SECTION 2 On February 20, 1975, the defendant Anama submitted his Answer with Counterclaim, denying the
material averments of the complaint, and averring inter alia (1) that the remedy of replevin was improper
G.R. No. 61508 March 17, 1999
Citibank, N.A. (Formerly First National City Bank), petitioner, vs.
The Honorable Court of Appeals and Douglas F. Anama, respondents.
At bar is a special civil action for certiorari with prayer for a temporary restraining order faulting the Court
of Appeals1 with grave abuse of discretion for nullifying the lower court's order of seizure of mortgaged
properties subject of a case for sum of money and replevin.
The facts leading to the institution of the case are as follows:
In considering for a loan obtained from Citibank, N.A. (formerly First National City Bank), the defendant
(private respondent herein) Douglas Anama executed a promissory note, dated November 10, 1972, 2 to
pay the plaintiff bank the sum of P418,000.00 in sixty (60) equal successive monthly installments of
P8,722.25, starting on the 10th day of December 1972 and on the 10th of every month thereafter. The
said Promissory Note stipulated further that:
(a) the loan is subject to interest at the rate of twelve percent (12%) per annum;
(b) the promissory note and the entire amount therein stated shall become immediately due and
payable without notice or demand upon
(aa) default in the payment of any installment of principal or interest at the time when the same is
due;
(bb) the occurrence of any change in the condition and affairs of the defendant, which in the opinion
of the plaintiff shall increase its credit risk;
(c) the defendant agrees to pay all costs, expenses, handling and insurance charges incurred in the
granting of the loan;
(d) in case the services of a lawyer is made necessary for collection, defendant shall be liable for
attorney's fees of at least ten percent (10%) of the total amount due. 3
To secure payment of the loan, private respondent Anama also constituted a Chattel Mortgage of even
date in favor of petitioner, on various machineries and equipment located at No. 1302 Epifanio delos
Santos Avenue, Quezon City, under the following terms and conditions:
(a) The machineries and equipment subject of the mortgage, stand as security for defendant's
account.
(b) All replacement, substitutions, additions, increases and accretions to the properties mortgaged
shall also be subject to the mortgage.
(c) The defendant appoints the plaintiff as his attorney-in-fact with authority to enter the premises of
the defendant and take actual possession of the mortgaged chattels without any court order, to sell
said property to any party.
(d) All expenses in carrying into effect the stipulations therein shall be for the account of the
defendant and shall form part of the amount of the obligation secured by the mortgage.
(e) In case the plaintiff institutes proceedings for the foreclosure of the mortgage, the plaintiff shall be
entitled to the appointment of a receiver without a bond.
(f) In case of default, the defendant shall be liable for attorney's fees and cost of collection in the sum
equal to twenty-five (25%) of the total amount of the indebtedness outstanding and unpaid. 4
On November 25, 1974, for failure and refusal of the private respondent to pay the monthly installment
due under the said promissory note since January 1974, despite repeated demands, petitioner filed a
verified complaint against private respondent Anama for the collection of his unpaid balance of
P405,820.52 on the said promissory note, for the delivery and possession of the chattels covered by the
Chattel Mortgage preparatory to the foreclosure thereof as provided under Section 14 of the Chattel
Mortgage Law, docketed as Civil Case No. 95991 before the then Court of First Instance of Manila.
and the writ of seizure should be vacated; (2) that he signed the promissory note for P418,000.00 without
receiving from plaintiff Citibank any amount, and was even required to pay the first installment on the
supposed loan in December 1974; (3) that the understanding between him and the Citibank was for the
latter to release to him the entire loan applied for prior to and during the execution of his promissory note,
but Citibank did not do so and, instead, delayed the release of any amount on the loan even after the
execution of the promissory note thereby disrupting his timetable of plans and causing him damages; (4)
that the amount released by Citibank to him up to the present was not the amount stated in the
promissory note, and his alleged default in paying the installment on the loan was due to the delay in
releasing the full amount of the loan as agreed upon; (5) that the macheniries and equipment described in
the chattel mortgage executed by him are really worth more than P1,000,000.00 but he merely acceded
to the valuation thereof by Citibank in said document because of the latter's representation that the same
was necessary to speed up the granting of the loan applied for by him; (6) that the properties covered by
said chattel mortgage are real properties installed in a more or less permanent nature at his (defendant's)
premises in Quezon City, as admitted by Citibank in said mortgage document; (7) that the mortgage
contract itself stipulated that the manner and procedure for affecting the sale or redemption of the
mortgage properties, if made extrajudicial, shall be governed by Act No. 1508 and other pertinent laws
which all pertain to real properties; and (8) that because of the filing of this complaint without valid
grounds therefor, he suffered damages and incurred attorney's fees; the defendant, now private
respondent, averred.
On December 2, 1974, the trial court upon proof of default of the private respondent in the payment of the
said loan, issued an Order of Replevin over the macheneries and equipment covered by the Chattel
Mortgage.
However, despite the issuance of the said order of seizure of subject chattels, actual delivery of
possession thereof to petitioner did not take place because negotiations for an amicable settlement
between the parties were encouraged by the trial court.
On March 24, 1975, a pre-trial conference was held and the lower court issued an order for joint
management by the petitioner and the private respondent of the latter's business for ten (10) days, after
which the former would appointed receiver for the said business.
On April 1, 1975, the petitioner took over private respondent's business as receiver. When further
proposals to settle the case amicably failed, the lower court proceeded to try the case on the merits.
On January 29, 1977, petitioner presented a Motion for the Issuance of an Alias Writ of Seizure, ordering
the sheriff to seize the properties involved and dispose of them in accordance with the Revised Rules of
Court. The lower court then gave private respondent five (5) days to oppose the said motion and on
February 22, 1977, he sent in his opposition thereto on the grounds: (1) that Citibank's P400,000 replevin
bond to answer for damages was grossly inadequate because the market value of the properties involved
is P1,710,000 and their replacement cost is P2,342,300.00 per the appraisal report of the Appraisal and
Research Corp.; (2) that he was never in default to justify the seizure; (3) that the Civil Case No. 18071 of
the Court of First Instance, entitled Hernandes vs. Anama, et al., which, according to Citibank,
supposedly increased its credit risk in the alleged obligation, had already been dismissed as against him
and the case terminated with the dismissal of the complaint against the remaining defendant, First
National City Bank, by the Court in its orders of January 12, 1977 and February 7, 1977; (4) that his
(defendant's) supposed obligations with Citibank were fully secured and his mortgaged properties are
more than sufficient to secure payment thereof; and (5) that the writ of seizure if issued would stop his
business operations and contracts and expose him to lawsuits from customers, and also dislocate his
employees and their families entirely dependent thereon for their livelihood.
On February 28, 1977, acting on the said Motion and private respondent's opposition, the trial court
issued an Order granting the Motion for Alias Writ of Seizure, ruling thus:
 WHEREFORE, the motion for alias writ of seizure is hereby granted. At any rate, this Order gives
another opportunity for defendant and the intervenor who claims to be a part owner to file a
counterbond under Sec. 60 of Rules of Court. 5
Private respondent moved for reconsideration of the aforesaid order but the same was denied by the
Resolution of March 18, 1977, to wit:
In view of the foregoing, the motion for reconsideration is hereby denied.
At any rate, as already stated, the defendant has still a remedy available which is to file a bond
executed to the plaintiff in double the value of the properties as stated in the plaintiff's affidavit. The
Court at this instance therefore has no authority to stop or suspended the writ of seizure already
ordered. 6
Accordingly, by virtue of the Alias writ of Seizure, petitioner took possession of the mortgaged chattels of
private respondent. As a consequence, the sheriff seized subject properties, dismantled and removed
them from the premises where they were installed, delivered them to petitioner's possession on March
17, 18 and 19, 1977 and advertised them for sale at public auction scheduled on March 22, 1977.
On March 21, 1977, private respondent filed with the Court of Appeals a Petition for Certiorari and
Prohibition 7 with Injunction to set aside and annul the questioned resolution of the trial court on the
ground that they were issued "in excess of jurisdiction and with grave abuse of discretion" because of the
"lack of evidence and clear cut right to possession of First National City Bank (herein petitioner)" top the
machineries subject of the Chattel Mortgage.
On July 30, 1982, finding that the trial court acted with grave abuse of discretion amounting to excess of
lack of jurisdiction in issuing the assailed resolutions, the Court of Appeals granted petition, holding that
the provision of the Rules of Court on Replevin and Receivership have not been complied with, in that (1)
there was no Affidavit of Merit accompanying the Complaint for Replevin; (2) the bond posted by Citibank
was insufficient; and (3) there was non-compliance with the requirement of a receiver's bond and oath of
office. The decretal portion of the assailed decision of the Court of Appeals, reads:
WHEREFORE, the petition is granted. The questioned resolutions issues by the respondent judge in
Civil Case No. 95991, dated February 28, 1977 and March 18, 1977, together with the writs and
processes emanating or deriving therefrom, are hereby declare null and void ab initio.
The respondent ex-officio sheriff of Quezon City and the respondent First National City Bank are
hereby ordered to return all the machineries and equipment with their accessories seized, dismantled
and hauled, to their original and respective places and position in the shop flooring of the petitioner's
premises where these articles were, before they were dismounted, seized and hauled at their own
expense. The said respondents are further ordered to cause the repair of the concrete foundations
destroyed by them including the repair of the electrical wiring and facilities affected during the seizure,
dismanting and hauling.
The writ of preliminary injunction heretofore in effect is hereby made permanent. Costs against the
private respondents. SO ORDERED 8
Therefrom, Citibank came to this Court via its present petition for certiorari, ascribing grave abuse of
discretion to the Court of Appeals and assigning as errors, that:
I law, that is, whether the provisions of the Rules of Court on delivery of personal property or
THE RESPONDENT COURT ERRED IN PRACTICALLY AND IN EFFECT
RENDERING JUDGMENT ON THE MERITS AGAINST THE HEREIN
PETITIONER BY ORDERING THE RETURN OF THE MACHINERIES AND
EQUIPMENT AND ITS ACCESSORIES TO THEIR ORIGINAL AND RESPECTIVE
PLACES AND POSITIONS.
II
THE RESPONDENT COURT ERRED IN FINDING THAT THE COMPLAINT OF
THE PETITIONER DID NOT COMPLY WITH THE PROVISIONS OF SEC. 2, RULE
60 OF THE RULES OF COURT.
III
THAT THE RESPONDENT COURT ERRED IN FINDING THAT THE BOND
POSTED BY THE PETITIONER IS QUESTIONABLE AND/OR INSUFFICIENT.
IV
THE RESPONDENT COURT ERRED IN FINDING THAT THE PETITIONER DID
NOT COMPLY WITH THE PROVISIONS OF SEC. 5, RULE 59 BY FAILING TO
POST A RECEIVER'S BOND.
V
THE RESPONDENT ERRED IN FINDING THAT THE HON. JORGE R. COQUIA
ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR
LACK OF JURISDICTION IN DEALING WITH THE SITUATION.
I
Anent the first assigned error, petitioner contends that the Court of Appeals, by nullifying the
writ of seizure issued below, in effect, rendered judgment on the merits and adjudged private
respondent Anama as the person lawfully entitled to the possession of the properties subject
of the replevin suit. It is theorized that the same cannot be done, as the case before the court
below was yet at trial stage and lower court still had to determine whether or not private
respondent was in fact in default in the payment of his obligation to petitioner Citibank, which
default would warrant the seizure of subject machineries and equipment.
The contention is untenable. A judgment is on the merits when it determines the rights and
liabilities of the parties on the basis of the disclosed facts, irrespective of formal technical or
dilatory objections, and it is not necessary that there should have been a trial. 9 The assailed
decision of the Court of Appeals did not make any adjudication on the rights and liabilities
between Citibank and Douglas Anama. There was no finding yet of the fact of default. The
decision only ruled on the propriety of the issuance of the writ of seizure by the trial court. As
worded by the respondent court itself, "the main issues to be resolved are whether there was
lack or excess of jurisdiction, or grave abuse of discretion, in the issuance of the orders in
question, and there is no appeal nor any plain, speedy, and adequate remedy in the ordinary
course of law." 10
In resolving the issue posed by the petition, the Court of Appeals limited its disposition to a
determination of whether or not the assailed order of seizure was issued in accordance with
replevin as a provisional remedy were followed. The Court of Appeals relied on Ruled 60 of the
Rules of Court, which prescribed the procedure for the recovery of possession of personal
property, which Rule, provides:
 Sec. 2. Affidavit and Bond. Upon applying or such order the plaintiff must show
by his own affidavit or that of some other person who personally knows the facts:
(a) That the plaintiff is the owner of the property claimed
particularly describing it, or is entitled to the possession
thereof;
(b) That the property is wrongfully detained by the defendant,
alleging the cause of detention thereof according to his best of
knowledge, information and belief;
(c) That it has nor been taken for a tax assessment or fine
pursuant to law, or seized under an execution, or an
attachment against the property of the plaintiff, or is so seized,
that is exempt from such seizure; and
(d) The actual value of the property.
