
company failed to obtain the proper clearance that it can transact business
with the RTC of Dasmarias, Cavite. They added that the various
clearances which were issued in favor of the bonding company were
applicable only in the courts of the cities of Pasay, Pasig, Manila, and
Makati, but not in the RTC, Imus, Cavite. The CA rendered the assailed
Decision in favor of the respondents, finding grave abuse of discretion
amounting to lack of or in excess of jurisdiction on the part of the RTC in
issuing the Orders Hence, the petitioners filed a petition for review
Issues: THE HONORABLE COURT OF APPEALS ERRED IN ORDERING
THE LIFTING OF THE WRIT OF ATTACHMENT PURSUANT TO SECTION
13, RULE 57 OF THE REVISED RULES OF CIVIL PROCEDURE
Held: A writ of preliminary attachment is defined as a provisional remedy
issued upon order of the court where an action is pending to be levied upon
the property or properties of the defendant therein, the same to be held
thereafter by the sheriff as security for the satisfaction of whatever judgment
that might be secured in the said action by the attaching creditor against the
defendant. In the case at bar, the CA correctly found that there was grave
abuse of discretion amounting to lack of or in excess of jurisdiction on the
part of the trial court in approving the bond posted by petitioners despite the
fact that not all the requisites for its approval were complied with. In
accepting a surety bond, it is necessary that all the requisites for its
approval are met; otherwise, the bond should be rejected. Every bond
should be accompanied by a clearance from the Supreme Court
showing that the company concerned is qualified to transact business
which is valid only for thirty (30) days from the date of its issuance.
However, it is apparent that the Certification issued by the Office of the
Court Administrator (OCA) at the time the bond was issued would clearly
show that the bonds offered by Western Guaranty Corporation may be
accepted only in the RTCs of the cities of Makati, Pasay, and Pasig.
Therefore, the surety bond issued by the bonding company should not have
been accepted by the RTC of Dasmarias, Branch 90, since the certification
secured by the bonding company from the OCA at the time of the issuance
of the bond certified that it may only be accepted in the above-mentioned
cities. Thus, the trial court acted with grave abuse of discretion amounting to
lack of or in excess of jurisdiction when it issued the writ of attachment
founded on the said bond. The grant of the provisional remedy of
attachment involves three stages: first, the court issues the order
granting the application; second, the writ of attachment issues
pursuant to the order granting the writ; and third, the writ is
implemented. For the initial two stages, it is not necessary that
jurisdiction over the person of the defendant be first obtained.
However, once the implementation of the writ commences, the court
must have acquired jurisdiction over the defendant, for without such
jurisdiction, the court has no power and authority to act in any manner
against the defendant. Any order issuing from the Court will not bind the
defendant. Such belated service of summons on respondents cannot
be deemed to have cured the fatal defect in the enforcement of the
writ. The trial court cannot enforce such a coercive process on respondents
without first obtaining jurisdiction over their person. The preliminary writ of
attachment must be served after or simultaneous with the service of
summons on the defendant whether by personal service, substituted

service or by publication as warranted by the circumstances of the


case. The subsequent service of summons does not confer a
retroactive acquisition of jurisdiction over her person because the law
does not allow for retroactivity of a belated service.
Metro Inc. and spouses frederick and liza juan vs Laras gifts and
decors and mr and ms. Luis and lara villafuerte
GR no 171741, Nov. 27, 2009
FACTS: Laras Gifts and Decors Inc. (LGD) and Metro, Inc. are corporations
engaged in the business of manufacturing, producing, selling and exporting
handicrafts. Luis Villafuerte, Jr. and Lara Maria R. Villafuerte are the
president and vice-president of LGD respectively. Frederick Juan and Liza
Juan are the principal officers of Metro, Inc. Sometime in 2001, Metro Inc.
and LGD agreed that LGD would endorse to Metro Inc. purchase
orders received by LGD from their buyers in the US in exchange for a
15% commission, to be shared equally by LGD and James R. Paddon
(JRP), LGDs agent. The terms of the agreement were later embodied
in an e-mail labeled as the "2001 Agreement." 4In May 2003, LGD filed
with the RTC, Branch 197, Las Pias City (trial court) a complaint against
Metro Inc. for sum of money and damages with a prayer for the issuance of
a writ of preliminary attachment. Subsequently, respondents filed an
amended complaint5and alleged that, as of July 2002, Metro Inc.
defrauded them in the amount of $521,841.62.Respondents also prayed
for the issuance of a writ of preliminary attachment. In its 23 June 2003
Order,the trial court granted LGDs prayer and issued the writ of
attachment against the properties and assets of petitioners. On 26
June 2003, petitioners filed a motion to discharge the writ of
attachment. Metro Inc. argued that the writ of attachment should be
discharged on the ground that respondents failed to substantiate their
allegations of fraud with specific acts or deeds showing how
petitioners defrauded them. After considering the arguments of the
parties, the trial court granted Metro incc motion and lifted the writ of
attachment. LGD filed a motion for reconsideration. In its 10 September
2003 Order, the trial court denied the motion. According to the trial court,
respondents failed to sufficiently show that petitioners were guilty of fraud
either in incurring the obligation upon which the action was brought, or in
the performance thereof. The trial court found no proof that petitioners were
motivated by malice in entering into the 2001 agreement. The trial court also
declared that petitioners failure to fully comply with their obligation, absent
other facts or circumstances to indicate evil intent, does not automatically
amount to fraud. LGD filed a petition for certiorari before the Court of
Appeals. LGD alleged that the trial court gravely abused its discretion when
it ordered the discharge of the writ of attachment without requiring
petitioners to post a counter-bond. According to the Court Appeals, the
trial court gravely abused its discretion when it ordered the discharge
of the writ of attachment without requiring petitioners to post a
counter-bond. The Court of Appeals said that when the writ of
attachment is issued upon a ground which is at the same time also the
applicants cause of action, courts are precluded from hearing the
motion for dissolution of the writ when such hearing would
necessarily force a trial on the merits of a case on a mere motion. The
Court of Appeals pointed out that, in this case, fraud was not only alleged as
the ground for the issuance of the writ of attachment, but was actually the
core of respondents complaint. The Court of Appeals declared that the only
way that the writ of attachment can be discharged is by posting a counterbond in accordance with Section 12, Rule 57 of the Rules of Court. The
Court of Appeals granted respondents petition. Metro Inc. filed a motion for
reconsideration. In its 2 March 2006 Resolution, the Court of Appeals
denied the motion.
ISSUE: Whether the writ of attachment issued by the trial court was
improperly issued such that it may be discharged without the filing of a
counter-bond.
HELD: The petition is without merit. Metro inc,Frederick juan are guilty of
fraud committed both at the inception of the agreement and in the
performance of the obligation. Through machinations and schemes,
Metro Inc. successfully enticed LGD to enter into the 2001 Agreement. In
order to secure LGDs full trust in them and lure LGD to endorse more
Purchase Orders and increase the volume of the orders, Metro Inc during
the early part, remitted to LGDs shares under the Agreement. However,
soon thereafter, just when the orders increased and the amount involved
likewise increased, Metro Inc. suddenly, without any justifiable reasons
and in pure bad faith and fraud, abandoned their contractual

obligations to remit to plaintiffs their shares. And worse, Metro Inc.


transacted directly with LGDs foreign buyer to the latters exclusion and
damage. Clearly, Metro Inc. planned everything from the beginning,
employed ploy and machinations to defraud plaintiffs, and consequently
take from them a valuable client. Metro Inc.are likewise guilty of fraud by
violating the trust and confidence reposed upon them by LGD. Metro Inc.
received the proceeds of LGDs LCs with the clear obligation of remitting
15% thereof to LGD. Their refusal and failure to remit the said amount
despite demand constitutes a breach of trust amounting to malice and fraud.
LGDs allegation that petitioners undertook to sell exclusively and only
through JRP/LGD for Target Stores Corporation but that petitioners
transacted directly with respondents foreign buyer is sufficient allegation of
fraud to support their application for a writ of preliminary attachment. Since
the writ of preliminary attachment was properly issued, the only way it
can be dissolved is by filing a counter-bond in accordance with
Section 12, Rule 57 of the Rules of Court.
PRELIMINARY INJUNCTION
IDOLOR v. CA
Facts: To secure a loan of P520,000.00, petitioner Teresita Idolor executed
in favor of private respondent Gumersindo De Guzman a Deed of Real
Estate Mortgage with right of extra-judicial foreclosure upon failure to
redeem the mortgage. Thereafter, private respondent Iluminada de
Guzman, wife of Gumersindo de Guzman, filed a complaint against
petitioner Idolor before the Office of the Barangay Captain of Barangay
Ramon Magsaysay, Quezon City, which resulted in a "Kasunduang Pagaayos. Petitioner failed to comply with her undertaking; thus private
respondent Gumersindo filed a motion for execution before the Office of the
Barangay captain who subsequently issued a certification to file action.
Then, Respondent Gumersindo De Guzman filed an extra judicial
foreclosure of the real estate mortgage pursuant to the parties agreement
set forth in the real estate mortgage. The mortgaged property was sold in a
public auction to respondent Gumersindo, as the highest bidder and
consequently, the Sheriff's Certificate of Sale was registered with the
Registry of Deeds of Quezon City. petitioner filed with the Regional Trial
Court of Quezon City, Branch 220, a complaint for annulment of Sheriff's
Certificate of Sale with prayer for the issuance of a temporary restraining
order (TRO) and a writ of preliminary injunction against private respondents,
Deputy Sheriffs Marino Cachero and Rodolfo Lescano and the Registry of
Deeds of Quezon City alleging among others alleged irregularity and lack of
notice in the extra-judicial foreclosure proceedings subject of the real estate
mortgage. In the meantime, a temporary restraining order was issued by the
trial court. The trial court issued a writ of preliminary injunction enjoining
private respondents, the Deputy Sheriffs and the Registry of Deeds of
Quezon City from causing the issuance of a final deed of sale and
consolidation of ownership of the subject property in favor of the De
Guzman spouses. Spouses de Guzman filed with the respondent Court of
Appeals a petition for certiorari seeking annulment of the trial court's order,
which granted the issuance of a preliminary injunction.
the respondent court granted the petition and annulled the assailed writ of
preliminary injunction. Teresita Idolor filed her motion for reconsideration
which was denied. Hence this petition for review on certiorari filed by
petitioner Teresita V. Idolor.
Issue: whether or not the respondent Court of Appeals erred in ruling that
petitioner has no more proprietary right to the issuance of the writ of
injunction.
Held: Injunction is a preservative remedy aimed at protecting substantive
rights and interests.6 Before an injunction can be issued, it is essential that
the following requisites be present: 1) there must be aright in esse or the
existence of a right to be protected; 2) the act against which the injunction is
to be directed is a violation of such right. Hence the existence of a right
violated, is a prerequisite to the granting of an injunction. Injunction is not
designed to protect contingent or future rights. Failure to establish either the
existence of a clear and positive right which should be judicially protected
through the writ of injunction or that the defendant has committed or has
attempted to commit any act which has endangered or tends to endanger
the existence of said right, is a sufficient ground for denying the injunction. 8
The controlling reason for the existence of the judicial power to issue the
writ is that the court may thereby prevent a threatened or continuous
irremediable injury to some of the parties before their claims can be
thoroughly investigated and advisedly adjudicated.9 It is to be resorted to