The plaintiff must also give a bond, executed to the defendant in double of the value
of the property as stated in the affidavit aforementioned, for the property to the
defendant of such sum as he may recover from the plaintiff in the action.
The Court of Appeals did not pass upon the issue of who, as between Douglas Anama and Citibank, is
entitled to the possession of subject machineries, as asserted by the latter. When it ordered the
restoration of the said machineries to Douglas Anama (now the private respondent), it merely defendant
to the possession of his properties, since there was a finding that the issuance of the writ was not in
accordance with the specific rules of the Rules of Court.
II
In its second assignment of errors, petitioner theorizes that the Court of Appeals erred in
finding that it did not comply with Section 2, Rule 60 of the Rules of Court requiring the
replevin plaintiff to attach an affidavit of merit to the compliant.
Petitioner maintains that although there was no affidavit of merit accompanying its complaint, there was
nonetheless substantial compliance with the said rule as all that is required to be alleged in the affidavit of
merit was set forth in its verified complaint. Petitioner argues further that assuming arguendo that there
was non-compliance with the affidavit of merit requirement, such defense can no longer be availed of by
private respondent Anama as it was not alleged in his Answer and was only belatedly interposed in his
Reply to the Petitioner's Comment on the Petitioner for Certiorari before the Court of Appeals.
Petitioner is correct insofar as it contends that substantial compliance with the affidavit requirement may
be permissible. There is substantial compliance with the rule requiring that an affidavit of merit to support
the complaint for replevin if the complaint itself contains a statements of every fact required to be stated in
the affidavit of merit and the complaint is verified like an affidavit. On the matter of replevin, Justice
Vicente Francisco's Comment on the Rules of Court, states:
Although the better practice is to keep the affidavit and pleading separate, if plaintiff's pleading
contains a statement of every fact which the statute requires to be shown in the affidavits, and the
pleading is verified by affidavit covering every statement therein, this will be sufficient without a
separate affidavit; but in no event can the pleading supply the absence of the affidavit unless all that
the affidavit is required to contain is embodied in the pleading, and the pleading is verified in the
form required in the case of a separate affidavit. (77 CJS 65 cited in Francisco, Rules of Court of the
Philippines, Vol. IV-A, p. 383)
And similarly, in the case of an attachment which likewise requires an affidavit of merit, the Court held
that the absence of an affidavit of merit is not fatal where the petition itself, which is under oath, recites
the circumstances or facts constitutive of the grounds for the petition. 11
The facts that must be set forth in the affidavit of merit are (1) that plaintiff owns the property particularly
describing the same, or that he is entitled to its possession; (2) wrongful detention by defendants of said
property; (3) that the property is not taken by virtue of a tax assessment or fine pursuant to law or seized
under execution or attachment or, if it is so seized, that it is exempt from seizure; and the, (4) the actual
value of the property. 12
But, as correctly taken note of by the Court of Appeals, petitioner's complaint does not allege all the facts
that should be set forth in an affidavit of merit. Although the complaint alleges that petitioner is entitled to
the possession of subject properties by virtue of the chattel mortgage executed by the private respondent,
upon the latter's default on its obligation, and the defendant's alleged "wrongful detention" of the same,
the said complaint does not state that subject properties were not taken by virtue of a tax assessment or
fine imposed pursuant to law or seized under execution or attachment or, if they were so seized, that they
are exempt from such seizure.
Then too, petitioner stated the value of subject properties at a "probable value of P200,000.00, more or
less". Pertinent rules require that the affidavit of merit should state the actual value of the property subject
of a replevin suit and not just its probable value. Actual value (or actual market value) means "the price
which an article would command in the ordinary course of business, that is to say, when offered for sale
by one willing to sell, but not under compulsion to sell and purchased by another who is willing to buy, but
under no obligation to purchase it". 13Petitioner alleged that the machineries and equipment involved are
valued at P200,000.00 while respondent denies the same, claiming that per the appraisal report, the
market value of the said properties is P1,710,000.00 and their replacement cost is P2,342,300.00.
Petitioner's assertion is belied by the fact that upon taking possession of the aforesaid properties, it
insured the same for P610,593.74 and P450,000.00, separately. It bears stressing that the actual value of
the properties subject of a replevin is required to be in the affidavit because such actual value will be the
basis of the replevin bond required to be posted by the plaintiff. Therefore, when the petitioner failed to
declare the actual value of the machineries and equipment subject of the replevin suit, there was non-
compliance with Section 2, Rule 60 of the Revised Rules of Court.
It should be noted, however, that the private respondent interposed the defense of lack of affidavit of
merit only in his Reply to the Comment of Citibank on the Petition for Certiorari which respondent filed
with the Court of Appeals. Section 2, Rule 9 of the Revised Rules of Court, provides:
Sec. 2. Defenses and objections not pleaded deemed waived Defenses and
objections not pleaded either in a motion to dismiss or in the answer are deemed
waived; except the failure to state a cause of action which may be alleged in later
pleading, . . . .
This Rule has been revised and amended, as follows:
Sec. 1. Defenses and objection not pleaded. Defenses and objections not
pleaded in a motion to dismiss or in the answer are deemed waived. However,
when it appears from the pleadings or the evidence on record that the court has no
jurisdiction over the subject matter, that there is another action pending between the
same parties for the same cause, or that the action is barred by a prior judgment or
by statute of limitations, the court shall dismiss the claim.
Thus, although respondent's defense of lack of affidavit of merit is meritorious, procedurally, such a
defense is no longer available for failure to plead the same in the Answer as required by the omnibus
motion rule.
III
Petitioner also faults the Court of Appeals for finding that the bond posted by the petitioner is
questionable and/or insufficient. It is averred that, in compliance with Section 2, Rule 60 requiring the
replevin plaintiff to post a bond in double the value of the properties involved, it filed a bond in the amount
P400,000.00 which is twice the amount of P200,000.00 declared in its complaint.
The Court reiterates its findings on the second assignment of errors, particularly on the issue of the actual
of subject properties as against their probable value. Private respondent, at the onset, has put into issues
the value of the said properties. In the Special Defenses contained in his Answer, private respondent
averred:
That while defendant admits that he executed a Chattel Mortgage in favor of
plaintiff, he vigorously denies that the machineries covered therein are worth
P200,000.00. The fact is that plaintiff knew fully well that said chattels are worth no
less than P1,000,000.00, said defendant having acceded to said valuation upon
plaintiff's representation that it would be necessary to speed up the granting of the
loan.
As here was a disagreement on the valuation of the properties in the first place, proper determination of
the value of the bond to be posted by the plaintiff cannot be sufficiently arrived at. Though the rules
specifically require that the needed bond be double the value of the properties, since plaintiff merely
denominated a probable value of P200,000.00 and failed to aver the properties' actual value, which is
claimed to be much greater than that declared by plaintiff, the amount of P400,000.00 would indeed be
insufficient as found by the Court of Appeals. The Rules of Court requires the plaintiff to "give a bond,
executed to the defendant in double the value of the property as stated in the affidavit
. . . ." Hence, the bond should be double the actual value of the properties involved. In this case, what
was posted was merely an amount which was double the probable value as declared by the plaintiff and,
therefore, inadequate should there be a finding that the actual value is actually far greater than
P200,000.00. Since the valuation made by the petitioner has been disputed by the respondent, the lower
court should have determined first the actual value of the properties. It was thus as error for the said court
to approve the bond, which was based merely on the probable value of the properties.
It should be noted that a replevin bond is intended to indemnify the defendant against any loss that he
may suffer by reason of its being compelled to surrender the possession of the disputed property pending
trial of the
action. 14 The same may also be answerable for damages if any when judgment is rendered in favor of
the defendant or the party against whom a writ of replevin was issued and such judgment includes the
return of the property to him. 15 Thus, the requirement that the bond be double the actual value of the
properties litigated upon. Such is the case because the bond will answer for the actual loss to the plaintiff,
which corresponds to the value of the properties sought to be recovered and for damages, if any.
Petitioner also maintains that, assuming for the sake of argument that its replevin bond was grossly
inadequate or insufficient, the recourse of the respondent should be to post a counterbound or a
redelivery bond as provided under Section 5 of Rule 60.
Sec. 5 and 6, Rule 60 of the Rules of Court, read:
Sec. 5. Return of property. If the defendant objects to the sufficient of the plaintiff's bond, or of the
surety or sureties thereon, he cannot require the return of the property as in this section provided;
but if he does not so object, he may, at any time before the delivery of the property to the plaintiff, if
such delivery be adjudge, and for the payment of such sum to him as may be recovered against the
defendant, and by serving a copy of such bond on the plaintiff or his attorney.
Sec. 6. Disposition of property by officer. If within five (5) days after the taking of the property by
the officer, the defendant does not object to the sufficiecy of the bond, or of the surety or sureties
thereon, or require the return of the property as provided in the last preceding section; or if the
defendant so objects, and the plaintiff's first or new bond is approved; or if the defendant so require,
and his bond is object to and found insufficient and he does not forthwith file an approved bond, the
property shall be delivered to the plaintiff, the officer must return it to the defendant.
The Court held in a prior case 16 that the remedies provided under Section 5, Rule 60, are alternative
remedies. ". . . If a defendant in a replevin action wishes to have the property taken by the sheriff restored
to him, he should, within five days from such taking, (1) post a counter-bond in double the value of said
property, and (2) serve plaintiff with a copy thereof, both requirements as well as compliance therewith
within the five-day period mentioned being mandatory." 17 This course of action is available to the
defendant for as long as he does not object to the sufficiency of the plaintiff's bond.
Conformably, a defendant in a replevin suit may demand the return of possession of the property
replevined by filing a redelivery bond executed to the plaintiff in double the value of the property as stated
in the plaintiff's affidavit within the period specified in Section 5 and 6.
Alternatively, "the defendant may object to the sufficiency of the plaintiff's bond, or of the surety or
sureties thereon;" but if he does so, "he cannot require the return of the property" by posting a counter-
bond pursuant to Section 5 and 6. 18
In the case under consideration, the private respondent did not opt to cause redelivery of the
properties to him by filing a counter-bond precisely because he objected to the sufficiency of
the bond posted by plaintiff. Therefore, he need not file a counter-bond or redelivery bond.
When such objection was not given due course in the court below when, instead of
requiring the plaintiff to post a new bond, the court approved the bond in the amount of
P400,000.00, claimed by respondent to be insufficient, and ordered the seizure of the
properties recourse to a petition for certiorari before the Court of Appeals assailing such
order is proper under the circumstances.
IV
As its fourth assignment of errors, petitioner contends that the Court of Appeals made an error of
judgment in finding that the petitioner did not comply with the provisions of Section 5, Rule 59 by failing to
post a receiver's bond. Petitioner contends that although it is in agreement with the Court of Appeals that
a receiver's bond is separate and distinct from a replevin bond, under the circumstances it was not
required to file a receiver's bond because it did not assume receivership over the properties. It is further
argued that assuming that it did assume receivership, the Chattel Mortgage expressly provides, that:
In case the MORTGAGEE institutes proceedings, judicially or otherwise, for the
foreclosure of this Chattel Mortgage, or to enforce any of its rights hereunder, the
MORTGAGEE shall be entitled as a matter of right to the appointment of a receiver,
without bond, of the mortgaged properties and of such properties, real or personal,
claims and rights of the MORTGAGOR as shall be necessary or proper to enable
the said receiver to property control and dispose of the mortgaged properties. 19
The order of the trial court dated March 24, 1975 provided, among others, that the properties shall be
under joint management for a period of ten days, after which period "the bank, by virtue of the stipulations
under the chattel mortgage, becomes the Receiver to perform all the obligations as such Receiver" and
"in the event that the bank decides not to take over the receivership, the joint management continues." 20
From the evidence on record, it is palpably clear that petitioner Citibank did, in fact, assume receivership.
A letter 21dated April 1, 1975 sent by petitioner to the private respondent, reads: xxx
Petitioner cannot therefore deny that nine days after the trial court issued the order of receivership, it
informed he private respondent that it would, as it did, assume receivership.
The Court of Appeals found that the requirements of Section 5, Rule 59 on receivership were not
complied with by the petitioner, particularly the filing or posting of a bond and the taking of an oath.
It should be noted that under the old Rules of Court which was in effect at the time this case was still at
trial stage, a bond for the appointment of a receiver was not generally required of the applicant, except
when the application wasex parte. 22 Therefore, petitioner was not absolutely required to file a bond.
 The appellate court culled the facts that matter as follows:
Besides, as stipulated in the chattel mortgage contract between the parties, petitioner, as the mortgagee,
is entitled to the appointment of a receiver without a bond.