only when there is a pressing necessity to avoid injurious consequences


which cannot be remedied under any standard of compensation. 10 In the
instant case, we agree with the respondent Court that petitioner has no
more proprietary right to speak of over the foreclosed property to entitle her
to the issuance of a writ of injunction. When petitioner filed her complaint for
annulment of sheriff's sale against private respondents with prayer for the
issuance of a writ of preliminary injunction, she failed to show sufficient
interest or title in the property sought to be protected as her right of
redemption had already expired.
Gustilo vs Real
Facts: Gustilo charged respondent Judge Ricardo S. Real, Sr for gross
misconduct, gross incompetence, gross ignorance of the law, and violation
of the Anti-Graft and Corrupt Practices when the respondent judge issued a
temporary restraining order (TRO) and annulled the proclamation of
complainant as the duly elected punong barangay of Punta Mesa, Manapla
and issued a second TRO "to maintain the status quo between the
contending parties."
Issue: Whether or not the issuance of TRO is valid?
Held: Before an injunctive writ can be issued, it is essential that the following
requisites be present: (1) there must be aright in esse or the existence of a
right to be protected; and (2) the act against which injunction to be directed
is a violation of such right.11 The onus probandi is on movant to show that
there exists a right to be protected, which is directly threatened by the act
sought to be enjoined. Further, there must be a showing that the invasion of
the right is material and substantial and that there is an urgent and
paramount necessity for the writ to prevent a serious damage.12 In this case,
complainant had been duly proclaimed as the winning candidate for punong
barangay. He had taken his oath of office. Unless his election was annulled,
he was entitled to all the rights of said office. We do not see how the
complainant's exercise of such rights would cause an irreparable injury or
violate the right of the losing candidate so as to justify the issuance of a
temporary restraining order "to maintain the status quo.
Alemars Sibal and Sons vs NLRC
Facts: Private respondent NLM Katipunan, representing the group of
Charito Alimurong, filed with the Department of Labor and Employment a
notice of strike,3 raising charges of unfair labor practice (ULP) and illegal
dismissal against petitioner. Thereafter, the charges were elevated to
respondent National Labor Relations Commission (NLRC) for compulsory
arbitration. Labor Arbiter Emilio V. Pealosa rendered a decision 5 ordering
petitioner to pay private respondent separation pay. Labor Arbiter Emilio V.
Pealosa rendered a decision5 ordering petitioner to pay private respondent
separation pay. private respondent filed with the Labor Arbiter a motion for
execution of the decision of the Labor Arbiter. Petitioner did not file any
opposition thereto. On the other hand, Rehabilitation Receiver of petitioner
submitted a Manifestation with Motion,7 alleging that petitioner was not yet
in a position to comply with the directive of Labor Arbiter de Vera for the
reason that it was still under Rehabilitation Receivership by virtue of the
order of the Securities and Exchange Commission. Due to the failure of
petitioner to comply with its obligation to pay the first batch of complainants
their separation pay, the Labor Arbiter granted the motion for execution of
private respondent. petitioner filed with the Labor Arbiter a Motion to
Suspend Execution,9 citing as reason therefor the order issued by the
Securities and Exchange Commission which states: All actions for claims
against the corporation before any court, tribunal or body are suspended
accordingly.
Held: Petitioner contends that public respondent should have denied the
order of the Labor Arbiter for the immediate payment of separation pay in
favor of private respondent. Petitioner insists that a stay of execution of
monetary award is justified in this case because of the order of the
Securities and Exchange Commission suspending all claims against
petitioner pending before any court, tribunal or body. Jurisprudence has
established that a stay of execution may be warranted by the fact that a
petitioner corporation has been placed under rehabilitation receivership. 15
However, it is undisputed that on March 5, 1997, the Securities and
Exchange Commission issued an order approving the proposed
rehabilitation plan of petitioner and placing it under liquidation pursuant to
Presidential Decree 902-A . Subject to the control of the SEC, the liquidator,
Ledesma, Saludo & Associates,16 was ordered to "wind up the affairs of the

corporation, continue to manage the corporation for purposes of liquidation


in order to protect the interest of its creditors and avoid dissipation, loss,
wastage, or destruction of the remaining assets and other properties of the
corporation and to ensure orderly payment of claims against such
corporation in accordance with applicable laws." Thus, petitioner pointed out
that the SEC's order suspending all claims against it pending before any
other court, tribunal or body was pursuant to the rehabilitation receivership
proceedings. Such order was necessary to enable the rehabilitation receiver
to effectively exercise its powers free from any judicial or extra-judicial
interference that might unduly hinder the rescue of the distressed
company.18 Since receivership proceedings have ceased and petitioner's
rehabilitation receiver and liquidator, Ledesma Saludo & Associates, has
been given the imprimatur to proceed with corporate liquidation, the cited
order of the Securities and Exchange Commission has been rendered
functus officio. Thus, there is no legal impediment for the execution of the
decision of the Labor Arbiter for the payment of separation pay.

case by granting Bristol-Myers' petition and reinstating the Decision dated


September 24, 2002 of the NLRC which dismissed the complaint for
dismissal. It also ordered the discharge of the TRO cash bond and
injunction cash bond. Thus, both conditions of the writ of preliminary
injunction were satisfied. Notably, the appellate court ruled that Lagrosas
had no right to the monetary awards granted by the labor arbiter and the
NLRC, and that the implementation of the writ of execution and notices of
garnishment was properly enjoined. This in effect amounted to a finding that
Lagrosas did not sustain any damage by reason of the injunction. To
reiterate, the injunction bond is intended to protect Lagrosas against loss or
damage by reason of the injunction only. Contrary to Lagrosas' claim, it is
not a security for the judgment award by the labor arbiter.

Lagrosas vs Bristol-Myers

Facts: Petitioners obtained a P600,000.00 loan from the Manila Banking


Corporation (respondent), secured by a real estate. When petitioners failed
to pay their obligation, the mortgaged property was extra-judicially
foreclosed. Respondent was the winning bidder at public auction sale.
Thereafter, instead of redeeming the property, petitioners filed a complaint
for annulment of the foreclosure sale of the property before the Regional
Trial Court. While the case was pending, the parties entered into a
compromise agreement. Under the Compromise Agreement dated January
23, 1987, the petitioners admitted the validity of the extra-judicial foreclosure
and agreed to purchase the property from respondent for P2,548,000.00.
Parties agreed that the amount of P100,000.00 shall be payable upon
execution of the agreement and the balance of P2,448,000.00, which shall
earn twenty-six per cent (26%) interest per annum, shall be payable in
eighteen installments. Petitioners failed to pay the balance of P2,448,000.00
within the eighteen-installment period from February 23, 1987 to July 27,
1988. A year and three months later, or on October 20, 1989, respondent
filed a Motion for Issuance of Writ of Execution to enforce the Decision
dated January 30, 1987. petitioners filed a Manifestation praying for
deferment of the enforcement of the writ of execution until July 31, 1990
because petitioners have a pending proposal for the settlement of their
judgment debt. And to evade the implementation of the writ, petitioners filed
on December 20, 1991 an Ex-Parte Motion to Recall the Court's Order
dated December 5, 1991 claiming that their obligation was novated by the
Letter dated June 7, 1991 from respondent's Statutory Receiver. Thereafter,
respondent filed a Manifestation and Motion for Issuance of Alias Writ of
Execution manifesting that the Letter dated June 7, 1991 did not novate the
Decision dated January 30, 1987 but was a mere accommodation of the
petitioners' request for a liberal mode of payment of their account and
petitioners still failed to comply with such approved mode of payment. RTC
Branch 165 issued its Order which resolved the pending motions with the
Court. With respect to petitioner's ex-parte motion to recall, the Court said
that for failure to comply with Sections 4, 5 and 6 of Rule 15 of the Revised
Rules of Court and considering the nature of petitioners' motion, it treated
petitioner's motion as a mere scrap of paper. Petitioners appealed before
the CA but it was denied.hence, petition for review.

Facts: Michael J. Lagrosas is a territory manager of Bristol-Myers Squibb


(Phil.), Inc. Ma. Dulcinea S. Lim, also a Territory Manager and Lagrosas'
former girlfriend, attended a district meeting of territory managers at
McDonald's Alabang Town Center. After the meeting, she dined out with her
friends. She left her car at McDonald's and rode with Cesar R. Menquito, Jr.
When they returned to McDonald's, Menquito and Lagrosas had a
confrontation and when Lim intervened, she was accidentally hit by
Lagrosas with a steering wheel lock. Thereafter, after a disciplinary hearing,
Bristol-Myers dismissed Lagrosas effective immediately. Lagrosas then filed
a complaint [8] for illegal dismissal, non-payment of vacation and sick leave
benefits, 13th month pay, attorney's fees, damages and fair market value of
his Team Share Stock Option Grant. Labor Arbiter Renaldo O. Hernandez
rendered a Decision [9] in NLRC case declaring the dismissal illegal. He
noted that while Lagrosas committed a misconduct, it was not connected
with his work. On appeal in NLRC, the decision was affirmed. Later, Labor
Arbiter Hernandez issued a writ of execution. [15] Notices of garnishment
were then served upon the Philippine British Assurance Co., Inc. for the
supersedeas bond posted by Bristol-Myers and the Bank of the Philippine
Islands for the balance of the judgment award. Bristol-Myers moved to
quash the writ of execution contending that it timely filed a petition for
certiorari with the Court of Appeals. The appellate court gave due course to
Bristol-Myers' petition and issued a temporary restraining order (TRO) [17]
enjoining the enforcement of the writ of execution and notices of
garnishment. Upon the expiration of the TRO, the appellate court issued a
writ of preliminary injunction. Bristol-Myers then moved to discharge and
release the TRO cash bond. It argued that since it has posted an injunction
cash bond, the TRO cash bond should be legally discharged and released.
The appellate court held that upon the expiration of the TRO, the cash bond
intended for it also expired. Thus, the discharge and release of the cash
bond for the expired TRO is proper. But the appellate court disallowed the
discharge of the injunction cash bond since the writ of preliminary injunction
was issued pendente lite. Since there is a pending appeal with the Supreme
Court, the Decision is not yet final and executory.
Issue: Did the Court of Appeals err in disallowing the discharge and release
of the injunction cash bond?
Held: it is settled that the purpose of a preliminary injunction is to prevent
threatened or continuous irremediable injury to some of the parties before
their claims can be thoroughly studied and adjudicated. Its sole aim is to
preserve the status quo until the merits of the case can be heard fully. A
preliminary injunction may be granted only when, among other things, the
applicant, not explicitly exempted, files with the court where the action or
proceeding is pending, a bond executed to the party or person enjoined, in
an amount to be fixed by the court, to the effect that the applicant will pay
such party or person all damages which he may sustain by reason of the
injunction or temporary restraining order if the court should finally decide
that the applicant was not entitled thereto. Upon approval of the requisite
bond, a writ of preliminary injunction shall be issued. The injunction bond is
intended as a security for damages in case it is finally decided that the
injunction ought not to have been granted. Its principal purpose is to protect
the enjoined party against loss or damage by reason of the injunction, and
the bond is usually conditioned accordingly. In this case, the Court of
Appeals issued the writ of preliminary injunction to enjoin the
implementation of the writ of execution and notices of garnishment "pending
final resolution of this case or unless the [w]rit is sooner lifted by the Court."
By its Decision dated January 28, 2005, the appellate court disposed of the

RECEIVERSHIP
Aguilar vs Manila Banking Corporation

Issue: whether respondent's receivership is a supervening event that


rendered execution of the Decision dated January 30, 1987 impossible, if
not unjust; that since a bank under receivership is relieved of its obligation
to pay interest on the deposits of its depositors, they (petitioners) are also
not obliged to pay interest on a loan due it and interest shall commence
again only after respondent's resumption of banking operations.
Held: On the arguments relating to the effect of respondent's receivership,
petitioners brought this matter for the first time in RTC Branch 165 in their
Omnibus Motion dated March 5, 2001, fourteen years after respondent was
placed under receivership and was ordered to close operation in 1987. The
belated invocation of such circumstance speaks strongly of the staleness of
their claim. Besides, it would be absurd to adopt petitioners' position that
they are not obliged to pay interest on their obligation when respondent was
placed under receivership. When a bank is placed under receivership, it
would only not be able to do new business, that is, to grant new loans or to
accept new deposits. However, the receiver of the bank is in fact obliged to
collect debts owing to the bank, which debts form part of the assets of the
bank.71 Thus, petitioners' obligation to pay interest subsists even when
respondent was placed under receivership. The respondent's receivership is
an extraneous circumstance and has no effect on petitioners' obligation.

Larrobis, Jr vs Philippine Veterans Bank


Facts: Petitioner spouses contracted a monetary loan with respondent
Philippine Veterans Bank, evidenced by a promissory note, due and
demandable on February 27, 1981, and secured by a Real Estate
Mortgage executed on their lot together with the improvements
thereon. On March 23, 1985, the respondent bank went bankrupt and
was placed under receivership/liquidation by the Central Bank from
April 25, 1985 until August 1992. On August 23, 1985, the bank, through
Francisco Go, sent the spouses a demand letter which pertains to the
insurance premiums advanced by respondent bank over the
mortgaged property of petitioners. On August 23, 1995, more than
fourteen years from the time the loan became due and demandable,
respondent bank filed a petition for extrajudicial foreclosure of
mortgage of petitioners property. On October 18, 1995, the property
was sold in a public auction by Sheriff Arthur Cabigon with Philippine
Veterans Bank as the lone bidder. On April 26, 1996, petitioners filed a
complaint with the RTC, Cebu City, to declare the extra-judicial foreclosure
and the subsequent sale thereof to respondent bank null and void. On April
17, 1998, the RTC dismissed the complaint on the ground that defendant
bank was placed under receivership by the Central Bank from April 1985
until 1992. The defendant bank was given authority by the Central Bank to
operate as a private commercial bank and became fully operational only on
August 3, 1992. From April 1985 until July 1992, defendant bank was
restrained from doing its business. The defendant banks right to
foreclose the mortgaged property prescribes in ten (10) years but such
period was interrupted when it was placed under receivership. Article
1154 of the New Civil Code to this effect provides: "The period during which
the obligee was prevented by a fortuitous event from enforcing his right is
not reckoned against him."
Issue: Whether or not the period within which the respondent bank was
placed under receivership and liquidation proceedings may be considered a
fortuitous event which interrupted the running of the prescriptive period in
bringing actions
Held: Respondents claims that because of a fortuitous event, it was not
able to exercise its right to foreclose the mortgage on petitioners property;
and that since it was banned from pursuing its business and was placed
under receivership from April 25, 1985 until August 1992, it could not
foreclose the mortgage on petitioners property within such period since
foreclosure is embraced in the phrase "doing business," are without merit.
While it is true that foreclosure falls within the broad definition of
"doing business," that is: a continuity of commercial dealings and
arrangements and contemplates to that extent, the performance of
acts or words or the exercise of some of the functions normally
incident to and in progressive prosecution of the purpose and object
of its organization. it should not be considered included, however, in
the acts prohibited whenever banks are "prohibited from doing
business" during receivership and liquidation proceedings. This we
made clear in Banco Filipino Savings & Mortgage Bank vs. Monetary Board,
Central Bank of the Philippines24 where we explained that: Section 29 of the
Republic Act No. 265, as amended known as the Central Bank Act, provides
that when a bank is forbidden to do business in the Philippines and placed
under receivership, the person designated as receiver shall immediately
take charge of the banks assets and liabilities, as expeditiously as possible,
collect and gather all the assets and administer the same for the benefit of
its creditors, and represent the bank personally or through counsel as he
may retain in all actions or proceedings for or against the institution,
exercising all the powers necessary for these purposes including, but not
limited to, bringing and foreclosing mortgages in the name of the bank. And
in Provident Savings Bank vs. Court of Appeals, we further stated that:
When a bank is prohibited from continuing to do business by the Central
Bank and a receiver is appointed for such bank, that bank would not be able
to do new business, i.e., to grant new loans or to accept new deposits.
However, the receiver of the bank is in fact obliged to collect debts owing to
the bank, which debts form part of the assets of the bank. The receiver must
assemble the assets and pay the obligation of the bank under receivership,
and take steps to prevent dissipation of such assets. Accordingly, the
receiver of the bank is obliged to collect pre-existing debts due to the
bank, and in connection therewith, to foreclose mortgages securing
such debts. This is consistent with the purpose of receivership
proceedings, i.e., to receive collectibles and preserve the assets of the bank
in substitution of its former management, and prevent the dissipation of its
assets to the detriment of the creditors of the bank. It is not disputed that

Philippine Veterans Bank was placed under receivership by the Monetary


Board of the Central Bank by virtue of Resolution No. 364 on April 25, 1985,
pursuant to Section 29 of the Central Bank Act on insolvency of banks.
There is also no truth to respondents claim that it could not continue
doing business from the period of April 1985 to August 1992, the time
it was under receivership. As correctly pointed out by petitioner,
respondent was even able to send petitioners a demand letter, through
Francisco Go, on August 23, 1985 for "accounts receivable in the total
amount of P6,345.00 as of August 15, 1984" for the insurance premiums
advanced by respondent bank over the mortgaged property of petitioners.
How it could send a demand letter on unpaid insurance premiums and not
foreclose the mortgage during the time it was "prohibited from doing
business" was not adequately explained by respondent. As we held in
Philippine Veterans Bank vs. NLRC, a labor case which also involved
respondent bank, all the acts of the receiver and liquidator pertain to
petitioner, both having assumed petitioners corporate existence.
Petitioner cannot disclaim liability by arguing that the non-payment of
MOLINAs just wages was committed by the liquidators during the
liquidation period.36 However, the bank may go after the receiver who is
liable to it for any culpable or negligent failure to collect the assets of such
bank and to safeguard its assets.
REPLEVIN
JOSE S. OROSA and MARTHA P. OROSA, petitioners, vs. HON. COURT
OF APPEALS, FCP CREDIT CORPORATION
Facts: On September 28, 1983, petitioner purchased the subject motor
vehicle on installment from Fiesta Motor Sales Corporation. He executed
and delivered to Fiesta Motor Sales Corp. a promissory note payable in
monthly installments. To secure payment, petitioner executed a chattel
mortgage over the subject motor vehicle in favor of Fiesta Motor. On
September 28, 1983, Fiesta Motor Sales assigned the promissory note and
chattel mortgage to private respondent FCP Credit Corporation. The
complaint further alleged that petitioner failed to pay part of the installment
which fell due. Consequently, private respondent FCP Credit Corporation
demanded from petitioner payment of the entire outstanding balance of the
obligation with accrued interest and to surrender the vehicle which petitioner
was allegedly detaining. The trial court dismissed the complaint for FCP had
no reason to file the present action since petitioner already paid the
installments which are the sole bases of the complaint. The lower court
declared that private respondent was not entitled to the writ of replevin, and
was liable to petitioner for actual damages under the replevin bond it filed. a
"Supplemental Decision" was rendered by the trial court ordering private
respondent's surety, Stronghold Insurance Co., Inc. to jointly and severally
[with private respondent] return to petitioner the 1983 Ford Laser 1.5 Sedan
or its equivalent in kind or in cash and to pay the damages specified in the
main decision to the extent of the value of the replevin bond.
Issue: whether writ of replevin in returning the car or its equivalent is proper.
Held: No because petitioner had not yet fully paid the purchase price. To
sustain lower courts decision would tantamount to unjust enrichment. The
Court of Appeals was correct when it instead ordered private respondent to
return, not the car itself, but only the amount equivalent to the fourteen
installments actually paid with interest.
SMART vs. ASTORGA
Facts: Astorga was employed by SMART. When the SMART launched an
organizational alignment to achieve more efficient operations it abolished
Astorgas division. Astorga was offered supervisory position but refused to
accept after performance evaluation was conducted because the position
carried low salary. Astorga filed a complaint for illegal dismissal. SMART
averred that Astorga was dismissed on the ground of redundancy.
Meanwhile, SMART demanded from Astorga to pay the market value of
Honda Civic Sedan which was given to her under the companys car plan
program. The writ of replevin was issued after Astorga refused to return the
said car. Astorga argued that RTC has no jurisdiction because the subject
car was the result of benefit arising from employment contract.
Issue: Whether RTC has no jurisdiction over the complaint for recovery of
the car.
Held: No. The RTC rightfully assumed jurisdiction over the suit and acted
well within its discretion in denying Astorgas motion to dismiss. SMARTs

demand for payment of the market value of the car or, in the alternative, the
surrender of the car, is not a labor, but a civil, dispute. It involves the
relationship of debtor and creditor rather than employee-employer relations.
As such, the dispute falls within the jurisdiction of the regular courts. In
Basaya, Jr. v. Militante, Replevin is a possessory action, the gist of which is
the right of possession in the plaintiff. The primary relief sought therein is
the return of the property in specie wrongfully detained by another person. It
is an ordinary statutory proceeding to adjudicate rights to the title or
possession of personal property. The question of whether or not a party has
the right of possession over the property involved and if so, whether or not
the adverse party has wrongfully taken and detained said property as to
require its return to plaintiff, is outside the pale of competence of a labor
tribunal and beyond the field of specialization of Labor Arbiters.
SERVICEWIDE SPECIALISTS, INCORPORATED, Petitioner, vs. THE
HON. COURT OF APPEALS, JESUS PONCE, and ELIZABETH PONCE,
Respondents.
Facts: Sometime in 1975, respondent spouses Atty. Jesus and Elizabeth
Ponce bought on installment a Holden Torana vehicle from C. R. Tecson
Enterprises. They executed a promissory note and a chattel mortgage on
the vehicle dated December 24, 1975 in favor of the C. R. Tecson
Enterprises to secure payment of the note. On the same date, C.R. Tecson
Enterprises, in turn, executed a deed of assignment of said promissory note
and chattel mortgage in favor of Filinvest Credit Corporation with the
conformity of respondent spouses. The latter were aware of the
endorsement of the note and the mortgage to Filinvest as they in fact
availed of its financing services to pay for the car. In 1976, respondent
spouses transferred and delivered the vehicle to Conrado R. Tecson by way
of sale with assumption of mortgage. Subsequently, in 1978, Filinvest
assigned all its rights and interest over the same promissory note and
chattel mortgage to petitioner Servicewide Specialists Inc. without notice to
respondent spouses. Due to the failure of respondent spouses to pay the
installments under the promissory note from October 1977 to March 1978,
and despite demands to pay the same or to return the vehicle petitioners
filed complaint for replevin with damages. Respondent spouses denied any
liability claiming they had already returned the car to Conrado Tecson
pursuant to the Deed of Sale with Assumption of Mortgage. Thus, they filed
a third party complaint against Conrado Tecson praying that in case they are
adjudged liable to petitioner, Conrado Tecson should reimburse them. RTC
found spouses guilty but was reversed by CA on the ground of absence of
notification on the assignment of PN and CM.
Issue: whether the assignment of a credit requires notice to the debtor in
order to bind him.
Held: Since the alienation by the respondent spouses of the vehicle
occurred prior to the assignment of credit to petitioner, it follows that the
former were not bound to obtain the consent of the latter as it was not yet
an assignee of the credit at the time of the alienation of the mortgaged
vehicle. When Tecson Enterprises assigned the promissory note and the
chattel mortgage to Filinvest, it was made with respondent spouses tacit
approval. When Filinvest in turn, as assignee, assigned it further to
petitioner, the latter should have notified the respondent spouses of the
assignment in order to bind them. This, they failed to do. Insofar as Filinvest
is concerned, the debtor is still respondent spouses because of the absence
of its consent to the sale. Worse, Filinvest was not even notified of such
sale. Having subsequently stepped into the shoes of Filinvest, petitioner
acquired the same rights as the former had against respondent spouses.
The defenses that could have been invoked by Filinvest against the
spouses can be successfully raised by petitioner. Therefore, for failure of
respondent spouses to obtain the consent of Filinvest thereto, the sale of
the vehicle to Conrado R. Tecson was not binding on the former. When the
credit was assigned by Filinvest to petitioner, respondent spouses stood on
record as the debtor-mortgagor.
KENNETH HAO, COMPLAINANT, VS. ABE C. ANDRES, SHERIFF IV,
REGIONAL TRIAL COURT, BRANCH 16, DAVAO CITY RESPONDENT.
Facts: Complainant Hao is one of the defendants in a civil case for replevin
entitled "Zenaida Silver, doing trade and business under the name and style
ZHS Commercial v. Loreto Hao, Atty. Amado Cantos, Kenneth Hao and
John Does," pending before the RTC of Davao City. On October 17, 2005,
Judge Fuentes issued an Order of Seizure against 22 motor vehicles
allegedly owned by the complainant. Andres was able to seize 9 motor
vehicles. Hao in his complaint alleged that Andres seized the vehicles in an