However, the Court of Appeals was right in finding a defect in such assumption of receiver in that the
requirement of taking an oath has not been complied with Section 5, Rule 59, states:
Sec. 5. Oath and bond of receiver. Before entering upon his duties, the receiver
must be sworn to perform them faithfully, and must file a bond, executed to such
person and in such sum as the court or judge may direct, to the effect that he will
faithfully discharge the duties of receiver in the action and obey the orders of the
court therein.
Consequently, the trail court erred in allowing the petitioner to assume receivership over the machine
shop of private respondent without requiring the appointed receiver to take an oath.
V On September 25, 1978, Filinvest Credit Corporation in turn assigned the credit in favor of
In light of the foregoing, the answer to the fifth assignment of errors is in the negative. For erroneously
issuing thealias writ of seizure without inquiring into the sufficiency of the replevin bond and for allowing
petitioner to assume receivership without the requisite oath, the Court of Appeals aptly held that the trial
court acted with grave abuse of discretion in dealing with situation.
Under the Revised Rules of Court, the property seized under a writ of replevin is not to be delivered
immediately to the plaintiff. 23 This is because a possessor has every right to respected in its possession
and may not be deprived of it without due process. 24
As enunciated by this Court in the case of Filinvest Credit Corporation vs. Court of Appeals, 25
The reason why the law does not allow the creditor to possess himself of the mortgaged property
with violence and against the will of the debtor is to be found in the fact that the creditor's right of
possession is conditioned upon the fact of default, and the existence of this fact may naturally be
the subject of controversy. The debtor, for instance, may claim in good faith, and rightly or wrongly,
that the debt is paid, or that for some other reason the alleged default is nonexistent. His possession
in this situation is as fully entitled to protection as that of any other person, and in the language of
Article 446 of the Civil Code, he must be respected therein. To allow the creditor to seized the
property against the will of the debtor would make the former to a certain extent both judge and
executioner in his own cause a thing which is inadmissible in the absence of unequivocal
agreement in the contract itself or express provision to the effect in the statute.
WHEREFORE, for lack of merit, the petition is hereby DISMISSED. No pronouncement as to costs. SO
ORDERED.
G.R. No. 110048 November 19, 1999
SERVICEWIDE SPECIALISTS, INC., petitioner, vs.
COURT OF APPEALS, HILDA TEE, & ALBERTO M. VILLAFRANCA, respondents.
This is a petition for review on certiorari under Rule 45 of Decision of the Court of Appeals 1 in CA-G.R.
CV No. 19571, affirming the judgment of the Regional Trial Court of Manila, Branch XX, dismissing Civil
Case No. 84-25763 for replevin and damages.
The litigation involves a motor vehicle, a Colt Galant, 4-door Sedan automobile, with Motor No. 2E-08927,
Serial No. A112A-5297, Model No. 1976.
2
On May 14, 1976, Leticia L. Laus of Quezon City purchased on credit a Colt Galant . . . from
Fortune Motors (Phils.) Corporation. On the same date, she executed a promissory note for the
amount of P56,028.00, inclusive of interest at 12% per annum, payable within a period of 48 months
starting August, 1976 at a monthly installment of P1,167.25 due and demandable on the 17th day of
each month (Exhibit "A", pp. 144, Orig. Records,). It was agreed upon, among others, that in case of
default in the payment of any installment the total principal sum, together with the interest, shall
become immediately due and payable (Exhibit "A"; p. 144, Orig. Records). As a security for the
promissory note, a chattel mortgage was constituted over the said motor vehicle (Exhibit "B", ibid.),
with a deed of assignment incorporated therein such that the credit and mortgage rights were
assigned by Fortune Motors Corp. in favor of Filinvest Credit Corporation with the consent of the
mortgagor-debtor Leticia Laus (Exhibits "B-1" and "B-2", p. 147, ibid.). The vehicle was then
registered in the name of Leticia L. Laus with the chattel mortgage annotated on said certificate.
(Exhibit "H"; p. 154, ibid.)
Servicewide Specialists, Inc. (Servicewide, for brevity) transferring unto the latter all its rights under
the promissory note and the chattel mortgage (Exhibit "B-3", p. 149, ibid.) with the corresponding
notice of assignment sent to the registered car owner (Exhibit "C"; p. 150, ibid.).
On April 18, 1977, Leticia Laus failed to pay the monthly installments for that month. The
installments for the succeeding 17 months were not likewise fully paid, hence on September 25,
1978, pursuant to the provisions of the promissory note, Servicewide demanded payment of the
entire outstanding balance of P46,775.24 inclusive of interests (Exhibits "D" and "E"; pp. 151-
152, ibid.). Despite said formal demand, Leticia Laus failed to pay all the monthly installments due
until July 18, 1980.
On July 25, 1984, Servicewide sent a statement of account to Leticia Laus and demanded payment
of the amount of P86,613.32 representing the outstanding balance plus interests up to July 25,
1985, attorney's fees, liquidated damages, estimated repossession expense, and bonding fee
(Exhibit "F"; p. 153, ibid.)
As a result of the failure of Leticia Laus to settle her obligation, or at least to surrender possession of
the motor vehicle for the purpose of foreclosure, Servicewide instituted a complaint for replevin,
impleading Hilda Tee and John Dee in whose custody the vehicle was believed to be at the time of
the filing of the suit.
In its complaint, plaintiff alleged that it had superior lien over the mortgaged vehicle; that it is lawfully
entitled to the possession of the same together with all its accessories and equipments; (sic) that
Hilda Tee was wrongfully detaining the motor vehicle for the purpose of defeating its mortgage lien;
and that a sufficient bond had been filed in court. (Complaint with Annexes, pp. 1-13, ibid.). On July
30, 1984, the court approved the replevin bond (p. 20, ibid.)
On August 1, 1984, Alberto Villafranca filed a third party claim contending that he is the absolute
owner of the subject motor vehicle duly evidenced by the Bureau of Land Transportation's
Certificate of Registration issued in his name on June 22, 1984; that he acquired the said mother
vehicle from a certain Remedios D. Yang under a Deed of Sale dated May 16, 1984; that he
acquired the same free from all lien and emcumbrances; and that on July 30, 1984, the said
automobile was taken from his residence by Deputy Sheriff Bernardo Bernabe pursuant to the
seizure order issued by the court a quo.
Upon motion of the plaintiff below, Alberto Villafranca was substituted as defendant. Summons was
served upon him. (pp. 55-56, ibid).
On March 20, 1985, Alberto Villafranca moved for the dismissal of the complaint on the ground that
there is another action pending between the same parties before the Regional Trial Court of Makati,
 Branch 140, docketed as Civil Case No. 8310, involving the seizure of subject motor vehicle and the
indemnity bond posted by Servicewide (Motion to Dismiss with Annexes; pp. 57-110, ibid.) On
March 28, 1985, the court granted the aforesaid motion (p. 122, ibid.), but subsequently the order of
dismissal was reconsidered and set aside (pp. 135-136, ibid.). For failure to file his Answer as
required by the court a quo, Alberto Villafranca was declared in default and plaintiff's evidence was
received ex parte.
On December 27, 1985, the lower court rendered a decision dismissing the complaint for
insufficiency of evidence. Its motion for reconsideration of said decision having been denied, . . . .
In its appeal to the Court of Appeals, petitioner theorized that a suit for replevin aimed at the foreclosure
of a chattel is an action quasi in rem, and does not require the inclusion of the principal obligor in the
Complaint. However, the appellate court affirmed the decision of the lower Court; ratiocinating, thus:
A cursory reading, however, of the Promissory Note dated May 14, 1976 in favor of Fortune Motors
(Phils.) Corp. in the sum of P56,028.00 (Annex "A" of Complaint, p. 7, Original Records) and the
Chattel Mortgage of the same date (Annex "B" of Complaint; pp. 8-9, ibid.) will disclose that the
maker and mortgagor respectively are one and the same person: Leticia Laus. In fact, plaintiff-
appellant admits in paragraphs (sic) nos. 2 and 3 of its Complaint that the aforesaid public
documents (Annexes "A" and "B" thereof) were executed by Leticia Laus, who, for reasons not
explained, was never impleaded. In the case under consideration, plaintiff-appellant's main case is
for judicial foreclosure of the chattel mortgage against Hilda Tee and John Doe who was later
substituted by appellee Alberto Villafranca. But as there is no privity of contract, not even a causal
link, between plaintiff-appellant Servicewide Specialists, Inc. and defendant-appellee Alberto
Villafranca, the court a quo committed no reversible error when it dismissed the case for
insufficiency of evidence against Hilda Tee and Alberto Villafranca since the evidence adduced
pointed to Leticia Laus as the party liable for the obligation sued upon (p. 2, RTC Decision). 3
Petitioner presented a Motion for Reconsideration but in its Resolution 4 of May 10, 1993, the Court of
Appeals denied the same, taking notice of another case "pending between the same parties . . . relating
to the very chattel mortgage of the motor vehicle in litigation."
Hence, the present petition for review on certiorari under Rule 45. Essentially, the sole issue here is:
Whether or not a case for replevin may be pursued against the defendant, Alberto Villafranca, without
impleading the absconding debtor-mortgagor?
Rule 60 of the Revised Rules of Court requires that an applicant for replevin must show that he "is the
owner of the property claimed, particularly describing it, or is entitled to the possession thereof." 5 Where
the right of the plaintiff to the possession of the specified property is so conceded or evident, the action
need only be maintained against him who so possesses the property. In rem action est per quam rem
nostram quae ab alio possidetur petimus, et semper adversus eum est qui rem possidet. 6
Citing Northern Motors, Inc. vs. Herrera, 7 the Court said in the case of BA Finance (which is of similar
import with the present case):
There can be no question that persons having a special right of property in the goods the recovery
of which is sought, such as a chattel mortgagee, may maintain an action for replevin therefor.
Where the mortgage authorizes the mortgagee to take possession of the property on default, he
may maintain an action to recover possession of the mortgaged chattels from the mortgagor or
from any person in whose hands he may find them. 8
Thus, in default of the mortgagor, the mortgagee is thereby constituted as attorney-in-fact of the
mortgagor, enabling such mortgagee to act for and in behalf of the owner. That the defendant is not privy
to the chattel mortgage should be inconsequential. By the fact that the object of replevin is traced to his
possession, one properly can be a defendant in an action for replevin. It is here assumed that the
plaintiff's right to possess the thing is not or cannot be disputed. 9 (Emphasis supplied)
However, in case the right of possession on the part of the plaintiff, or his authority to claim such
possession or that of his principal, is put to great doubt (a contending party may contest the legal bases
for plaintiffs cause of action or an adverse and independent claim of ownership or right of possession may
be raised by that party), it could become essential to have other persons involved and impleaded for a
complete determination and resolution of the controversy. 10 In the case under scrutiny, it is not disputed
that there is an adverse and independent claim of ownership by the respondent as evinced by the
existence of a pending case before the Court of Appeals involving subject motor vehicle between the
same parties herein. 11 Its resolution is a factual matter, the province of which properly lies in the lower
Court and not in the Supreme Court, in the guise of a petition for review on certiorari. For it is basic that
under Rule 45, this Court only entertains questions of law, and rare are the exceptions and the present
case does not appear to be one of them.
In a suit for replevin, a clear right of possession must be established. (Emphasis supplied) A foreclosure
under a chattel mortgage may properly be commenced only once there is default on the part of the
mortgagor of his obligation secured by the mortgage. The replevin in this case has been resorted to in
order to pave the way for the foreclosure of what is covered by the chattel mortgage. The conditions
essential for such foreclosure would be to show, firstly, the existence of the chattel mortgage and,
secondly, the default of the mortgagor. These requirements must be shown because the validity of the
plaintiffs exercise of the right of foreclosure is inevitably dependent thereon. 12
Since the mortgagee's right of possession is conditioned upon the actual fact of default which itself may
be controverted, the inclusion of other parties, like the debtor or the mortgagor himself, may be required
in order to allow a full and conclusive determination of the case. When the mortgagee seeks a replevin in
order to effect the eventual foreclosure of the mortgage, it is not only the existence of, but also the
mortgagor's default on, the chattel mortgage that, among other things, can properly uphold the right to
replevy the property. The burden to establish a valid justification for such action lies with the plaintiff. An
adverse possessor, who is not the mortgagor, cannot just be deprived of his possession, let alone be
bound by the terms of the chattel mortgage contract, simply because the mortgagee brings up an action
for replevin. 13
Leticia Laus, being an indispensable party, should have been impleaded in the complaint for replevin and
damages. An indispensable party is one whose interest will be affected by the court's action in the
litigation, and without whom no final determination of the case can be had. The party's interest in the
subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties that
his legal presence as a party to the proceeding is an absolute necessity. In his absence, there cannot be
a resolution of the dispute of the parties before the Court which is effective, complete, or equitable.