oppressive manner. The cease and desist order against the seizure was
issued on October 21, 2005 when the counter-replevin bond was approved.
On October 24, 2005, 8 of 9 seized motor vehicles were missing. Andres
was found guilty of serious negligence in the custody of nine motor by the
investigating judge.
Issue: whether the implementation of replevin is proper.
Held: No. Pursuant to Rule 60, being an officer of the court, Andres must be
aware that there are well-defined steps provided in the Rules of Court
regarding the proper implementation of a writ of replevin and/or an order of
seizure. The Rules, likewise, is explicit on the duty of the sheriff in its
implementation. First, the rules provide that property seized under a
writ of replevin is not to be delivered immediately to the plaintiff. In
accordance with the said rules, Andres should have waited no less than five
days in order to give the complainant an opportunity to object to the
sufficiency of the bond or of the surety or sureties thereon, or require the
return of the seized motor vehicles by filing a counter-bond. This, he failed
to do. Silver was already in possession of the nine seized vehicles
immediately after seizure, or no more than three days after the taking of the
vehicles. Thus, Andres committed a clear violation of Section 6, Rule 60 of
the Rules of Court with regard to the proper disposal of the property. It
matters not that Silver was in possession of the seized vehicles merely for
safekeeping as stated in the depository receipts. The rule is clear that the
property seized should not be immediately delivered to the plaintiff, and the
sheriff must retain custody of the seized property for at least five days.
From the moment an order of delivery in replevin is executed by taking
possession of the property specified therein, such property is in
custodia legis. As legal custodian, it is Andres' duty to safekeep the
seized motor vehicles. Hence, when he passed his duty to safeguard
the motor vehicles to Silver, he committed a clear neglect of duty.
Despite the cease and desist order, Andres failed to return the motor
vehicles to their lawful owners. When a writ is placed in the hands of a
sheriff, it is his duty, in the absence of any instructions to the contrary, to
proceed with reasonable celerity and promptness to execute it according to
its mandate. However, the prompt implementation of an order of seizure
is called for only in instances where there is no question regarding the
right of the plaintiff to the property. Where there is such a question,
the prudent recourse for Andres is to desist from executing the order
and convey the information to his judge and to the plaintiff.
G.R. No. 165895
June 5, 2009
TERLYNGRACE
RIVERA, Petitioner
VARGAS, Respondent.

vs.

FLORENCIO

L.

Facts: On February 24, 2003, respondent Florencio Vargas (Vargas)


filed a complaint against petitioner and several John Does before RTC
Cagayan, for the recovery of a 150 T/H rock crushing plant located in
Sariaya, Quezon. Vargas claims ownership of the said equipment,
having purchased and imported the same directly from Hyun Dae Trading
Co., in Seoul, South Korea in 1993. The equipment was allegedly
entrusted to petitioners husband, Jan T. Rivera, who died sometime in
late 2002, as caretaker of respondents construction aggregates
business in Batangas. According to Vargas, petitioner failed to return the
said equipment after her husbands death despite his repeated demands,
thus forcing him to resort to court action. Summons dated February 24,
2003 was served upon petitioner through her personal secretary on April 28,
2003 at her residence in Paraaque City. Interestingly, however, the writ of
replevin was served upon and signed by a certain Joseph Rejumo, the
security guard on duty in petitioners crushing plant in Sariaya,
Quezon on April 29, 2003, contrary to the sheriffs return stating that
the writ was served upon Rivera. Rivera filed her answer, manifestation,
and motion for the acceptance of petitioners redelivery bond. In her answer,
petitioner countered that the rock-crushing plant was ceded in favor of her
husband as his share following the dissolution of the partnership formed
between Jan Rivera and respondents wife, Iluminada Vargas, on May 28,
1998, while the partnerships second rock-crushing plant in Cagayan was
ceded in favor of Iluminada. She further averred that from the time that the
partnership was dissolved sometime in 2000 until Jan Riveras death in late
2002, it was petitioners husband who exercised ownership over the said
equipment without any disturbance from respondent. On May 12, 2003, the
RTC issued an Order disapproving petitioners redelivery bond
application for failure to comply with the requirements under Sections
5 and 6 of Rule 60 of the Rules of Court. Without directly saying so, the
RTC faulted petitioner for her failure to file the application for redelivery

bond within five (5) days from the date of seizure as provided in the Rules of
Court. Petitioner argues that the RTC committed grave abuse of
discretion in denying her counterbond on the ground that it was filed
out of time. She contends that the mandatory five-day period did not
even begin to run in this case due to the improper service of the writ of
replevin, contrary to Section 4 of Rule 60.
Issue: Whether there is improver service of the writ of replevin.
Held: Yes. Replevin is one of the most ancient actions known to law, taking
its name from the object of its process. It originated in common law as a
remedy against the wrongful exercise of the right of distress for rent and,
according to some authorities, could only be maintained in such a case. But
by the weight of authority, the remedy is not and never was restricted to
cases of wrongful distress in the absence of any statutes relating to the
subject, but is a proper remedy for any unlawful taking. "Replevied," used in
its technical sense, means delivered to the owner, while the words "to
replevy" means to recover possession by an action of replevin. Replevin is
both a form of principal remedy and of provisional relief. It may refer
either to the action itself, i.e., to regain the possession of personal
chattels being wrongfully detained from the plaintiff by another, or to
the provisional remedy that would allow the plaintiff to retain the thing
during the pendency of the action and to hold it pendente lite.28 The
action is primarily possessory in nature and generally determines
nothing more than the right of possession. A person seeking a remedy
in an action for replevin must follow the course laid down in the
statute, since the remedy is penal in nature.34 When no attempt is made
to comply with the provisions of the law relating to seizure in this kind of
action, the writ or order allowing the seizure is erroneous and may be set
aside on motion35 by the adverse party. Be it noted, however, that a motion
to quash the writ of replevin goes to the technical regularity of
procedure, and not to the merits of the case36 in the principal action.
The process regarding the execution of the writ of replevin in Section
4 of Rule 60 is unambiguous: the sheriff, upon receipt of the writ of
replevin and prior to the taking of the property, must serve a copy
thereof to the adverse party (petitioner, in this case) together with the
application, the affidavit of merit, and the replevin bond. 37The reasons
are simple, i.e., to provide proper notice to the adverse party that his
property is being seized in accordance with the courts order upon
application by the other party, and ultimately to allow the adverse party to
take the proper remedy consequent thereto. If the writ was not served
upon the adverse party but was instead merely handed to a person
who is neither an agent of the adverse party nor a person authorized
to receive court processes on his behalf, the service thereof is
erroneous and is, therefore, invalid, running afoul of the statutory and
constitutional requirements. Under these circumstances, no right to seize
and to detain the property shall pass, the act of the sheriff being both
unlawful and unconstitutional. The RTC, however, denied the redelivery
bond for having been filed beyond the five-day mandatory period prescribed
in Sections 5 and 6 of Rule 60. 42 But since the writ was invalidly served,
petitioner is correct in contending that there is no reckoning point from which
the mandatory five-day period shall commence to run. The writ must also
satisfy proper service in order to be valid and effective: i.e. it should
be directed to the officer who is authorized to serve it; and it should be
served upon the person who not only has the possession or custody
of the property involved but who is also a party or agent of a party to
the action.
Navaro vs. Escobido GR No. 153788, November 27, 2009
FACTS: KARGO ENTERPRISES is in the business of, among others,
buying and selling motor vehicles, including hauling trucks and other heavy
equipment. Karen Go who is married to Glen Go filed a complaint
against Roger Navarro for the cause of action based on the lease
agreement entered into between the parties. The subject of the
controversy is the Fuso mounted with crane vehicle. Navarro delivered unto
plaintiff 6 post dated checks in the amount of P66,332 each which
represents the rentals of the vehicle. Unfortunately, 2 checks were
dishonerd by the bank. Karen Go demanded the balance which was due
against Navaro or to return the vehicle. A second complaint was then filed
by Karen Go which alleged almost the same allegations contained in the
first complaint except the subject vehicle and the date. Navaro then issued 3
post dated checks in the amount of P100,000 each but the third check was
dishonored for insufficiency of funds. On October 12 and 14, 1998, the RTC
issued in both cases writs of replevin, as a result the Sheriff seized the 2

vehicle and delivered the same to the possession of Karen Go. In Navaros
motion both cases were consolidated. In its may 2008 order the RTC
dismissed the complaint on the ground that the complaint states no cause of
action. Karen Go filed a MR which was granted by the RTC. RTC denied
Navaros MR. Navaro filed a pettion for certiorari with the CA but the CA
affirmed the RTCs decision. Navaros MR was likewise been denied. In his
present petition, Navaro alleged that the complaints were premature
because no prior demand was made on him to comply with the
provisions of the lease agreements before the complaints for replevin
were filed.
ISSUE:Whether prior demand is necessary before a writ of replevin can be
issued
HELD: For a writ of replevin to issue, all that the applicant must do is
to file an affidavit and bond, pursuant to Section 2, Rule 60 of the
Rules, which states: Sec. 2. Affidavit and bond. The applicant must show by
his own affidavit or that of some other person who personally knows the
facts:
(a) That the applicant is the owner of the property claimed, particularly
describing it, or is entitled to the possession thereof;(b) That the property
is wrongfully detained by the adverse party, alleging the cause of
detention thereof according to the best of his knowledge, information, and
belief;(c) That the property has not been distrained or taken for a tax
assessment or a fine pursuant to law, or seized under a writ of execution or
preliminary attachment, or otherwise placed under custodia legis, or if so
seized, that it is exempt from such seizure or custody; and(d) The actual
market value of the property.
The applicant must also give a bond, executed to the adverse party in
double the value of the property as stated in the affidavit aforementioned,
for the return of the property to the adverse party if such return be adjudged,
and for the payment to the adverse party of such sum as he may recover
from the applicant in the action. Nothing in these provisions which
requires the applicant to make a prior demand on the possessor of the
property before he can file an action for a writ of replevin. Thus, prior
demand is not a condition precedent to an action for a writ of replevin.
More importantly, Navarro is no longer in the position to claim that a prior
demand is necessary, as he has already admitted in his Answers that he
had received the letters that Karen Go sent him, demanding that he either
pay his unpaid obligations or return the leased motor vehicles. Navarros
position that a demand is necessary and has not been made is therefore
totally unmeritorious.
SUPPORT PENDENTE LITE
DE Asis vs. CA [G.R. No. 127578. February 15, 1999]
FACTS: On October 14, 1988, Vircel D. Andres, in her capacity as the
legal guardian of the minor, Glen Camil Andres de Asis, brought an
action for maintenance and support against Manuel de Asis, before the
RTC of Quezon City, alleging that Manuel de Asis is the father of Glen
Camil Andres de Asis, and the former refused and/or failed to provide for the
maintenance of the latter, despite repeated demands. Manuel de asis
denied his paternity of the said minor and he cannot therefore be
required to provide support for him. On July 4, 1989, Vircel D. Andres,
through counsel, sent in a manifestation stating that Manuel de asis
made a judicial declaration that Glen Camil was not his child therefore
he is not entitle to support the child. With this judicial declaration, it is a
useless exercise to claim for support from Manuel. Based on the
circumstances, it will be practical that Vircel D. Andres will withdraw the
complaint subject to the condition that Manuel de asis will not file a counterclaim. RTC dismissed the case w/ prejudice. On September 7, 1995,
another Complaint for maintenance and support was brought against
Manuel A. de Asis, in the name of Glen Camil Andres de Asis,
represented by her legal guardian/mother, Vircel D. Andres. before the
Regional Trial Court of Kalookan, praying that judgment be rendered
ordering to pay the plaintiff the sum of not less than P2,000 per month for
every month since June 1, 1987 as support in arrears which defendant
failed to provide.To give plaintiff a monthly allowance of P5,000.00 to be
paid in advance on or before the 5th of each and every month;To give
plaintiff by way of support pendente lite, a monthly allowance of P5,000.00
per month, the first monthly allowance to start retroactively from the first day

of this month and the subsequent ones to be paid in advance on or before


the 5th of each succeeding month. On October 8, 1993, Manuel moved to
dismiss the Complaint on the ground of res judicata, alleging that Civil
Case C-16107 is barred by the prior judgment which dismissed with
prejudice Civil Case Q-88-935. The trial court ruled that res judicata is
inapplicable in an action for support for the reason that renunciation
or waiver of future support is prohibited by law. Manuels MR is also
denied.Manuel filed with the CA a Petition for Certiorari. The CA found the
said Petition devoid of merit and dismissed the same. Manuel contends
that the manifestation in civil case Q-88-935, in effect, admitted the
lack of filiation between him and the minor child, which admission
binds the complainant, and since the obligation to give support is
based on the existence of paternity and filiation between the child and
the putative parent, the lack thereof negates the right to claim for
support. Thus, petitioner maintains that the dismissal of the Complaint by
the lower court on the basis of the said manifestation bars the present
action for support, especially so because the order of the trial court explicitly
stated that the dismissal of the case was with prejudice.
ISSUE: Whether an action for support cannot be barred by res judicata
HELD: The petition is without merit. The new Civil Code provides that the
allowance for support is provisional because the amount may be
increased or decreased depending upon the means of the giver and
the needs of the recipient (Art. 297); and that the right to receive
support cannot be renounced nor can it be transmitted to a third
person; neither can it be compensated with what the recipient owes
the obligator (Art. 301). Furthermore, the right to support can not be
waived or transferred to third parties and future support cannot be the
subject of compromise. The reason behind the law is the right to support
being founded upon the need of the recipient to maintain his existence, he
is not entitled to renounce or transfer the right for this would mean
sanctioning the voluntary giving up of life itself. To allow renunciation or
transmission or compensation of the family right of a person to support is
virtually to allow either suicide or the conversion of the recipient to a public
burden. This is contrary to public policy. The manifestation sent in by
respondents mother in the first case, which acknowledged that it would be
useless to pursue its complaint for support, amounted to renunciation as it
severed the vinculum that gives the minor, Glen Camil, the right to claim
support from his putative parent, the petitioner.
Furthermore, the
agreement entered into between the petitioner and respondents
mother for the dismissal of the complaint for maintenance and support
conditioned upon the dismissal of the counterclaim is in the nature of
a compromise which cannot be countenanced. It violates the prohibition
against any compromise of the right to support. It is true that in order to
claim support, filiation and/or paternity must first be shown between the
claimant and the parent. However, paternity and filiation or the lack of
the same is a relationship that must be judicially established and it is
for the court to declare its existence or absence. It cannot be left to
the will or agreement of the parties.
People vs. Manahan [G.R. No. 128157. September 29, 1999]
FACTS: Teresita Tibigar, 16 years old, worked at the Espiritu Canteen in
Dagupan City. Manuel Manahan is the brother-in-law of Josefina Espiritu,
owner of the canteen. His wife Primadonna is the sister of Josefina Espiritu.
Manuel and Primadonna temporarily reside at the canteen together with the
family of Josefina as Primadonna was then pregnant. On 5 January 1995, at
about two oclock in the morning, Teresita who was asleep was suddenly
awakened when she felt someone beside her. Upon opening her eyes she
saw accused Manuel Manahan as he immediately placed himself on top of
her. Manuel Manahan, by the use of force succeeded in having carnal
knowledge over Teresita. Manuel then threatened Teresitas life in case
she will report such incident. Teresita went home to her parents in
pangasinan. The sexual encounter resulted in her pregnancy.
Afterwards, her parents learned about the incident which led them to
the filing of a criminal offense of rape against Manuel Manahan. On 2
October 1995, she gave birth to a healthy baby girl and christened her
Melanie Tibigar. Manuel was convicted by the RTC of Dagupan on the crime
charged.
ISSUE: Whether the accused can be ordered to acknowledge and provide
support for Melanie Tibigar
HELD: On the matter of acknowledgment and support of the child, a
correction of the view of the court a quo is in order. Article 345 of The

Revised Penal Code provides that persons guilty of rape shall also be
sentenced to "acknowledge the offspring, unless the law should prevent him
from doing so," and "in every case to support the offspring." In the case
before us, compulsory acknowledgment of the child Melanie Tibigar is
not proper there being a legal impediment in doing so as it appears
that the accused is a married man. As pronounced by this Court in
People v. Guerrero,"the rule is that if the rapist is a married man, he cannot
be compelled to recognize the offspring of the crime, should there be any,
as his child, whether legitimate or illegitimate." Consequently, that portion of
the judgment under review is accordingly deleted. In any case, we sustain
that part ordering the accused to support the child as it is in accordance with
law.
Lopez vs Court of Appeals
Facts: The Regional Trial Court (RTC) of Malabon a decision declaring the
nullity of marriage between Cherry Pie Lopez and Alberto Lopez a.k.a Cesar
Lopez (petitioner). The decision became final and executory based on a
certification1 dated January 5, 2001. Petitioner moved to reconsider2 the
support aspect of the decision but was denied by Order of January 26,
2001. On February 8, 2001, the RTC, acting on petitioners Notice of
Appeal4 filed on February 7, 2001, gave it due course and directed the
transmittal of the records of the case to the Court of Appeals "as soon as
possible." Petitioner paid before the RTC a total of Sixty (P60.00) Pesos as
docket fees as shown by Official Receipt. For petitioners failure to pay the
full amount of P520.00 docket fees, the Court of Appeals, by Resolution of
March 19, 2001,6 dismissed his appeal. Petitioner filed a Motion for
Reconsideration7 of the appellate courts March 19, 2001 Resolution, but it
was denied by Resolution of April 26, 2001 on the grounds that the motion
did not contain an affidavit or proof of service and that it did not state on its
face the material dates determinative of its timeliness.
Issue: Whether or not the aspect of support is final and executory.
Held: The dismissal of the petition notwithstanding, petitioner is not without
remedy. For as what he seeks to assail is the amount of support he
was adjudged to provide, he can file a motion with the trial court for its
modification since a judgment granting support never becomes final.
Montefalcon vs. Vasquez [G.R. No. 165016, June 17, 2008]
FACTS: In 1999, petitioner Dolores P. Montefalcon filed a Complaint for
acknowledgment and support against respondent Ronnie S. Vasquez
before the RTC of Naga City. Alleging that her son Laurence is the
illegitimate child of Vasquez, she prayed that Vasquez be obliged to
give support to co-petitioner Laurence Montefalcon, whose certificate
of live birth he signed as father. According to petitioners, Vasquez only
gave a total of P19,000 as support for Laurence since Laurence was born in
1993. Vasquez allegedly also refused to give him regular school allowance
despite repeated demands. Petitioner Dolores added that she and Vasquez
are not legally married, and that Vasquez has his own family. Vasquez was
declared in default for failure to answer the service of summons
(substituted). The court ordered Vasquez to acknowledge Laurence
and to pay P 5000 monthly. In the same year, Vasquez surfaced. He filed a
notice of appeal to which petitioners opposed. Appeal was granted by the
court. Before the appellate court, he argued that the trial court erred in trying
and deciding the case as it "never" acquired jurisdiction over his person, as
well as in awarding P5,000-per-month support, which was allegedly
"excessive and exorbitant." The appellate court granted Vasquezs
contention.
ISSUE: Whether he is obliged to give support to co-petitioner Laurence.
HELD: YES. Article 175 of the Family Code of the Philippines mandates that
illegitimate filiation may be established in the same way and on the same
evidence as legitimate children. Under Article 172, appearing in the civil
register or a final order; or (2) by admission of filiation in a public document
or private handwritten instrument and signed by the parent concerned; or in
default of these two, by open and continuous possession of the status of a
legitimate child or by any other means allowed by the Rules of Court and
special laws. Laurence's record of birth is an authentic, relevant and
admissible piece of evidence to prove paternity and filiation. Vasquez did
not deny that Laurence is his child with Dolores. He signed as father in
Laurence's certificate of live birth, a public document. He supplied the data
entered in it. Thus, it is a competent evidence of filiation as he had a hand in
its preparation. In fact, if the child had been recognized by any of the modes

in the first paragraph of Article 172, there is no further need to file any action
for acknowledgment because any of said modes is by itself a consummated
act. As filiation is beyond question, support follows as matter of
obligation. Petitioners were able to prove that Laurence needs
Vasquez's support and that Vasquez is capable of giving such support.
Dolores testified that she spent around P200,000 for Laurence; she spends
P8,000 a month for his schooling and their subsistence. She told the lower
court Vasquez was earning US$535 monthly based on his January 10, 2000
contract of employment with Fathom Ship Management and his seafarer
information sheet. That income, if converted at the prevailing rate, would be
more than sufficient to cover the monthly support for Laurence. Under
Article 195 (4) of the Family Code, a parent is obliged to support his
illegitimate child. The amount is variable. There is no final judgment
thereof as it shall be in proportion to the resources or means of the
giver and the necessities of the recipient. It may be reduced or
increased proportionately according to the reduction or increase of
the necessities of the recipient and the resources or means of the
person obliged to support. Support comprises everything indispensable
for sustenance, dwelling, clothing, medical attendance, education and
transportation, in keeping with the financial capacity of the family. Under the
premises, the award of P5,000 monthly support to Laurence is reasonable,
and not excessive nor exorbitant.
Interpleader
G.R. No. 70145 November 13, 1986
MARCELO
A.
MESINA, petitioner, vs.
THE
HONORABLE
INTERMEDIATE APPELLATE COURT, HON. ARSENIO M. GONONG, in
his capacity as Judge of Regional Trial Court Manila (Branch VIII),
JOSE GO, and ALBERT UY, respondents.
Facts: Respondent Jose Go, on December 29, 1983, purchased from
Associated Bank Cashier's Check for P800,000.00. Unfortunately, Jose
Go left said check on the top of the desk of the bank manager when he
left the bank. The bank manager entrusted the check for safekeeping
to a bank official, a certain Albert Uy, who had then a visitor in the
person of Alexander Lim. Uy had to answer a phone call on a nearby
telephone after which he proceeded to the men's room. When he
returned to his desk, his visitor Lim was already gone. When Jose Go
inquired for his cashier's check from Albert Uy, the check was not in his
folder and nowhere to be found. The latter advised Jose Go to go to the
bank to accomplish a "STOP PAYMENT" order, which suggestion Jose
Go immediately followed. He also executed an affidavit of loss. Albert Uy
went to the police to report the loss of the check, pointing to the person of
Alexander Lim as the one who could shed light on it. The check was
immediately dishonored by Associated Bank by sending it back to Prudential
Bank, with the words "Payment Stopped" stamped on it. Several days later,
respondent Associated Bank received a letter, dated January 9, 1984, from
a certain Atty. Lorenzo Navarro demanding payment on the cashier's
check in question, which was being held by his client. He however
refused to reveal the name of his client and threatened to sue, if
payment is not made. On February 1, 1984, police sent a letter to the
Manager of the Prudential Bank, Escolta Branch, requesting assistance in
Identifying the person who tried to encash the check but said bank refused
saying that it had to protect its client's interest and the Identity could only be
revealed with the client's conformity. Unsure of what to do on the matter,
respondent Associated Bank on February 2, 1984 filed an action for
Interpleader naming as respondent, Jose Go and one John Doe, Atty.
Navarro's then unnamed client. Respondent bank moved to amend its
complaint, having been notified for the first time of the name of Atty.
Navarro's client and substituted Mesina for John Doe. Mesina alleged
that he came to possess the check when it was paid to him by
Alexander Lim in a "certain transaction" but refused to elucidate
further. The issued warrant of arrest was not served to Alberto Uy due to
successful evasion. On the pretrial conference of interpleader case, it
was disclosed that the "John Doe" impleaded as one of the defendants
is actually petitioner Mesina. Mesina move to dismiss the case on the
grounds of lack of jurisdiction and in view of the absence of an order
to litigate, failure to state a cause of action and lack of personality to
sue but was denied. Petitioner was declared in default for the period which
he is required to file an answer already expired.
Issue: Whether interpleader suit is proper when a party is earlier sued on
the same claim.
Held: Yes. Petitioner failed to substantiate his claim that he is a holder
in due course and for consideration or value as shown by the