Conversely, a party is not indispensable to the suit if his interest in the controversy or subject matter is
distinct and divisible from the interest of the other parties and will not necessarily be prejudiced by a
judgment which does complete justice to the parties in Court. He is not indispensable if his presence
would merely complete relief between him and those already parties to the action or will simply avoid
multiple litigation. 14 Without the presence of indispensable parties to a suit or proceeding, a judgment of
a Court cannot attain real finality. 15
That petitioner could not locate the mortgagor, Leticia Laus, is no excuse for resorting to a procedural
short-cut. It could have properly availed of substituted service of summons under the Revised Rules of
Court. 16 If it deemed such a mode to be unavailing, it could have proceeded in accordance with Section
14 of the same Rule. 17 Indeed, petitioner had other proper remedies, it could have resorted to but failed
to avail of. For instance, it could have properly impleaded the mortgagor. Such failure is fatal to
petitioner's cause.
With the foregoing disquisition and conclusion, the other issues raised by petitioner need not be passed
upon.
WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals in CA-G.R. CV No.
19571 AFFIRMED. No pronouncement as to costs. SO ORDERED.
G.R. No. 160191 June 8, 2006
TWIN ACE HOLDINGS CORPORATION, Petitioner, vs.
RUFINA AND COMPANY, Respondent.
From the records, it appears that on 3 December 1991, Twin Ace Holdings Corporation (Twin Ace) filed a
Complaint1 for recovery of possession of personal property, permanent injunction and damages with
prayer for the issuance of a writ of replevin, temporary restraining order and a writ of preliminary
injunction against Rufina and Company (Rufina).
As alleged in the complaint, Twin Ace is a private domestic corporation engaged in the manufacture of
rhum, wines and liquor under the name and style "Tanduay Distillers." It has registered its mark of
ownership of its bottles with the Bureau of Patent, Trademarks and Technology Transfer under Republic
Act No. 623. In the conduct of its business, it sells its products to the public excluding the bottles. It
makes substantial investments in brand new bottles which it buys from glass factories and which they use
for about five times in order to recover the cost of acquisition. Twin Ace thus retrieves its used empty
bottles, washes and uses them over and over again as containers for its products.
On the other hand, Rufina is engaged in the production, extraction, fermentation and manufacture of patis
and other food seasonings and is engaged in the buying and selling of all kinds of foods, merchandise
and products for domestic use or for export to other countries. In producing patis and other food
seasonings, Rufina uses as containers bottles owned by Twin Ace without any authority or permission
from the latter. In the process, Rufina is unduly benefited from the use of the bottles.
Upon the posting of Twin Ace of the required bond, the Regional Trial Court (RTC) of Manila, Branch 26,
issued an Order dated 5 February 1992 granting the application for the issuance of a writ of
replevin.2 Upon the implementation of the said writ, Deputy Sheriff Amado P. Sevilla was able to seize a
total of 26,241 empty bottles marked "TANDUAY DISTILLERY, INC.,"3 at the address of Rufina.
In its Answer with counter-application for a Writ of Preliminary Injunction, Rufina claimed that the marked
bottles it used as containers for its products were purchased from junk dealers; hence, it became the
owner thereof.
After hearing, the trial court rendered its decision dated 20 May 1995 the dispositive portion of which
states:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of the defendant as
follows:
a) dismissing the complaint for lack of merit;
b) dissolving the order of replevin;
c) ordering the plaintiff to return 26,241 bottles to the defendant in the place where the bottles
were seized at the expense of the plaintiff within 48 hours from receipt hereof;
d) ordering the plaintiff to pay the defendant the sum of P100,000.00 as actual damages
sustained by the latter to be taken from the replevin bond;
e) ordering the plaintiff to pay the defendant the sum of P1,000,000.00 as damages for
besmirched reputation;
f) ordering the plaintiff to pay the sum of P100,00.00 as nominal damages;
g) ordering the plaintiff to pay the defendant the sum of P50,000.00 as attorneys fee; and
h) ordering the plaintiff to pay the cost of the suit.4
Twin Ace appealed to the Court of Appeals. On 27 September 2002, the appellate court rendered its
decision5modifying the decision of the trial court as follows:
WHEREFORE, in view of all the foregoing, the appealed decision dated May 20, 1995 of Branch 26,
Regional Trial Court, Manila, in Civil Case No. 92-59862 is MODIFIED, in that the award of damages,
except nominal damages, and attorneys fees is DELETED for lack of legal and factual basis. The award
of nominal damages is reduced toP50,000.00. In all other respects, the assailed decision is AFFIRMED.
Costs against plaintiff-appellant.6
A motion for reconsideration dated 19 October 20027 filed by Twin Ace was denied in a resolution of the
Court of Appeals dated 29 September 2003.8 Hence, this Petition for Review.
For resolution are the following issues:
I.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT
RUFINA IS NOT COVERED WITHIN THE EXEMPTION PROVIDED BY SECTION 6 OF R.A.
623, AS AMENDED BY R.A. 5700.
II.
THE HONORABLE COURT OF APPEALS ERRED IN AWARDING NOMINAL DAMAGES
AGAINST PETITIONER TWIN ACE CONSIDERING THAT IT WAS THE ONE WHOSE
RIGHTS HAVE BEEN VIOLATED OR INVADED BY RESPONDENT RUFINA.
III.
THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT PETITIONER AS
OWNER OF THE SUBJECT BOTTLES IS ENTITLED TO COMPENSATION FOR ITS
UNAUTHORIZED USE BY RESPONDENT RUFINA.9
Pertinent provision of Republic Act No. 623,10 as amended by Republic Act No. 5700,11 is quoted
hereunder for clarity:
Sec. 2. It shall be unlawful for any person, without the written consent of the manufacturer, bottler, or
seller, who has successfully registered the marks of ownership in accordance with the provisions of the
next preceding section, to fill such bottles, boxes, kegs, barrels, steel cylinders, tanks, flasks,
accumulators, or other similar containers so marked or stamped, for the purpose of sale, or to sell,
dispose of, buy or traffic in, or wantonly destroy the same, whether filled or not to use the same for
drinking vessels or glasses or drain pipes, foundation pipes, for any other purpose than that registered by
the manufacturer, bottler or seller. Any violation of this section shall be punished by a fine of not more
than one thousand pesos or imprisonment of not more than one year or both.
Sec. 3. The use by any person other than the registered manufacturer, bottler or seller, without written
permission of the latter of any such bottle, cask, barrel, keg, box, steel cylinders, tanks, flasks,
accumulators, or other similar containers, or the possession thereof without written permission of the
manufacturer, by any junk dealer or dealer in casks, barrels, kegs, boxes, steel cylinders, tanks, flasks,
accumulators, or other similar containers, the same being duly marked or stamped and registered as
herein provided, shall give rise to a prima facie presumption that such use or possession is unlawful.12
Sec. 4. The criminal action provided in this Act shall in no way affect any civil action to which the
registered manufacturer, bottler, or seller, may be entitled by law or contract.
Sec. 5. No action shall be brought under this Act against any person to whom the registered
manufacturer, bottler, or seller, has transferred by way of sale, any of the containers herein referred to,
but the sale of the beverage contained in the said containers shall not include the sale of the containers
unless specifically so provided.
Sec. 6. The provisions of this Act shall not be interpreted as prohibiting the use of bottles as containers
for "sisi," "bagoong," "patis," and similar native products. 13
In sum, Twin Ace asserts that the provision under the law affords protection only to small scale
producers/manufacturers who do not have the capacity to buy new bottles for use in their products and
cannot extend to Rufina which had unequivocably admitted in its Answer14 and affirmed in the decision of
the trial court that it is engaged, on a large scale basis, in the production and manufacture of food
seasonings.
For its part, Rufina counters that the law did not really distinguish between large scale manufacturers and
small time producers.
The petition is not meritorious.
The earlier case of Twin Ace Holdings Corporation v. Court of Appeals,15 applies to the present petition.
In said case, Twin Ace filed a Complaint for Replevin against Lorenzana Food Corporation to recover
three hundred eighty thousand bottles allegedly owned by Twin Ace but detained and used by Lorenzana
Food Corporation as containers for its native products without its express permission, in violation of the
law. In that case, this Court acknowledged that the exemption under the law is unqualified as the law did
not make a distinction that it only applies to small scale industries but not to large scale manufacturers.
Thus, even if the court in said case held that the exemption is primarily meant to give protection to small
scale industries, it did not qualify that the protection therein was intended and limited only to such. The
Court held:
Petitioner itself alleges that respondent LORENZANA uses the subject 350 ml., 375 ml. and 750 ml.
bottles as containers for processed foods and other related products such as patis, toyo, bagoong,
vinegar and other food seasonings. Hence, Sec. 6 squarely applies in private respondents favor.
Obviously, the contention of TWIN ACE that the exemption refers only to criminal liability but not to civil
liability is without merit. It is inconceivable that an act specifically allowed by law, in other words legal, can
be the subject of injunctive relief and damages. Besides, the interpretation offered by petitioner defeats
the very purpose for which the exemption was provided.
Republic Act No. 623, "An Act to Regulate the Use of Duly Stamped or Marked Bottles, Boxes, Casks,
Kegs, Barrels and Other Similar Containers," as amended by RA No. 5700, was meant to protect the
intellectual property rights of the registrants of the containers and prevent unfair trade practices and fraud
on the public. However, the exemption granted in Sec. 6 thereof was deemed extremely necessary to
provide assistance and incentive to the backyard, cottage and small-scale manufacturers of indigenous
native products such as patis, sisi and toyo who do not have the capital to buy brand new bottles as
containers nor afford to pass the added cost to the majority of poor Filipinos who use the products as their
daily condiments or viands. If the contention of petitioner is accepted, i.e., to construe the exemption as to
apply to criminal liability only but not to civil liability, the very purpose for which the exemption was
granted will be defeated. None of the small-scale manufacturers of the indigenous native products
protected would possibly wish to use the registered bottles if they are vulnerable to civil suits. The effect
is a virtual elimination of the clear and unqualified exemption embodied in Sec. 6. It is worthy to note that
House Bill No. 20585 was completely rejected because it sought to expressly and directly eliminate that
which petitioner indirectly proposes to do with this petition.16 (Emphasis supplied.)
It is worth noting that Lorenzana Food Corporation which prevailed in the case filed by Twin Ace against it
is certainly not a small scale industry. Just like Rufina, Lorenzana Food Corporation also manufactures
and exports processed foods and other related products, e.g., patis, toyo, bagoong, vinegar and other
food seasonings.
It is a basic rule in statutory construction that when the law is clear and free from any doubt or ambiguity,
there is no room for construction or interpretation. As has been our consistent ruling, where the law
speaks in clear and categorical language, there is no occasion for interpretation; there is only room for
application.17
Notably, attempts to amend the protection afforded by Section 6 of Republic Act No. 623, by giving
protection only to small scale manufacturers or those with a capitalization of five hundred thousand pesos
or less (P500,000.00), through then House Bill No. 20585,18 and subsequently through House Bill No.
30400,19 proved unsuccessful as the amendment proposed in both Bills was never passed.
In view of these considerations, we find and so hold that the exemption contained in Section 6 of Rep. Act
No. 623 applies to all manufacturers of sisi, bagoong, patis and similar native products without distinction
or qualification as to whether they are small, medium or large scale.
On the issue of nominal damages, Article 2222 of the Civil Code20 states that the court may award
nominal damages in every obligation arising from any source enumerated in Article 1157, 21 or in every
other case where any property right has been invaded.22 Nominal damages are given in order that a right
of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized,
and not for the purpose of indemnifying the plaintiff for any loss suffered by him.23 In another case,24 this
Court held that when plaintiff suffers some species of injury not enough to warrant an award of actual
damages, the court may award nominal damages. Considering the foregoing, we find that the award of
nominal damages to Rufina in the amount of fifty thousand pesos (P50,000.00) is reasonable, warranted
and justified.
As to the third issue, Rule 60, Section 2(a), of the Revised Rules of Court mandates that a party praying
for the recovery of possession of personal property must show by his own affidavit or that of some other
person who personally knows the facts that he is the owner of the property claimed, particularly
describing it, or is entitled to the possession thereof.25 It must be borne in mind that replevin is a
possessory action the gist of which focuses on the right of possession that, in turn, is dependent on a
legal basis that, not infrequently, looks to the ownership of the object sought to be replevied.26 Wrongful
detention by the defendant of the properties sought in an action for replevin must be satisfactorily
established. If only a mechanistic averment thereof is offered, the writ should not be issued. 27 In this
case, Twin Ace has not shown that it is entitled to the possession of the bottles in question and
consequently there is thus no basis for the demand by it of due compensation. As stated by the court in
the earlier case of Twin Ace Holdings Corporation v. Court of Appeals28 :
Petitioner cannot seek refuge in Sec. 5 of RA No. 623 to support its claim of continuing ownership over
the subject bottles. In United States v. Manuel [7 Phil. 221 (1906)] we held that since the purchaser at his
discretion could either retain or return the bottles, the transaction must be regarded as a sale of the
bottles when the purchaser actually exercised that discretion and decided not to return them to the
vendor. We also take judicial notice of the standard practice today that the cost of the container is
included in the selling price of the product such that the buyer of liquor or any such product from any store
is not required to return the bottle nor is the liquor placed in a plastic container that possession of the
bottle is retained by the store.
WHEREFORE, premises considered, the instant petition is DENIED for lack of merit and the decision
dated 27 September 2002 and resolution dated 29 September 2003, in CA-G.R. CV No. 52852, both of
the Court of Appeals are Affirmed. SO ORDERED.
G.R. No. 111107 January 10, 1997
LOEONARDO A. PAAT, in his capacity as Officer-in-Charge (OIC), Regional Executive Director
(RED), Region 2 and JOVITO LAYUGAN, JR., in his capacity as Community Environment and
Natural Resources Officer (CENRO), both of the Department of Environment and Natural
Resources (DENR), petitioners, vs. COURT OF APPEALS, HON. RICARDO A. BACULI in his
capacity as Presiding Judge of Branch 2, Regional Trial Court at Tuguegarao, Cagayan, and
SPOUSES BIENVENIDO and VICTORIA DE GUZMAN, respondents.
Without violating the principle of exhaustion of administrative remedies, may an action
for replevin prosper to recover a movable property which is the subject matter of an administrative
forfeiture proceeding in the Department of Environment and Natural Resources pursuant to Section 68-A
of P.D. 705, as amended, entitled The Revised Forestry Code of the Philippines?
Are the Secretary of DENR and his representatives empowered to confiscate and forfeit conveyances
used in transporting illegal forest products in favor of the government?
These are two fundamental questions presented before us for our resolution.
The controversy on hand had its incipiency on May 19, 1989 when the truck of private respondent Victoria
de Guzman while on its way to Bulacan from San Jose, Baggao, Cagayan, was seized by the Department
of Environment and Natural Resources (DENR, for brevity) personnel in Aritao, Nueva Vizcaya because
the driver could not produce the required documents for the forest products found concealed in the truck.
Petitioner Jovito Layugan, the Community Environment and Natural Resources Officer (CENRO) in
Aritao, Cagayan, issued on May 23, 1989 an order of confiscation of the truck and gave the owner thereof
fifteen (15) days within which to submit an explanation why the truck should not be forfeited. Private
respondents, however, failed to submit the required explanation. On June 22, 1989, 1 Regional Executive
Director Rogelio Baggayan of DENR sustained petitioner Layugan's action of confiscation and ordered
the forfeiture of the truck invoking Section 68-A of Presidential Decree No. 705 as amended by Executive
Order No. 277. Private respondents filed a letter of reconsideration dated June 28, 1989 of the June 22,
1989 order of Executive Director Baggayan, which was, however, denied in a subsequent order of July
12, 1989. 2Subsequently, the case was brought by the petitioners to the Secretary of DENR pursuant to
private respondents' statement in their letter dated June 28, 1989 that in case their letter for
reconsideration would be denied then "this letter should be considered as an appeal to the
Secretary." 3 Pending resolution however of the appeal, a suit for replevin, docketed as Civil Case 4031,
was filed by the private respondents against petitioner Layugan and Executive Director Baggayan 4 with
the Regional Trial Court, Branch 2 of Cagayan, 5 which issued a writ ordering the return of the truck to
private respondents. 6Petitioner Layugan and Executive Director Baggayan filed a motion to dismiss with
the trial court contending, inter alia, that private respondents had no cause of action for their failure to
exhaust administrative remedies. The trial court denied the motion to dismiss in an order dated December
28, 1989. 7 Their motion for reconsideration having been likewise denied, a petition for certiorari was filed
by the petitioners with the respondent Court of Appeals which sustained the trial court's order ruling that
the question involved is purely a legal question. 8 Hence, this present petition, 9 with prayer for temporary
restraining order and/or preliminary injunction, seeking to reverse the decision of the respondent Court of
Appeals was filed by the petitioners on September 9, 1993. By virtue of the Resolution dated September
27, 1993, 10 the prayer for the issuance of temporary restraining order of petitioners was granted by this
Court.
Invoking the doctrine of exhaustion of administrative remedies, petitioners aver that the trial court could
not legally entertain the suit for replevin because the truck was under administrative seizure proceedings
pursuant to Section 68-A of P.D. 705, as amended by E.O. 277. Private respondents, on the other hand,
would seek to avoid the operation of this principle asserting that the instant case falls within the exception
of the doctrine upon the justification that (1) due process was violated because they were not given the
chance to be heard, and (2) the seizure and forfeiture was unlawful on the grounds: (a) that the Secretary
of DENR and his representatives have no authority to confiscate and forfeit conveyances utilized in
transporting illegal forest products, and (b) that the truck as admitted by petitioners was not used in the
commission of the crime.
Upon a thorough and delicate scrutiny of the records and relevant jurisprudence on the matter, we are of
the opinion that the plea of petitioners for reversal is in order.
This Court in a long line of cases has consistently held that before a party is allowed to seek the
intervention of the court, it is a pre-condition that he should have availed of all the means of administrative
processes afforded him. Hence, if a remedy within the administrative machinery can still be resorted to by
giving the administrative officer concerned every opportunity to decide on a matter that comes within his
jurisdiction then such remedy should be exhausted first before court's judicial power can be sought, The
premature invocation of court's intervention is fatal to one's cause of action. 11 Accordingly, absent any
finding of waiver or estoppel the case is susceptible of dismissal for lack of cause of
action. 12 This doctrine of exhaustion of administrative remedies was not without its practical and legal
reasons, for one thing, availment of administrative remedy entails lesser expenses and provides for a
speedier disposition of controversies. It is no less true to state that the courts of justice for reasons of
comity and convenience will shy away from a dispute until the system of administrative redress has been
completed and complied with so as to give the administrative agency concerned every opportunity to
correct its error and to dispose of the case. However, we are not amiss to reiterate that the principle of
exhaustion of administrative remedies as tested by a battery of cases is not an ironclad rule. This doctrine
is a relative one and its flexibility is called upon by the peculiarity and uniqueness of the factual and
circumstantial settings of a case. Hence, it is disregarded (1) when there is a violation of due
process, 13 (2) when the issue involved is purely a legal question, 14 (3) when the administrative action is
patently illegal amounting to lack or excess of jurisdiction, 15 (4) when there is estoppel on the part of the
administrative agency concerned, 16 (5) when there is irreparable injury, 17 (6) when the respondent is a
department secretary whose acts as an alter ego of the President bears the implied and assumed
approval of the latter, 18(7) when to require exhaustion of administrative remedies would be
unreasonable, 19 (8) when it would amount to a nullification of a claim, 20 (9) when the subject matter is a
private land in land case proceedings, 21 (10) when the rule does not provide a plain, speedy and
adequate remedy, and (11) when there are circumstances indicating the urgency of judicial
intervention. 22
In the case at bar, there is no question that the controversy was pending before the Secretary of DENR
when it was forwarded to him following the denial by the petitioners of the motion for reconsideration of
private respondents through the order of July 12, 1989. In their letter of reconsideration dated June 28,
1989, 23 private respondents clearly recognize the presence of an administrative forum to which they seek
to avail, as they did avail, in the resolution of their case. The letter, reads, thus:
xxx xxx xxx
If this motion for reconsideration does not merit your favorable action, then this
letter should be considered as an appeal to the
Secretary. 24
It was easy to perceive then that the private respondents looked up to the Secretary for the review and
disposition of their case. By appealing to him, they acknowledged the existence of an adequate and plain
remedy still available and open to them in the ordinary course of the law. Thus, they cannot now, without
violating the principle of exhaustion of administrative remedies, seek court's intervention by filing an
action for replevin for the grant of their relief during the pendency of an administrative proceedings.
Moreover, it is important to point out that the enforcement of forestry laws, rules and regulations and the
protection, development and management of forest lands fall within the primary and special
responsibilities of the Department of Environment and Natural Resources. By the very nature of its
function, the DENR should be given a free hand unperturbed by judicial intrusion to determine a
controversy which is well within its jurisdiction. The assumption by the trial court, therefore, of the replevin
suit filed by private respondents constitutes an unjustified encroachment into the domain of the
administrative agency's prerogative. The doctrine of primary jurisdiction does not warrant a court to
arrogate unto itself the authority to resolve a controversy the jurisdiction over which is initially lodged with
an administrative body of special competence. 25 In Felipe Ismael, Jr. and Co. vs. Deputy Executive
Secretary, 26 which was reiterated in the recent case of Concerned Officials of MWSS vs. Vasquez, 27 this
Court held:
Thus, while the administration grapples with the complex and multifarious problems
caused by unbriddled exploitation of these resources, the judiciary will stand clear.
A long line of cases establish the basic rule that the courts will not interfere in
matters which are addressed to the sound discretion of government agencies
entrusted with the regulation of activities coming under the special technical
knowledge and training of such agencies.
To sustain the claim of private respondents would in effect bring the instant controversy beyond the pale
of the principle of exhaustion of administrative remedies and fall within the ambit of excepted cases
heretofore stated. However, considering the circumstances prevailing in this case, we can not but rule out
these assertions of private respondents to be without merit. First, they argued that there was violation of
due process because they did not receive the May 23, 1989 order of confiscation of petitioner Layugan.
This contention has no leg to stand on. Due process does not necessarily mean or require a hearing, but
simply an opportunity or right to be heard. 28 One may be heard, not solely by verbal presentation but
also, and perhaps many times more creditably and practicable than oral argument, through
pleadings. 29 In administrative proceedings moreover, technical rules of procedure and evidence are not
strictly applied; administrative process cannot be fully equated with due process in its strict judicial
sense. 30 Indeed, deprivation of due process cannot be successfully invoked where a party was given the
chance to be heard on his motion for reconsideration, 31 as in the instant case, when private respondents
were undisputedly given the opportunity to present their side when they filed a letter of reconsideration
dated June 28, 1989 which was, however, denied in an order of July 12, 1989 of Executive Director
Baggayan, In Navarro III vs. Damasco, 32 we ruled that :
The essence of due process is simply an opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain one's side or an opportunity to seek a reconsideration of the
action or ruling complained of. A formal or trial type hearing is not at all times and in all instances
essential. The requirements are satisfied when the parties are afforded fair and reasonable
opportunity to explain their side of the controversy at hand. What is frowned upon is the absolute
lack of notice or hearing.
Second, private respondents imputed the patent illegality of seizure and forfeiture of the truck because
the administrative officers of the DENR allegedly have no power to perform these acts under the law.
They insisted that only the court is authorized to confiscate and forfeit conveyances used in transporting
illegal forest products as can be gleaned from the second paragraph of Section 68 of P.D. 705, as
amended by E.O. 277. The pertinent provision reads as follows:
Sec. 68. . . .
xxx xxx xxx
The court shall further order the confiscation in favor of the government of the timber or any forest
products cut, gathered, collected, removed, or possessed, as well as
the machinery, equipments,implements and tools illegaly [sic] used in the area where the timber or
forest products are found. (Emphasis ours)
A reading, however, of the law persuades us not to go along with private respondents' thinking not only
because the aforequoted provision apparently does not mention nor include "conveyances" that can be
the subject of confiscation by the courts, but to a large extent, due to the fact that private respondents'
interpretation of the subject provision unduly restricts the clear intention of the law and inevitably reduces
the other provision of Section 68-A, which is quoted herein below:
Sec. 68-A. Administrative Authority of the Department or His Duly Authorized
Representative To Order Confiscation. In all cases of violation of this Code or other forest laws,
rules and regulations, theDepartment Head or his duly authorized representative, may order the
confiscation of any forest products illegally cut, gathered, removed, or possessed or abandoned,
and all conveyances used either by land, water or air in the commission of the offense and to
dispose of the same in accordance with pertinent laws, regulations and policies on the matter.