established facts of the case. The holder of a cashier's check who is


not a holder in due course cannot enforce such check against the
issuing bank which dishonors the same. If a payee of a cashier's check
obtained it from the issuing bank by fraud, or if there is some other reason
why the payee is not entitled to collect the check, the respondent bank
would, of course, have the right to refuse payment of the check when
presented by the payee, since respondent bank was aware of the facts
surrounding the loss of the check in question. The check in question
suffers from the infirmity of not having been properly negotiated and
for value by respondent Jose Go who as already been said is the real
owner of said instrument. Further, respondent bank merely took the
necessary precaution not to make a mistake as to whom to pay and
therefore interpleader was its proper remedy. It has been shown that
the interpleader suit was filed by respondent bank because petitioner
and Jose Go were both laying their claims on the check, petitioner
asking payment thereon and Jose Go as the purchaser or owner. Bank
filed the interpleader suit not because petitioner sued it but because
petitioner is laying claim to the same check that Go is claiming. On the very
day that the bank instituted the case in interpleader, it was not aware of any
suit for damages filed by petitioner against it as supported by the fact that
the interpleader. Furthermore, the Order of the trial court requiring the
parties to file their answers is to all intents and purposes an order to
interplead, substantially and essentially and therefore in compliance with the
provisions of Rule 63 of the Rules of Court. The records of the case show
that respondent bank had to resort to details in support of its action for
Interpleader. Before it resorted to Interpleader, respondent bank took
precautionary and necessary measures to bring out the truth.
Eternal Gardens Memorial Parks Corporation vs. IAC and North
Phillippine Union Mission of the Seventh Day Adventist
GR NO. 73794, September 19,1988
FACTS: On October 6, 1976, Eternal gardens and Philippine Union
Mission of the seventh day Adventist (MISSION for short) executed a
Land Development Agreement whereby by Eternal Garden will
construct at its own expense and incur the necessary improvements
on the MISSIONs property and turn the property into a memorial park.
The said lot will be subdivided into and sold as memorial plots, at a
stipulated area and price per lot. Out of the proceeds from the sale,
MISSION is entitled to receive 40% of the net gross collection from the
project to be remitted monthly by Eternal Gardens to MISSION through a
designated depositary trustee bank. On the same date MISSION executed
in Eternal Gardens favor a Deed of Absolute Sale with Mortgage on the
lots with titles involved in the land development project. The deed was
supplemented by a Sale of Real Property with Mortgage and Special
Conditions dated October 28, 1978. The amounts totalling about
P984,110.82 which was paid by Eternal Gardens were to be considered as
part of the 40% due to MISSION under the Land Development Agreement.
All went well until Maysilo Estate asserted its claim of ownership over
the parcel of land. Confronted with such conflicting claims, Eternal
Gardens filed a complaint for interpleader against MISSION and
Maysilo Estate, docketed as Special Court Case No. C-9556 of the then
CFI of Rizal, Branch XII, Caloocan, alleging that in view of the conflicting
claims of ownership of MISSION and Maysilo over the property which
is the subject matter of the contracts, over which Eternal Graden has
no claim of ownership except as a purchaser thereof, and to protect
the interests of the corporation which has no interest in the subject
matter of the dispute and is willing to pay whoever is entitled or
declared to be the owners of said properties, the defendants should be
required to interplead and litigate their several claims between
themselves. An order was issued by the court requiring defendants to
interplead on October 22, 1981. MISSION filed a motion to dismiss dated
November 10, 1981 for lack of cause of action but also presented an
answer dated November 12, 1981. The motion to dismiss was denied on
January 12, 1982. The heirs of Maysilo Estate filed their own answer dated
November 11, 1981 and an amended answer dated October 20, 1983 thru
the estate's special receiver. The heirs of Pedro Banon filed an "Answer in
Intervention with Special and Affirmative Defenses" dated October 24, 1983,
while Lilia B. Sevilla and husband Jose Seelin filed their "Answer in Crossclaim" dated October 31, 1983. The heirs of Sofia O'Farrel y Patino, et al.
filed their Answer in Intervention dated November 10, 1983. MISSION
presented a motion for the placing on judicial deposit the amounts due and
unpaid from Eternal Gardens. The trial court denied judicial deposit on the
ground that the question of ownership of the subject property must first be
resolve. Thus, the contract entered by the parties was declared ineffective.
Another order dated October 26, 1984 was issued amending the February

13, 1984 order and setting aside the order for MISSIONs deposit of the
amounts it had previously received from Eternal Gardens.In G.R. No. 73569
it appeared that on January 11, 1985, MISSION filed a motion to dismiss the
Interpleader and the claims of the Maysilo Estate and the Intervenors and to
order the Eternal Gardens to comply with its Land Management with
MISSION. On January 28, 1985, the trial court passed a
resolution,dismissing the interpleader and consolidating the interventions
filed by Pedro Banon etc. with the Maysilo estate represented by its receiver
Arturo Salientes. The heirs of the Maysilo Estate moved for reconsideration
of the order of dismissal, which was granted by the trial judge.A motion for
Writ of Execution of the resolution of January 28, 1985 was filed by
MISSION. This was denied on June 25, 1985. The said court further set the
case for pre-trial and trial on July 18, 1985.It was elevated on certiorari and
mandamus to the Intermediate Appellate Court , docketed as AC-G.R. Sp
No. 06696 "North Philippine Union Mission of the Seventh Day Adventists,
vs. Hon. Antonia Corpus-Macandog Presiding Judge, Branch CXX,
Regional Trial Court, Caloocan City, Eternal Gardens Memorial Parks
Corporation, and Heirs of Vicente Singson Encarnacion It was raffled to the
Second Special Division. MISSION assailed the February 14, 1985 and
June 25, 1985 orders as violative of due process and attended by grave
abuse of discretion amounting to lack of jurisdiction. The petition was
dismissed in the decision of said Appellate Court. MISSION challenged the
decision in the Supreme Court in G.R. No. 73569. In its resolution dated
June 11, 1986, the Supreme Court denied the petition for review on
certiorari for lack of merit. Said resolution has become final and executory
on July 16, 1986.Earlier in 1983, the heirs of the late spouses Vicente
Singson Encarnacion and Lucila Conde filed Civil Case No. C-11836 for
quieting of title with Branch CXXII, Regional Trial Court, Caloocan City,
where petitioner and private respondent were named as defendants.Said
case is still pending in the lower Court. In the case at bar, G.R. No. 73794,
MISSION, filed a petition for certiorari with the Intermediate Appellate Court
docketed as AC-G.R. No. 04869 praying that the aforementioned Orders of
February 13, 1984 and October 26, 1984 of the Regional Trial Court be set
aside and that an order be issued to deposit in court or in a depositor
trustee bank of any and all payments, plus interest thereon, due the private
respondent MISSION under the Land Development Agreement, said
amounts deposited to be paid to whomever may be found later to be entitled
thereto, with costs. The Intermediate Appelate Court dismissed the petition
in its decision on February 27, 1985.In its Resolution promulgated on
September 5, 1985, the Court however, reversed its decision ordering
MISSION to deposit whatever is due from it under the Land
Development Agreement with a refutable bank to be designated by the
court to be the depositary trustee of the amounts to be paid whoever
shall be found entitled thereto.Eternal Gardens moved for a
reconsideration of the above decision but it was denied for lack of
merit. Hence, this petition. On July 8,1987, the Third Division of this Court
issued resolution requiring the parties to file a memoranda and to require
MISSSION to deposit its accruing installments within 10 days from notice
with a refutable commercial bank in a savings deposit account in the name
of the Supreme Court of the Philippines.
ISSUE: Whether judicial deposit made by Mission as one of the parties in
interpleader case filed by eternal is valid.
HELD: Under the circumstances, there appears to be no plausible reason
for petitioner's objections to the deposit of the amounts in litigation after
having asked for the assistance of the lower court by filing a complaint for
interpleader where the deposit of aforesaid amounts is not only required by
the nature of the action but is a contractual obligation of the petitioner under
the Land Development Program. As correctly observed by the Court of
Appeals, the essence of an interpleader, aside from the disavowal of
interest in the property in litigation on the part of the petitioner, is the
deposit of the property or funds in controversy with the court. it is a
rule founded on justice and equity: "that the plaintiff may not continue
to benefit from the property or funds in litigation during the pendency
of the suit at the expense of whoever will ultimately be decided as
entitled thereto. The case at bar was elevated to the Court of Appeals on
certiorari with prohibitory and mandatory injunction. Said appellate court
found that more than twenty million pesos are involved; so that on interest
alone for savings or time deposit would be considerable, now accruing in
favor of the Eternal Gardens. Finding that such is violative of the very
essence of the complaint for interpleader as it clearly runs against the
interest of justice in this case, the Court of Appeals cannot be faulted for
finding that the lower court committed a grave abuse of discretion which
requires correction by the requirement that a deposit of said amounts
should be made to a bank approved by the Court.

Wack-Wack Golf and Country Club vs Lee Won


Facts: Wack Wack Gold and Country Club Inc filed a complaint of
Interpleader against Lee Won and Bienvenido Tan. It alleged in its
complaint that the defendant Lee E. Won claims ownership of its
membership fee certificate 201, by virtue of the decision rendered in
civil case entitled Lee E. Won alias Ramon Lee vs. Wack Wack Golf &
Country Club, Inc." and also by virtue of membership fee certificate 201serial no. 1478 issued on October 17, 1963 by Ponciano B. Jacinto, deputy
clerk of court of the said CFI of Manila, for and in behalf of the president and
the secretary of the Corporation and of the People's Bank & Trust Company
as transfer agent of the said Corporation, pursuant to the order of
September 23, 1963 in the said case; that the defendant Bienvenido A.
Tan, on the other hand, claims to be lawful owner of its aforesaid
membership fee certificate 201 by virtue of membership fee certificate
201-serial no. 1199 issued to him on July 24, 1950 pursuant to an
assignment made in his favor by "Swan, Culbertson and Fritz," the
original owner and holder of membership fee certificate 201; , all of
which have been issued as early as December 1939; that the club claims no
interest whatsoever in the said membership fee certificate 201; that it has
no means of determining who of the two defendants is the lawful owner
thereof. The Corporation prayed that (a) an order be issued requiring Lee
and Tan to interplead and litigate their conflicting claims; and (b) judgment.
be rendered, after hearing, declaring who of the two is the lawful owner of
membership fee certificate 201. However, The defendants moved to dismiss
the complaint upon the grounds of res judicata, failure of the complaint to
state a cause of action, and bar by prescription. Finding the grounds of
bar by prior judgment and failure to state a cause of action well taken,
the trial court dismissed the complaint, with costs against the
Corporation. The petitioners appealed before the CA and contended that
The trial court erred in dismissing the complaint, instead of compelling
the appellees to interplead because there actually are conflicting
claims between the latter with respect to the ownership of membership
fee certificate 201, and, as there is not Identity of parties, of subjectmatter, and of cause of action, between civil case 26044 of the CFI of
Manila and the present action, the complaint should not have been
dismissed upon the ground of res judicata. The CA affirmed the decision
of the trial court. Hence, petition for review.
Issue: Whether or not the remedy of Interpleader was proper and filed on
time?
Held: A stakeholder should use reasonable diligence to hale the
contending claimants to court. He need not await actual institution of
independent suits against him before filing a bill of interpleader. He should
file an action of interpleader within a reasonable time after a dispute
has arisen without waiting to be sued by either of the contending
claimants. Otherwise, he may be barred by laches or undue delay. But
where he acts with reasonable diligence in view of the environmental
circumstances, the remedy is not barred. The question in this case is: Has
the Corporation in this case acted with diligence, in view of all the
circumstances, such that it may properly invoke the remedy of interpleader?
We do not think so. Corporation in the instant case was aware of the
conflicting claims of the appellees with respect to the membership fee
certificate 201 long before it filed the present interpleader suit. It had
been recognizing Tan as the lawful owner thereof. It was sued by Lee
who also claimed the same membership fee certificate. Yet it did not
interplead Tan. It preferred to proceed with the litigation (civil case
26044) and to defend itself therein. As a matter of fact, final judgment
was rendered against it and said judgment has already been executed.
It is not therefore too late for it to invoke the remedy of interpleader. It has
been held that a stakeholder's action of interpleader is too late when
filed after judgment has been rendered against him in favor of one of
the contending claimants, especially where he had notice of the
conflicting claims prior to the rendition of the judgment and neglected
the opportunity to implead the adverse claimants in the suit where
judgment was entered. This must be so, because once judgment is
obtained against him by one claimant he becomes liable to the latter. 1To
now permit the Corporation to bring Lee to court after the latter's successful
establishment of his rights in civil case 26044 to the membership fee
certificate 201, is to increase instead of to diminish the number of suits,
which is one of the purposes of an action of interpleader, with the possibility
that the latter would lose the benefits of the favorable judgment. This cannot
be done because having elected to take its chances of success in said civil
case 26044, with full knowledge of all the fact, the Corporation must submit

10

to the consequences of defeat. Moreover, a successful litigant cannot later


be impleaded by his defeated adversary in an interpleader suit and
compelled to prove his claim anew against other adverse claimants, as that
would in effect be a collateral attack upon the judgment. It is generally held
by the cases it is the office of interpleader to protect a party, not
against double liability, but against double vexation on account of one
liability. In fine, the instant interpleader suit cannot prosper because
the Corporation had already been made independently liable in civil
case 26044 and, therefore, its present application for interpleader
would in effect be a collateral attack upon the final judgment in the
said civil case; the appellee Lee had already established his rights to
membership fee certificate 201 in the aforesaid civil case and, therefore, this
interpleader suit would compel him to establish his rights anew, and thereby
increase instead of diminish litigations, which is one of the purposes of an
interpleader suit, with the possiblity that the benefits of the final judgment in
the said civil case might eventually be taken away from him; and because
the Corporation allowed itself to be sued to final judgment in the said
case, its action of interpleader was filed inexcusably late, for which
reason it is barred by laches or unreasonable delay.

construction; 3) there must have been no breach of the documents in


question; 4) there must be an actual justiciable controversy or the ripening
seeds of one between persons whose interests are adverse; 5) the issue
must be ripe for judicial determination; and 6) adequate relief is not
available through other means or other forms of action or proceeding. After
petitioners demanded payment of adjusted rentals, respondent complied
with the terms and conditions set forth in their contract of lease by paying
the rentals stipulated therein. Respondent religiously fulfilled its
obligations to petitioners even during the pendency of the present
suit. There is no showing that respondent committed an act
constituting a breach of the subject contract of lease. Further, It is true
that in Panganiban v. Pilipinas Shell Petroleum Corporation [17] we held that
the petition for declaratory relief should be dismissed in view of the
pendency of a separate action for unlawful detainer. In the case at bench,
the trial court had not yet resolved the rescission/ejectment case during the
pendency of the declaratory relief petition. In fact, the trial court, where the
rescission case was on appeal, itself initiated the suspension of the
proceedings pending the resolution of the action for declaratory relief.
Tambunting vs Spouses Sumabat

Declaratory Relief
[G.R. No. 150806, January 28, 2008]
EUFEMIA ALMEDA and ROMEL ALMEDA, Petitioners, vs. BATHALA
MARKETING INDUSTRIES, INC., Respondent.
Facts: Sometime in May 1997, respondent Bathala Marketing Industries,
Inc., as lessee, represented by its president Ramon H. Garcia, renewed
its Contract of Lease with Ponciano L. Almeda (Ponciano), as lessor,
husband of petitioner Eufemia and father of petitioner Romel Almeda .
Under the said contract, Ponciano agreed to lease a portion of the Almeda
Compound in Makati City. for a term of four (4) years from May 1, 1997
unless sooner terminated as provided in the contract. The contract of
lease contained pertinent provisions which gave rise to the instant
case, wherein, the lessee should pay additional rental or charge in
case there is increased of tax rate imposed on the said building and in
case an extraordinary inflation or devaluation of Philippine Currency
should supervene, the value of Philippine peso at the time of the
establishment of the obligation shall be the basis of payment. During the
effectivity of the contract, Ponciano died. Thereafter, respondent dealt with
petitioners. Petitioners informed respondents that they will increased
the rental rate pursuant to imposition of vat and extraordinary inflation
or deflation as indicated in the contract of lease. Respondents refused
to pay the Vat and adjusted rentals. The respondent instituted an
action for declaratory relief for purposes of determining the correct
interpretation of conditions of the lease contract to prevent damage
and prejudice. Petitioners later moved for the dismissal of the
declaratory relief case for being an improper remedy considering that
respondent was already in breach of the obligation and that the case
would not end the litigation and settle the rights of the parties. The trial
court, however, was not persuaded, and consequently, denied the motion.
RTC ruled in favor of the respondents on the grounds that: the burden
of paying the VAT was not a new tax that would call for application and
the demand in rental increase, there being no extraordinary inflation or
devaluation. The respondent made payment of the rental adjustment
demanded by petitioners, thus, the court ordered the restitution by the
latter to the former of the amounts paid, notwithstanding the wellestablished rule that in an action for declaratory relief, other than a
declaration of rights and obligations, affirmative relief are not sought
by or awarded to the parties. On appeal, CA affirmed decision of RTC,
however, it found that the trial court exceeded its jurisdiction in granting
affirmative relief to the respondent, particularly the restitution of its excess
payment.
Issue: Whether the action for declaratory relied is proper.
Held: Yes. Declaratory relief is defined as an action by any person
interested in a deed, will, contract or other written instrument, executive
order or resolution, to determine any question of construction or validity
arising from the instrument, executive order or regulation, or statute, and for
a declaration of his rights and duties thereunder. General rule that such an
action must be justified, as no other adequate relief or remedy is available
under the circumstances. Decisional law enumerates the requisites of an
action for declaratory relief, as follows: 1) the subject matter of the
controversy must be a deed, will, contract or other written instrument,
statute, executive order or regulation, or ordinance; 2) the terms of said
documents and the validity thereof are doubtful and require judicial

Facts: On May 3, 1973, respondents mortgaged a real property to


petitioner Antonio Tambunting, Jr. to secure the payment of a P7,727.95
loan. In August 1976, respondents were informed that their
indebtedness had ballooned to P15,000 for their failure to pay the
monthly amortizations May 1977, because respondents defaulted in their
obligation, petitioner Commercial House of Finance, Inc. (CHFI), as
assignee of the mortgage, initiated foreclosure proceedings on the
mortgaged property but the same did not push through. It was restrained by
the then Court of First Instance (CFI) of Caloocan City , a complaint for
injunction filed by respondents against petitioners. However, the case was
subsequently dismissed for failure of the parties to appear at the hearing on
November 9, 1977. On March 16, 1979, respondents filed an action for
declaratory relief with the CFI of Caloocan City, Branch 33, seeking a
declaration of the extent of their actual indebtedness. It was docketed
as Civil Case No. C-7496. Petitioners were declared in default for failure to
file an answer within the reglementary period. They moved for the dismissal
of the action on the ground that its subject, the mortgage deed, had already
been breached prior to the filing of the action but it was denied as they were
in default and they filed the motion out of time. On January 8, 1981, the CFI
rendered its decision. It fixed respondents liability at P15,743.83 and
authorized them to consign the amount to the court for proper disposition. In
compliance with the decision, respondents consigned the required amount
on January 9, 1981. In March 1995, respondents received a notice of
sheriffs sale indicating that the mortgage had been foreclosed by
CHFI on February 8, 1995 and that an extrajudicial sale of the property
would be held on March 27, 1995. On March 27, 1995, respondents
instituted Civil Case No. C-16822, a petition for preliminary injunction,
damages and cancellation of annotation of encumbrance with prayer
for the issuance of a temporary restraining order, with the RTC of
Caloocan City, Branch 120. However, the public auction scheduled on
that same day proceeded and the property was sold to CHFI as the
highest bidder. Respondents failed to redeem the property during the
redemption period. Hence, title to the property was consolidated in favor of
CHFI and a new certificate of title (TCT No. 310191) was issued in its name.
In view of these developments, respondents amended their complaint to
an action for nullification of foreclosure, sheriffs sale and
consolidation of title, reconveyance and damages. On February 11,
2000, the RTC issued the assailed decision. It ruled that the 1981 CFI
decision in Civil Case No. C-7496 (fixing respondents liability at P15,743.83
and authorizing consignation) had long attained finality. The mortgage was
extinguished when respondents paid their indebtedness by
consigning the amount in court. As a consequence, the trial court
nullified the foreclosure and extrajudicial sale of the property
Petitioners moved for a reconsideration of the trial courts decision but it was
denied. Hence, this petition. Petitioners claim that the trial court erred
when it affirmed the validity of the consignation. They insist that the
CFI was barred from taking cognizance of the action for declaratory
relief since, petitioners being already in default in their loan
amortizations, there existed a violation of the mortgage deed even
before the institution of the action. Hence, the CFI could not have
rendered a valid judgment in Civil Case No. C-7496 and the consignation
made pursuant to a void judgment was likewise void.