(Emphasis ours)
It is, thus, clear from the foregoing provision that the Secretary and his duly authorized representatives
are given the authority to confiscate and forfeit any conveyances utilized in violating the Code or other
forest laws, rules and regulations. The phrase "to dispose of the same" is broad enough to cover the act
of forfeiting conveyances in favor of the government. The only limitation is that it should be made "in
accordance with pertinent laws, regulations or policies on the matter." In the construction of statutes, it
must be read in such a way as to give effect to the purpose projected in the statute. 33 Statutes should be
construed in the light of the object to be achieved and the evil or mischief to be suppressed, and they
should be given such construction as will advance the object, suppress the mischief, and secure the
benefits intended. 34 In this wise, the observation of the Solicitor General is significant, thus:
But precisely because of the need to make forestry laws "more responsive to present situations
and realities" and in view of the "urgency to conserve the remaining resources of the country," that
the government opted to add Section 68-A. This amendatory provision is an administrative
remedy totally separate and distinct from criminal proceedings. More than anything else, it is
intended to supplant the inadequacies that characterize enforcement of forestry laws through
criminal actions. The preamble of EO 277-the law that added Section 68-A to PD 705-is most
revealing:
"WHEREAS, there is an urgency to conserve the remaining forest resources of the
country for the benefit and welfare of the present and future generations of Filipinos;
WHEREAS, our forest resources may be effectively conserved and protected through the
vigilant enforcement and implementation of our forestry laws, rules and regulations;
WHEREAS, the implementation of our forestry laws suffers from technical difficulties, due
to certain inadequacies in the penal provisions of the Revised Forestry Code of the
Philippines; and
WHEREAS, to overcome this difficulties, there is a need to penalize certain acts more
responsive to present situations and realities;"
It is interesting to note that Section 68-A is a new provision authorizing the DENR to confiscate, not
only "conveyances," but forest products as well. On the other hand, confiscation of forest products
by the "court" in a criminal action has long been provided for in Section 68. If as private
respondents insist, the power on confiscation cannot be exercised except only through the court
under Section 68, then Section 68-A would have no Purpose at all. Simply put, Section 68-A would
not have provided any solution to the problem perceived in EO 277, supra. 35
Private respondents, likewise, contend that the seizure was illegal because the petitioners themselves
admitted in the Order dated July 12, 1989 of Executive Director Baggayan that the truck of private
respondents was not used in the commission of the crime. This order, a copy of which was given to and
received by the counsel of private respondents, reads in part, viz.:
. . . while it is true that the truck of your client was not used by her in the
commission of the crime, we uphold your claim that the truck owner is not liable for
the crime and in no case could a criminal case be filed against her as provided
under Article 309 and 310 of the Revised Penal Code. . . 36
We observed that private respondents misread the content of the aforestated order and obviously
misinterpreted the intention of petitioners. What is contemplated by the petitioners when they stated that
the truck "was not used in the commission of the crime" is that it was not used in the commission of the
crime of theft, hence, in no case can a criminal action be filed against the owner thereof for violation of
Article 309 and 310 of the Revised Penal Code. Petitioners did not eliminate the possibility that the truck
was being used in the commission of another crime, that is, the breach of Section 68 of P.D. 705 as
amended by E.O. 277. In the same order of July 12, 1989, petitioners pointed out:
. . . However, under Section 68 of P.D. 705 as amended and further amended by
Executive Order No. 277 specifically provides for the confiscation of the
conveyance used in the transport of forest products not covered by the required
legal documents. She may not have been involved in the cutting and gathering of
the product in question but the fact that she accepted the goods for a fee or fare the
same is therefor liable. . . 37
Private respondents, however, contended that there is no crime defined and punishable under Section 68
other than qualified theft, so that, when petitioners admitted in the July 12, 1989 order that private
respondents could not be charged for theft as provided for under Articles 309 and 310 of the Revised
Penal Code, then necessarily private respondents could not have committed an act constituting a crime
under Section 68. We disagree. For clarity, the provision of Section 68 of P.D. 705 before its amendment
by E.O. 277 and the provision of Section 1 of E.O. No. 277 amending the aforementioned Section 68 are
reproduced herein, thus:
Sec. 68. Cutting, gathering and/or collecting timber or other products without license. Any person
who shall cut, gather, collect, or remove timber or other forest products from any forest land, or timber
from alienable and disposable public lands, or from private lands, without any authority under a
license agreement, lease, license or permit, shall be guilty of qualified theft as defined and punished
under Articles 309 and 310 of the Revised Penal Code . . . (Emphasis ours; Section 68, P.D. 705
before its amendment by E.O. 277)
Sec. 1. Section 68 of Presidential Decree No. 705, as amended, is hereby amended to read as
follows:
Sec. 68. Cutting, gathering and/or collecting timber or other forest products without license.
Any person who shall cut, gather, collect, remove timber or other forest products from any forest
land, or timber from alienable or disposable public land, or from private land, without any
authority, or possess timber or other forest products without the legal documents as required
under existing forest laws and regulations, shall be punished with the penalties imposed under
Articles 309 and 310 of the Revised Penal Code . . . (Emphasis ours; Section 1, E.O. No. 277
amending Section 68, P.D. 705 as amended)
With the introduction of Executive Order No. 277 amending Section 68 of P.D. 705, the act of cutting,
gathering, collecting, removing, or possessing forest products without authority constitutes a distinct
offense independent now from the crime of theft under Articles 309 and 310 of the Revised Penal Code,
but the penalty to be imposed is that provided for under Article 309 and 310 of the Revised Penal Code.
This is clear from the language of Executive Order No. 277 when it eliminated the phrase "shall be guilty
of qualified theft as defined and punished under Articles 309 and 310 of the Revised Penal Code" and
inserted the words "shall be punished with the penalties imposed under Article 309 and 310 of the
Revised Penal Code". When the statute is clear and explicit, there is hardly room for any extended court
ratiocination or rationalization of the law. 38
From the foregoing disquisition, it is clear that a suit for replevin can not be sustained against the
petitioners for the subject truck taken and retained by them for administrative forfeiture proceedings in
pursuant to Section 68-A of the P.D. 705, as amended. Dismissal of the replevin suit for lack of cause of
action in view of the private respondents' failure to exhaust administrative remedies should have been the
proper course of action by the lower court instead of assuming jurisdiction over the case and
consequently issuing the writ ordering the return of the truck. Exhaustion of the remedies in the
administrative forum, being a condition precedent prior to one's recourse to the courts and more
importantly, being an element of private respondents' right of action, is too significant to be waylaid by the
lower court.
It is worth stressing at this point, that a suit for replevin is founded solely on the claim that the defendant
wrongfully withholds the property sought to be recovered. It lies to recover possession of personal
chattels that are unlawfully detained. 39 "To detain" is defined as to mean "to hold or keep in
custody," 40 and it has been held that there is tortious taking whenever there is an unlawful meddling with
the property, or an exercise or claim of dominion over it, without any pretense of authority or right; this,
without manual seizing of the property is sufficient. 41 Under the Rules of Court, it is indispensable in
replevin proceeding that the plaintiff must show by his own affidavit that he is entitled to the possession of
property, that the property is wrongfully detained by the defendant, alleging the cause of detention, that
the same has not been taken for tax assessment, or seized under execution, or attachment, or if so
seized, that it is exempt from such seizure, and the actual value of the property. 42 Private respondents
miserably failed to convince this Court that a wrongful detention of the subject truck obtains in the instant
case. It should be noted that the truck was seized by the petitioners because it was transporting forest
products without the required permit of the DENR in manifest contravention of Section 68 of P.D. 705 as
amended by E.O 277. Section 68-A of P.D. 705, as amended, unquestionably warrants the confiscation
as well as the disposition by the Secretary of DENR or his duly authorized representatives of the
conveyances used in violating the provision of forestry laws. Evidently, the continued possession or
detention of the truck by the petitioners for administrative forfeiture proceeding is legally permissible,
hence, no wrongful detention exists in the case at bar.
Moreover, the suit for replevin is never intended as a procedural tool to question the orders of
confiscation and forfeiture issued by the DENR in pursuance to the authority given under P.D. 705, as
amended. Section 8 of the said law is explicit that actions taken by the Director of the Bureau of Forest
Development concerning the enforcement of the provisions of the said law are subject to review by the
Secretary of DENR and that courts may not review the decisions of the Secretary except through a
special civil action for certiorari or prohibition. It reads:
Sec. 8. REVIEW All actions and decisions of the Director are subject to review, motu propio or
upon appeal of any person aggrieved thereby, by the Department Head whose decision shall be final
and executory after the lapse of thirty (30) days from the receipt of the aggrieved party of said
decision, unless appealed to the President in accordance with Executive Order No. 19, Series of
1966. The Decision of the Department Head may not be reviewed by the courts except through a
special civil action for certiorari or prohibition.
WHEREFORE, the Petition is GRANTED; the Decision of the respondent Court of Appeals dated October
16, 1991 and its Resolution dated July 14, 1992 are hereby SET ASIDE AND REVERSED; the
Restraining Order promulgated on September 27, 1993 is hereby made permanent; and the Secretary of
DENR is directed to resolve the controversy with utmost dispatch. SO ORDERED.
G.R. No. 93540 December 13, 1999
FULGENCIO S. FACTORAN, JR., Secretary, Department of Environment and Natural Resources,
VICENTE A. ROBLES and NESTOR GAPUZAN, petitioners, vs.
COURT OF APPEALS (Third Division), Hon. BENIGNO T. DAYAW, as, Judge, Regional Trial Court
of Quezon City, Branch 80, JESUS SY and LILY FRANCISCO UY, respondents.
Before us is a petition for review on certiorari of the Decision and Resolution of the Court of Appeals
dated March 30, 1990 and May 18, 1990, respectively, dismissing petitioners' charge that Honorable
Benigno T. Dayaw, Presiding Judge of Branch 80 of the Regional Trial Court (RTC) of Quezon City,
committed grave abuse of discretion in ordering them to deliver to private respondents the six-wheeler
truck and its cargo, some 4,000 board feet of narra lumber which were confiscated by the Department of
Environment and Natural Resources (DENR) and forfeited in favor of the government. 1
The antecedent facts:
On August 9, 1988, two (2) police officers of the Marikina Police Station, Sub-Station III, intercepted a six-
wheeler truck, with Plate No. NJT-881, carrying 4,000 board feet of narra lumber as it was cruising along
the Marcos Highway. They apprehended the truck driver, private respondent Jesus Sy, and brought the
truck and its cargo to the Personnel Investigation Committee/Special Actions and Investigation Division
(PIC/SAID) of the DENR Office in Quezon City. There, petitioner Atty. Vecente Robies of the PIC/SAID
investigated them, and discovered the following discrepancies in the documentaion of the narra lumber: 2
a. What were declared in the documents (Certificate of Timber Origin, Auxiliary Invoices and various
Certifications) were narra flitches, while the cargo of the truck consisted of narra lumber;
b. As appearing in the documents, the Plate Numbers of the truck supposed to carry the forest
products bear the numbers BAX-404, PEC-492 OR NSN-267, while the Plate Number of the truck
apprehended is NVT-881;
c. Considering that the cargo is lumber, the transport should have been accompanied by a
Certificate of Lumber Origin, scale sheet of said lumber and not by a Certificate of Timber Origin,
which merely covers only transport of logs and flitches;
d. The log Sale Purchase Agreement presented is between DSM Golden Cup International as the
seller and Bonamy Enterprises as the buyer/consignee and not with Lily Francisco Lumber and
Hardware. 3
which are in violation of Bureau of Forestry Development (BFD) Circular No. 10. The said BFD Circular
requires possession or transportation of lumber to be supported by the following documents: (1)
Certificate of Lumber Origin (CLO) which shall be issued only be the District Forester, or in his absence,
the Assistant District Forester; (2) Sales Invoice; (3) Delivery Receipt; and (4) Tally Sheets. 4 Such
omission is punishable under Sec. 68 of Presidential Decree (P.D.) No. 705 otherwise known as the
Revised Forestry Code. 5 Thus, petitioner Atty. Robles issued a temporary seizure order and seizure
receipt for the narra lumber and the six-wheeler truck. 6
On January 20, 1989, petitioner Fulgencio S. Factoran, then Secretary of Environment and Natural
Resources (hereinafter referred to as petitioner Secretary) issued an order for the confiscation of the
narra lumber and the six- wheeler truck. 7
Private respondents neither asked for reconsideration of nor appealed, the said order to the Office of the
President. Consequently, the confiscated narra lumber and six-wheeler truck were forfeited in favor of the
government. They were subsequently advertised to be sold at public auction on March 20, 1989. 8
On March 17, 1989, private respondents filed a complaint with prayer for the issuance of writs of replevin
and preliminary injunction and/or temporary restraining order for the recovery of the confiscated lumber
and six-wheeler truck, and to enjoin the planned auction sale of the subject narra lumber,
respectively. 9 Said complaint was docketed as Civil Case No. Q-89-2045 and raffled to Branch 80 of the
RTC of Quezon City.
On the same day, the trial court issued an Order directing petitioners to desist from proceeding with the
planned auction sale and setting the hearing for the issuance of the writ of preliminary injunction on
March 27, 1989. 10
On March 20, 1989, the scheduled date of the auction sale, private respondents filed an Ex-Parte Motion
for Release and Return of Goods and Documents (Replevin) supported by an Affidavit for Issuance of
Writ of Replevin and Preliminary Injunction and a Replevin Bond in the amount of P180,000.00. 11 The
trial court granted the writ of replevin on the same day and directed the petitioners "to deliver the . . .