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Issue: Whether or not the decision of CFI granting the declaratory relief is
valid? And whether or not the decision of CA affirming the decision of the
RTC that the foreclosure is invalid?
Held: An action for declaratory relief should be filed by a person interested
under a deed, will, contract or other written instrument, and whose rights are
affected by a statute, executive order, regulation or ordinance before breach
or violation thereof. The purpose of the action is to secure an authoritative
statement of the rights and obligations of the parties under a statute, deed,
contract, etc. for their guidance in its enforcement or compliance and not to
settle issues arising from its alleged breach. It may be entertained only
before the breach or violation of the statute, deed, contract, etc. to which it
refers. Where the law or contract has already been contravened prior to
the filing of an action for declaratory relief, the court can no longer
assume jurisdiction over the action. In other words, a court has no more
jurisdiction over an action for declaratory relief if its subject, i.e., the statute,
deed, contract, etc., has already been infringed or transgressed before the
institution of the action. Under such circumstances, inasmuch as a
cause of action has already accrued in favor of one or the other party,
there is nothing more for the court to explain or clarify short of a
judgment or final order. Here, an infraction of the mortgage terms had
already taken place before the filing of Civil Case No. C-7496. Thus,
the CFI lacked jurisdiction when it took cognizance of the case in
1979. And in the absence of jurisdiction, its decision was void and
without legal effect. Nonetheless, the petition must fail. Article 1142 of
the Civil Code is clear. A mortgage action prescribes after ten years. An
action to enforce a right arising from a mortgage should be enforced within
ten years from the time the right of action accrues. [6] Otherwise, it will be
barred by prescription and the mortgage creditor will lose his rights under
the mortgage. The respondents institution of Civil Case No. C-7496 in the
CFI on March 16, 1979 did not interrupt the running of the ten-year
prescriptive period because, as discussed above, the court lacked
jurisdiction over the action for declaratory relief.
Velarde vs. Social Justice Society [GR 159357, 28 April 2004]
Facts: On 28 January 2003, the Social Justice Society (SJS) filed a
Petition for Declaratory Relief (SJS Petition) before the RTC-Manila
against Mariano Mike Z. Velarde, together with His Eminence, Jaime
Cardinal Sin, Executive Minister Erao Manalo, Brother Eddie
Villanueva and Brother Eliseo F. Soriano as co-respondents. SJS, a
registered political party, sought the interpretation of several
constitutional provisions, specifically on the separation of church and
state; and a declaratory judgment on the constitutionality of the acts
of religious leaders endorsing a candidate for an elective office, or
urging or requiring the members of their flock to vote for a specified
candidate. Bro. Eddie Villanueva submitted, within the original period [to file
an Answer], a Motion to Dismiss. Subsequently, Executive Minister Erao
Manalo and Bro. Mike Velarde, filed their Motions to Dismiss. While His
Eminence Jaime Cardinal L. Sin, filed a Comment and Bro. Eli Soriano, filed
an Answer within the extended period and similarly prayed for the dismissal
of the Petition. All sought the dismissal of the Petition on the common
grounds that it does not state a cause of action and that there is no
justiciable controversy. They were ordered to submit a pleading by way of
advisement, which was closely followed by another Order denying all the
Motions to Dismiss. Bro. Mike Velarde, Bro. Eddie Villanueva and Executive
Minister Erao Manalo moved to reconsider the denial. His Eminence Jaime
Cardinal L. Sin, asked for extension to file memorandum. Only Bro. Eli
Soriano complied with the first Order by submitting his Memorandum. The
Court denied the Motions to Dismiss, and the Motions for Reconsideration
filed by Bro. Mike Velarde, Bro. Eddie Villanueva and Executive Minister
Erao Manalo, which raised no new arguments other than those already
considered in the motions to dismiss. After narrating the above incidents,
the trial court said that it had jurisdiction over the Petition, because in
praying for a determination as to whether the actions imputed to the
respondents are violative of Article II, Section 6 of the Fundamental
Law, [the Petition] has raised only a question of law. It then proceeded
to a lengthy discussion of the issue raised in the Petition the separation of
church and state even tracing, to some extent, the historical background
of the principle. Through its discourse, the trial court opined at some
point that the [e]ndorsement of specific candidates in an election to
any public office is a clear violation of the separation clause. After its
essay on the legal issue, however, the trial court failed to include a
dispositive portion in its assailed Decision. Thus, Velarde and Soriano

filed separate Motions for Reconsideration which were denied by the lower
court. Velarde filed the petition for review.
Issue [1]: Whether SJS has legal interest in filing the Petition for
declaratory relief.
Held [1]: Legal standing or locus standi has been defined as a personal and
substantial interest in the case, such that the party has sustained or will
sustain direct injury as a result of the challenged act. Interest means a
material interest in issue that is affected by the questioned act or instrument,
as distinguished from a mere incidental interest in the question involved.
Velarde alleged that [i]n seeking declaratory relief as to the constitutionality
of an act of a religious leader to endorse, or require the members of the
religious flock to vote for a specific candidate, herein Respondent SJS has
no legal interest in the controversy; it has failed to establish how the
resolution of the proffered question would benefit or injure it. Parties
bringing suits challenging the constitutionality of a law, an act or a
statute must show not only that the law [or act] is invalid, but also
that [they have] sustained or [are] in immediate or imminent danger of
sustaining some direct injury as a result of its enforcement, and not
merely that [they] suffer thereby in some indefinite way. They must
demonstrate that they have been, or are about to be, denied some right or
privilege to which they are lawfully entitled, or that they are about to be
subjected to some burdens or penalties by reason of the statute or act
complained of. First, parties suing as taxpayers must specifically prove that
they have sufficient interest in preventing the illegal expenditure of money
raised by taxation. A taxpayers action may be properly brought only when
there is an exercise by Congress of its taxing or spending power. Herein,
there is no allegation, whether express or implied, that taxpayers money is
being illegally disbursed. Second, there was no showing in the Petition
for Declaratory Relief that SJS as a political party or its members as
registered voters would be adversely affected by the alleged acts of
Velarde, et al., if the question at issue was not resolved. There was no
allegation that SJS had suffered or would be deprived of votes due to
the acts imputed to the Velarde et al.. Neither did it allege that any of
its members would be denied the right of suffrage or the privilege to
be voted for a public office they are seeking. Finally, the allegedly keen
interest of its thousands of members who are citizens-taxpayers-registered
voters is too general and beyond the contemplation of the standards set by
our jurisprudence. Not only is the presumed interest impersonal in
character; it is likewise too vague, highly speculative and uncertain to satisfy
the requirement of standing.
Issue [2]: Whether the constitutional issue in the SJS Petition raises an
issue of transcendental significance or paramount importance to the people,
so as to allow the cognizance of the Petition, even sans legal standing.
Held [2]: In not a few cases, the Court has liberalized the locus standi
requirement when a petition raises an issue of transcendental significance
or paramount importance to the people. Herein, the Court deemed the
constitutional issue raised in the SJS Petition to be of paramount interest to
the Filipino people. The issue did not simply concern a delineation of the
separation between church and state, but ran smack into the governance of
our country. The issue was both transcendental in importance and novel in
nature, since it had never been decided before. The Court, thus, called for
Oral Argument to determine with certainty whether it could resolve the
constitutional issue despite the barren allegations in the SJS Petition as well
as the abbreviated proceedings in the court below. Much to its chagrin,
however, counsels for the parties -- particularly for SJS -- made no
satisfactory allegations or clarifications that would supply the deficiencies
hereinabove discussed. Hence, even if the Court would exempt the case
from the stringent locus standi requirement, such heroic effort would be
futile because the transcendental issue cannot be resolved anyway.
G.R. No. 165571
January 20, 2009
PHILIPPINE
NATIONAL
BANK
and
EQUITABLE
PCI
BANK, Petitioners, vs.
HONORABLE COURT OF APPEALS, SECURITIES AND EXCHANGE
COMMISSION EN BANC, ASB HOLDINGS, INC., ASB REALTY
CORPORATION, ASB DEVELOPMENT CORPORATION (formerly
TIFFANY TOWER REALTY CORPORATION), ASB LAND INC., ASB
FINANCE, INC., MAKATI HOPE CHRISTIAN SCHOOL, INC., BEL-AIR
HOLDINGS CORPORATION, WINCHESTER TRADING, INC., VYL
DEVELOPMENT CORPORATION, GERICK HOLDINGS CORPORATION,
and NEIGHBORHOOD HOLDINGS, INC., Respondents.

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Facts: Petitioners Philippine National Bank (PNB) and Equitable PCI Bank
are members of the consortium of creditor banks constituted pursuant to the
Mortgage Trust Indenture (MTI) 6 dated May 29, 1989, as amended, by and
between Rizal Commercial Banking Corporation-Trust and Investments
Division, acting as trustee for the consortium, and ASB Development
Corporation (ASBDC, formerly Tiffany Tower Realty Corporation). Other
members of the consortium include Metropolitan Bank and Trust Company
(Metrobank), Prudential Bank, Union Bank of the Philippines, and United
Coconut Planters Bank. Private respondents ASB Holdings, Inc., ASBDC,
ASB Land, Inc., ASB Finance, Inc., Makati Hope Christian School, Inc., BelAir Holdings Corporation, Winchester Trading, Inc., VYL Holdings
Corporation, and Neighborhood Holdings, Inc. (ASB Group) are
corporations engaged in real estate development. The ASB Group is owned
by Luke C. Roxas.7 Under the MTI, petitioners granted a loan of PhP
1,081,000,000 to ASBDC secured by a mortgage of five parcels of land with
improvements. On May 2, 2000, private respondents filed with the SEC a
verified petition for rehabilitation with prayer for suspension of actions and
proceedings pending rehabilitation pursuant to Presidential Decree No. (PD)
902-A, as amended. The case was docketed as SEC Case No. 05-00-6609.
Private respondents stated that they possess sufficient properties to cover
their obligations but foresee inability to pay them within a period of one year.
They cited the sudden non-renewal and/or massive withdrawal by creditors
of their loans to ASB Holdings, the glut in the real estate market, severe
drop in the sale of real properties, peso devaluation, and decreased investor
confidence in the economy which resulted in the non-completion of and
failure to sell their projects and default in the servicing of their credits as
they fell due. Private respondents mentioned through Creditors Committee
composed of representatives of individual creditors appointed a Comptroller.
Private respondents stated that the Comptroller, upon instruction from the
Creditors Committee, withheld approval of payments of obligations in the
ordinary course of business such as those due to contractors, unless Roxas
agrees to the payment of interest and other arrangements. Private
respondents believed that said conditions would eventually harm the
general body of their creditors. Private respondents prayed for the
suspension of payments to creditors while working out the final terms of a
rehabilitation plan with all the parties concerned. The SEC issued an order
of suspension for 60 days all actions for claims against the ASB Group,
enjoining the latter from disposing its properties in any manner except in the
ordinary course of business and from paying outstanding liabilities, and
appointed Atty. Monico V. Jacob as interim receiver of the ASB Group but
later replaced by Atty. Fortunato Cruz as interim receiver. The consortium of
creditor banks, which included petitioners prayed for the dismissal of said
petition. Upon motion by the ASB Group, the suspension period was
extended through an order and creditor banks appealed by filing before the
SEC en banc a Petition for Review on Certiorari with application for a
temporary restraining order.
Held: Petitioners impute error on the part of the SEC in appointing an
interim receiver since, allegedly, the requirements for it have not been met.
Petitioners, however, assume that private respondents were not entitled to
file a petition for rehabilitation. As previously discussed, private respondents
may file a petition for rehabilitation for being technically insolvent. Once the
petition is filed, the appointment of an interim receiver becomes automatic.
Petitioners assert that there two kinds of receivers that can be appointed: a
rehabilitation receiver or an interim receiver. A rehabilitation receiver under
PD 902-A, Sec. 6 may only be appointed when there is a showing that (1)
the receiver is necessary in order to preserve the rights of the partieslitigants; and/or (2) in order to protect the interest of the investing public and
creditors. In contrast, the appointment of an interim receiver is automatic
from the time the petition for rehabilitation is filed; there are no other
standards that need to be met. According to Rizal Commercial Banking
Corporation v. Intermediate Appellate Court, a petition for rehabilitation does
not necessarily result in the appointment of a rehabilitation receiver. 20 Prior
to the appointment of a rehabilitation receiver or management committee,
as the case may be, the right of secured creditors to foreclose mortgages
cannot be denied. Also, since PD 902-A does not provide for the
appointment of an interim receiver, then the Rules of Procedure on
Corporate Recovery, an administrative issuance, went beyond the law it
seeks to implement. As found by the appellate court, the appointment of an
interim receiver should be understood as a necessary and urgent step to
protect the interests of both creditors and stockholders of the petitioning
corporations, particularly the assets and business operations during the
pendency of the proceedings, and to ensure the viability and success of the
rehabilitation plan as eventually implemented.

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