[n]arra lumber, original documents and truck with plate no. NJT 881 to the custody of the plaintiffs and/or
their representative . . . . 12
On March 22, 1989, the trial court issued a writ of seizure. However, petitioners refused to comply
therewith. 13David G. Brodett, Sheriff of Branch 80 of the RTC of Quezon City (hereinafter referred to as
the Sheriff) reported that petitioners prevented him from removing the subject properties from the DENR
Compound and transferring them to the Mobil Unit Compound of the Quezon City Police Force. To avoid
any unwarranted confrontation between them, he just agreed to a constructive possession of the
properties in question. 14
In the afternoon of the same day, petitioners filed a Manifestation stating their intention to file a
counterbond under Rule 60 of the Rules of Court to stay the execution of the writ of seizure and to post a
cash bond in the amount of P180,000.00. But the trial court did not oblige petitioners for they failed to
serve a copy of the Manifestation on private respondents. Petitioners then immediately made the required
service and tendered the cash counterbond in the amount of P180,000.00, but it was refused, petitioners'
Manifestation having already been set for hearing on March 30, 1989. 15
On March 27, 1989, petitioners made another attempt to post a counterbond which was, however, denied
for the same reason. 16
On the same day, private respondents filed a motion to declare petitioners in contempt for disobeying the
writ of seizure. 17 The trial court gave petitioners twenty-four (24) hours to answer the motion. Hearing
thereon was scheduled on March 30, 1989.
However, on March 29, 1989, petitioners filed with the Court of Appeals a Petition for Certiorari,
Prohibition and/or Mandamus to annul the Orders of the trial court dated March 20, 1989 and March 27,
1989. 18
On March 30, 1989, the Court of Appeals granted petitioners temporary relief in the form of a temporary
restraining order (TRO).
On September 11, 1989, the Court of Appeals converted the TRO into a writ of preliminary injunction
upon filing by petitioners of a bond in the amount of P180,000.00. 19
However, on March 30, 1990, the Court of Appeals lifted the writ of preliminary injunction and dismissed
the petition. It declared that as the complaint for replevin filed by private respondents complied with the
requirements of an affidavit and bond under Secs. 1 and 2 of Rule 60 of the Revised Rules of court,
issuance of the writ of replevin was mandatory. 20
As for the contempt charges against petitioners, the Court of Appeals believed the same were sufficiently
based on a written charge by private respondents and the report submitted by the Sheriff. 21
On April 25, 1990, petitioners filed a motion for reconsideration of the foregoing decision. However, that
motion was denied by the Court of Appeals in its Resolution dated May 18, 1990. 22
Hence this petition.
On the one hand, petitioners contend, thus:
(1) Confiscated lumber cannot be subject of replevin. 23
(2) Petitioners not compelled to criminally prosecute private respondents but may opt only to
confiscate lumber. 24
(3) Private respondent charged criminally in court. 25 and
(4) Writ of Replevin issued in contravention of PD #605. 26
On the other hand, private respondents argue that:
(1) The respondent Judge had jurisdiction to take cognizance of the complaint for recovery of
personal property and, therefore, had jurisdiction to issue the necessary orders in connection
therewith. 27
(2) The issuance of the order for the delivery of personal property upon application, affidavit and
filing of replevin bond by the plaintiff is mandatory and not discretionary, hence, no abuse of
discretion can be committed by the trial court in the issuance thereof. 28
(3) The Order of March 20, 1989 was in accordance with Section 4, Rule 60 of the Rules of Court
and is, therefore, valid. 29
(4) The private respondents have not been proven to have violated Section 68 of the Revised
Forestry Code. 30
(5) The petitioners do not have the authority to keep private respondents' property for an indefinite
period, more so, to dispose of the same without notice and hearing or without due process. 31
(6) Contrary to the allegation of petitioners, no formal investigation was conducted by the PIC with
respect to the subject lumber in this
case. 32
(7) The alleged Order dated January 20, 1989 of the petitioner Secretary Fulgencio Factoran, Jr. of
the DENR is not valid and does not make the issuance of the order of replevin illegal. 33 and
(8) The subject properties were not in custody of the law and may be replevied. 34
At the outset we observe that herein respondents never appealed the confiscation order of petitioner
Secretary to the Office of the President as provided for in Sec. 8 of P.D. No. 705 which reads:
 All actions and decisions of the Director are subject to review, motu propio or upon appeal of
any person aggrieved thereby, by the Department Head whose decision shall be final and
executory after the lapse of thirty (30) days from receipt by the aggrieved party of said decision
unless appealed to the President . . . . The decision of the Department Head may not be
reviewed by the courts except through a special civil action for certiorari and prohibition.
The doctrine of exhaustion of administrative remedies is basic. Courts, for reasons of law, comity and
convenience, should not entertain suits unless the available administrative remedies have first been
resorted to and the proper authorities have been given an appropriate opportunity to act and correct
their alleged errors, if any, committed in the administrative forum. 35 As to the application of this
doctrine in cases involving violations of P.D. No. 705, our ruling in Paat v. Court of Appeals, is
apropos:
Moreover, it is important to point out that the enforcement of forestry laws, rules and regulations
and the protection, development and management of forest lands fall within the primary and
special responsibilities of the Department of Environment and Natural Resources. By the very
nature of its function, the DENR should be given a free hand unperturbed by judicial intrusion to
determine a controversy which is well within its jurisdiction. The assumption by the trial court,
therefore, of the replevin suit filed by the private respondents constitutes an encroachment into
the domain of the administrative agency's prerogative. The doctrine of primary jurisdiction does
not warrant a court to arrogate unto itself the authority to resolve a controversy the jurisdiction
over which is initially lodged with an administrative body of special competence. In Felipe
Ismael, Jr. and Co. vs. Deputy Executive Secretary, which was reiterated in the recent case
of Concerned Officials of MWSS vs. Vasquez, this Court held:
Thus, while the administration grapples with the complex and multifarious problems
caused by unbridled exploitation of these resources, the judiciary will stand clear. A long
line of cases establish the basic rule that the courts will not interfere in matters which are
addressed to the sound discretion of government agencies entrusted with the regulation of
activities coming under the special technical knowledge and training of such agencies. 36
However, petitioners did not file a motion to dismiss based on the ground of non-exhaustion of
administrative remedies. Thus, it is deemed waived. 37
Nonetheless, the petition is impressed with merit.
First. A writ of replevin does not just issue as a matter of course upon the applicant's filing of a bond and
affidavit, as the Court of Appeals has wrongly put it. The mere filing of an affidavit, sans allegations
therein that satisfy the requirements of Sec. 2, Rule 60 of the Revised Rules of Court, cannot justify the
issuance of a writ of replevin. Said provision reads:
Affidavit and bond. Upon applying for such order the plaintiff must show by his
own affidavit or that of some other person who personally knows the facts:
(a) That the plaintiff is the owner of the property claimed, particularly describing it,
or entitled to the possession thereof;
(b) That the property is wrongfully detained by the defendant, alleging the cause of
detention thereof to his best knowledge, information, and belief;
(c) That it has not been taken for a tax assessment or fine pursuant to law, or
seized under an execution, or an attachment against the property of the plaintiff, or,
if so seized, that it is exempt from such seizure; and
(d) The actual value of the property.
xxx xxx xxx
Wrongful detention by the defendant of the properties sought in an action for replevin must be
satisfactorily established. If only a mechanistic averment thereof is offered, the writ should not be issued.
In the case at bar, the subject narra lumber and six-wheeler truck were confiscated by petitioner
Secretary pursuant to Section 68-A of P.D. No. 705, as amended by Executive Order (E.O.) No. 277, to
wit:
Sec. 68-A. Administrative Authority of the Department Head or His Duly Authorized
Representative to Order Confiscation. In all cases of violations of this Code or
other forest laws, rules and regulations, the Department Head or his duly authorized
representative, may order the confiscation of any forest products illegally
cut, gathered, removed, or possessed or abandoned, and all conveyances used
either by land, water, or air in the commission of the offense and to dispose of the
same in accordance with pertinent laws, regulations or policies on the matter. 38
As the petitioner Secretary's administrative authority to confiscate is clearly provided by law,
the taking of the subject properties is not wrongful and does not warrant the issuance of a writ
of replevin prayed for by private respondents.
Second. Issuance of the confiscation order by petitioner Secretary was a valid exercise of his power
under Sec. 68-A of P.D. No. 705. By virtue of said order, the narra lumber and six-wheeler truck of private
respondents were held incustodia legis and hence, beyond the reach of replevin.
Property lawfully taken by virtue of legal process is deemed to be in custodia legis. 39 When a thing is in
official custody of a judicial or executive officer in pursuance of his execution of a legal writ, replevin will
not lie to recover it. 40Otherwise, there would be interference with the possession before the function of
law had been performed as to the process under which the property was taken. 41 So basic is this
doctrine that it found inclusion in the 1997 amendments introduced to the Rules of Civil Procedure. Thus,
Sec. 2(c), Rule 60 of the 1997 Rules of Civil Procedure provides that:
Affidavit and bond. Upon applying for such order the plaintiff must show by his
own affidavit or that of some other person who personally knows the facts:
xxx xxx xxx
(c) That the property has not been distrained or taken for a tax assessment or fine
pursuant to law, or seized under a writ of execution, or preliminary attachment or
otherwise placed under custodia legis, or if so seized, that it is exempt from such
seizure or custody; . . .
xxx xxx xxx. 42
Third. Petitioner Secretary's authority to confiscate forest products under Sec. 68-A of P.D. No. 705 is
distinct from and independent of the confiscation of forest products in a criminal action provided for in
Section 68 of P.D. No. 705. Thus, in Paat, we held that:
. . . precisely because of the need to make forestry laws "more responsive to
present situations and realities" and in view of the "urgency to conserve the
remaining resources of the country," that the government opted to add Section 68-
A. This amendatory provision is an administrative remedy totally separate and
distinct from criminal proceedings. . . . . The preamble of EO 277 that added
Section 68-A to PD 705- is most revealing:
WHEREAS, there is an urgency to conserve the remaining
forest resources of the country for the benefit and welfare of
the present and future generations of Filipinos;
 WHEREAS, our forest resources may be effectively
conserved and protected through the vigilant enforcement and
implementation of our forestry laws, rules and regulations;
WHEREAS, the implementation of our forestry laws suffers
from technical difficulties, due to certain inadequacies in the
Penal provisions of the Revised Forestry Code of the
Philippines; and
WHEREAS, to overcome this [sic] difficulties, there is a need
to penalize certain acts more responsive to present situations
and realities;
It is interesting to note that Section 68-A is a new provision authorizing the DENR to
confiscate, not only "conveyances" but forest products as well. On the other hand,
confiscation of forest products by the "court" in a criminal action has long been
provided for in Section 68. If as private respondents insist, the power of confiscation
cannot be exercised except only through the court under Section 68, then Section
68-A would have no purpose at all. Simply put, Section 68-A would not have
provided any solution to the problem perceived in EO 277, . . . . 43
Sec. 68-A was added precisely to supplant the inadequacies and supplement criminal
enforcement of forestry laws.
Fourth. Sec. 80 of P.D. No. 705 which requires delivery of the seized forest products within six (6) hours
from the time of the seizure to the appropriate official designated by law to conduct preliminary
investigations applies only to criminal prosecutions provided for in Sec. 68, and not to administrative
confiscation provided for in Section 68-A.
Sec. 80 of P.D. No. 705 provides:
Sec. 80. Arrest; Institution of criminal actions. A forest officer or employee of the
Bureau shall arrest even without a warrant any person who has committed or is
committing in his presence any of the offenses defined in this Chapter. He shall also
seize and confiscate, in favor of the Government, the tools and equipment used in
committing the offense, and the forest products cut, gathered or taken by the
offender in the process of committing the offense. The arresting officer or employee
shall thereafter deliver within six (6) hours from the time of arrest and seizure, the
offender and the confiscated forest products, tools and equipment to, and file the
proper complaint with, the appropriate official designated by law to conduct
preliminary investigations and file informations in court.
xxx xxx xxx
The title of Sec. 80 "Arrest; Institution of Criminal Actions" bespeaks this intendment of
the law. The fact, too, that Secs. 68 and 80 were co-existing prior to the introduction of Sec.
68-A, proves that Sec. 80 applies to the criminal prosecutions subject of Sec. 68 and not to the
administrative confiscation subject of Sec. 68-A. Sec. 68-A, therefore, should not be
interpreted in relation to Sec. 80 as to require that criminal charges be filed with and seized
forest products be immediately delivered to, the fiscal in case of administrative confiscation, for
this renders nugatory the purpose sought to be achieved thereby. Statutes should always be
construed in the light of the object to be achieved and the evil or mischief to be suppressed,
and they should be given such interpretation as will advance the object, suppress the mischief,
and secure the benefits intended. 44
Fifth. Nothing in the records supports private respondents' allegation that their right to due process was
violated as no investigation was conducted prior to the confiscation of their properties.
On the contrary, by private respondents' own admission, private respondent Sy who drove the six-
wheeler truck was properly investigated by petitioner Atty. Robles at the PIC/SAID Office of the DENR.
Thereafter, private respondent Sy and his witnesses were given full opportunity to explain the deficiencies
in the documents. 45 Private respondents categorically stated that they made a "continuous and almost
daily follow-up and plea . . . with the PIC for the return of the truck and lumber . . . ." 46 Finally in a letter
dated December 30, 1989, private respondent Lily Francisco Uy requested petitioner Secretary for
"immediate resolution and release of the impounded narra sawn lumber." 47
Undoubtedly, private respondents were afforded an opportunity to be heard before the order of
confiscation was issued. There was no formal or trial type hearing but the same is not, in all instances,
essential in administrative proceedings. It is settled that due process is satisfied when the parties are
afforded fair and reasonable opportunity to explain their side of the controversy or an opportunity to move
for a reconsideration of the action or ruling complained of. 48
Moreover, respondents claim that the order of confiscation was antedated and not the product of the
investigation supposedly conducted by the PIC of the DENR. However, they proffer no proof to support
that allegation. On the other hand, there is the legal presumption that official duty has been regularly
performed. The presumption of regularity in the performance of official duties is even particularly strong
with respect to administrative agencies like the DENR which are vested with quasi-judicial powers in
enforcing the laws affecting their respective fields of activity, the proper regulation of which requires of
them such technical mastery of all relevant conditions obtaining in the nation. 49
Finally. The writ of seizure and the writ of replevin were issued by the trial court in grave abuse of its
discretion. Thus, disobedience thereto cannot constitute indirect contempt of court which presupposes
that the court order thereby violated was valid and legal. Without a lawful order having been issued, no
contempt of court could be committed. 50
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals dated
March 30, 1990 and its Resolution dated May 18, 1990 in CA-G.R. SP No. 17194 are hereby SET ASIDE
and REVERSED. Respondent Presiding Judge Benigno T. Dayaw, of the Regional Trial Court of Quezon
City, is PERMANENTLY ENJOINED from enforcing the Orders dated March 20, 1989 and March 22,
1989 in Civil Case No. Q-89-2045, or if said orders have already been enforced, the said respondent
Judge is directed to render judgment of forfeiture on the replevin bond filed by private respondents.
Finally, the said respondent Judge is PERMANENTLY ENJOINED from further acting on the Motion for
Contempt filed by private respondents against the petitioners.
Costs against private respondents. SO ORDERED.
SUPERLINES VS. PNCC (supra)
 SECTION 3
G.R. No. 137705 August 22, 2000
SERG'S PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs.
PCI LEASING AND FINANCE, INC., respondent.
After agreeing to a contract stipulating that a real or immovable property be considered as personal or
movable, a party is estopped from subsequently claiming otherwise. Hence, such property is a proper
subject of a writ of replevin obtained by the other contracting party.
The Case
Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision1 of the Court of
Appeals (CA)2 in CA-GR SP No. 47332 and its February 26, 1999 Resolution3 denying reconsideration.
The decretal portion of the CA Decision reads as follows:
"WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and Resolution dated
March 31, 1998 in Civil Case No. Q-98-33500 are hereby AFFIRMED. The writ of preliminary injunction
issued on June 15, 1998 is hereby LIFTED."4
In its February 18, 1998 Order,5 the Regional Trial Court (RTC) of Quezon City (Branch 218)6 issued a
Writ of Seizure.7 The March 18, 1998 Resolution8 denied petitioners Motion for Special Protective Order,
praying that the deputy sheriff be enjoined "from seizing immobilized or other real properties in
(petitioners) factory in Cainta, Rizal and to return to their original place whatever immobilized
machineries or equipments he may have removed."9
The Facts
The undisputed facts are summarized by the Court of Appeals as follows:10
"On February 13, 1998, respondent PCI Leasing and Finance, Inc. ("PCI Leasing" for short) filed with the
RTC-QC a complaint for [a] sum of money (Annex E), with an application for a writ of replevin docketed
as Civil Case No. Q-98-33500.
"On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ of
replevin (Annex B) directing its sheriff to seize and deliver the machineries and equipment to PCI
Leasing after 5 days and upon the payment of the necessary expenses.
"On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioners factory, seized
one machinery with [the] word that he [would] return for the other machineries.
"On March 25, 1998, petitioners filed a motion for special protective order (Annex C), invoking the power
of the court to control the conduct of its officers and amend and control its processes, praying for a
directive for the sheriff to defer enforcement of the writ of replevin.
"This motion was opposed by PCI Leasing (Annex F), on the ground that the properties [were] still
personal and therefore still subject to seizure and a writ of replevin.
"In their Reply, petitioners asserted that the properties sought to be seized [were] immovable as defined
in Article 415 of the Civil Code, the parties agreement to the contrary notwithstanding. They argued that
to give effect to the agreement would be prejudicial to innocent third parties. They further stated that PCI
Leasing [was] estopped from treating these machineries as personal because the contracts in which the
alleged agreement [were] embodied [were] totally sham and farcical.
"On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of the
remaining properties. He was able to take two more, but was prevented by the workers from taking the
rest.
"On April 7, 1998, they went to [the CA] via an original action for certiorari."
Ruling of the Court of Appeals
Citing the Agreement of the parties, the appellate court held that the subject machines were personal
property, and that they had only been leased, not owned, by petitioners. It also ruled that the "words of
the contract are clear and leave no doubt upon the true intention of the contracting parties." Observing
that Petitioner Goquiolay was an experienced businessman who was "not unfamiliar with the ways of the
trade," it ruled that he "should have realized the import of the document he signed." The CA further held:
"Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon the case
below, since the merits of the whole matter are laid down before us via a petition whose sole purpose is
to inquire upon the existence of a grave abuse of discretion on the part of the [RTC] in issuing the
assailed Order and Resolution. The issues raised herein are proper subjects of a full-blown trial,
necessitating presentation of evidence by both parties. The contract is being enforced by one, and [its]
validity is attacked by the other a matter x x x which respondent court is in the best position to
determine."
Hence, this Petition.11
The Issues
In their Memorandum, petitioners submit the following issues for our consideration:
"A. Whether or not the machineries purchased and imported by SERGS became real property by virtue
of immobilization.
B. Whether or not the contract between the parties is a loan or a lease. "12
In the main, the Court will resolve whether the said machines are personal, not immovable, property
which may be a proper subject of a writ of replevin. As a preliminary matter, the Court will also address
briefly the procedural points raised by respondent.
The Courts Ruling
The Petition is not meritorious.
Preliminary Matter:Procedural Questions
Respondent contends that the Petition failed to indicate expressly whether it was being filed under Rule
45 or Rule 65 of the Rules of Court. It further alleges that the Petition erroneously impleaded Judge
Hilario Laqui as respondent.
There is no question that the present recourse is under Rule 45. This conclusion finds support in the very
title of the Petition, which is "Petition for Review on Certiorari."13
While Judge Laqui should not have been impleaded as a respondent,14 substantial justice requires that
such lapse by itself should not warrant the dismissal of the present Petition. In this light, the Court deems
it proper to remove,motu proprio, the name of Judge Laqui from the caption of the present case.
Main Issue: Nature of the Subject Machinery
Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ
issued by the RTC, because they were in fact real property. Serious policy considerations, they argue,
militate against a contrary characterization.
Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal
property only.15Section 3 thereof reads:
"SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court shall issue an order
and the corresponding writ of replevin describing the personal property alleged to be wrongfully detained
and requiring the sheriff forthwith to take such property into his custody."
On the other hand, Article 415 of the Civil Code enumerates immovable or real property as follows:
"ART. 415. The following are immovable property:
xxx xxx xxx
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and which tend directly to
meet the needs of the said industry or works;
xxx xxx x x x"
In the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners
in the factory built on their own land. Indisputably, they were essential and principal elements of their
chocolate-making industry. Hence, although each of them was movable or personal property on its own,
all of them have become "immobilized by destination because they are essential and principal elements
in the industry."16 In that sense, petitioners are correct in arguing that the said machines are real, not
personal, property pursuant to Article 415 (5) of the Civil Code.17
Be that as it may, we disagree with the submission of the petitioners that the said machines are not
proper subjects of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real property be considered as
personal.18After agreeing to such stipulation, they are consequently estopped from claiming otherwise.
Under the principle of estoppel, a party to a contract is ordinarily precluded from denying the truth of any
material fact found therein.
Hence, in Tumalad v. Vicencio,19 the Court upheld the intention of the parties to treat a house as a
personal property because it had been made the subject of a chattel mortgage. The Court ruled:
"x x x. Although there is no specific statement referring to the subject house as personal property, yet by
ceding, selling or transferring a property by way of chattel mortgage defendants-appellants could only
have meant to convey the house as chattel, or at least, intended to treat the same as such, so that they
should not now be allowed to make an inconsistent stand by claiming otherwise."
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile Mills20 also held
that the machinery used in a factory and essential to the industry, as in the present case, was a proper
subject of a writ of replevin because it was treated as personal property in a contract. Pertinent portions of
the Courts ruling are reproduced hereunder:
"x x x. If a house of strong materials, like what was involved in the above Tumalad case, may be
considered as personal property for purposes of executing a chattel mortgage thereon as long as the
parties to the contract so agree and no innocent third party will be prejudiced thereby, there is absolutely
no reason why a machinery, which is movable in its nature and becomes immobilized only by destination
or purpose, may not be likewise treated as such. This is really because one who has so agreed is
estopped from denying the existence of the chattel mortgage."
In the present case, the Lease Agreement clearly provides that the machines in question are to be
considered as personal property. Specifically, Section 12.1 of the Agreement reads as follows: 21
"12.1 The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the
PROPERTY or any part thereof may now be, or hereafter become, in any manner affixed or attached to
or embedded in, or permanently resting upon, real property or any building thereon, or attached in any
manner to what is permanent."
Clearly then, petitioners are estopped from denying the characterization of the subject machines as
personal property. Under the circumstances, they are proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding -- that the machines should be deemed personal property
pursuant to the Lease Agreement is good only insofar as the contracting parties are
concerned.22 Hence, while the parties are bound by the Agreement, third persons acting in good faith are
not affected by its stipulation characterizing the subject machinery as personal.23 In any event, there is no
showing that any specific third party would be adversely affected.
Validity of the Lease Agreement
In their Memorandum, petitioners contend that the Agreement is a loan and not a lease.24 Submitting
documents supposedly showing that they own the subject machines, petitioners also argue in their
Petition that the Agreement suffers from "intrinsic ambiguity which places in serious doubt the intention of
the parties and the validity of the lease agreement itself."25 In their Reply to respondents Comment, they
further allege that the Agreement is invalid.26
These arguments are unconvincing. The validity and the nature of the contract are the lis mota of the civil
action pending before the RTC. A resolution of these questions, therefore, is effectively a resolution of the
merits of the case. Hence, they should be threshed out in the trial, not in the proceedings involving the
issuance of the Writ of Seizure.
Indeed, in La Tondea Distillers v. CA,27 the Court explained that the policy under Rule 60 was that
questions involving title to the subject property questions which petitioners are now raising -- should be
determined in the trial. In that case, the Court noted that the remedy of defendants under Rule 60 was
either to post a counter-bond or to question the sufficiency of the plaintiffs bond. They were not allowed,
however, to invoke the title to the subject property. The Court ruled:
"In other words, the law does not allow the defendant to file a motion to dissolve or discharge the writ of
seizure (or delivery) on ground of insufficiency of the complaint or of the grounds relied upon therefor, as
in proceedings on preliminary attachment or injunction, and thereby put at issue the matter of the title or
right of possession over the specific chattel being replevied, the policy apparently being that said matter
should be ventilated and determined only at the trial on the merits."28
Besides, these questions require a determination of facts and a presentation of evidence, both of which
have no place in a petition for certiorari in the CA under Rule 65 or in a petition for review in this Court
under Rule 45.29
Reliance on the Lease Agreement
It should be pointed out that the Court in this case may rely on the Lease Agreement, for nothing on
record shows that it has been nullified or annulled. In fact, petitioners assailed it first only in the RTC
proceedings, which had ironically been instituted by respondent. Accordingly, it must be presumed valid
and binding as the law between the parties.
Makati Leasing and Finance Corporation30 is also instructive on this point. In that case, the Deed of
Chattel Mortgage, which characterized the subject machinery as personal property, was also assailed
because respondent had allegedly been required "to sign a printed form of chattel mortgage which was in
a blank form at the time of signing." The Court rejected the argument and relied on the Deed, ruling as
follows:
"x x x. Moreover, even granting that the charge is true, such fact alone does not render a contract void ab
initio, but can only be a ground for rendering said contract voidable, or annullable pursuant to Article 1390
of the new Civil Code, by a proper action in court. There is nothing on record to show that the mortgage
has been annulled. Neither is it disclosed that steps were taken to nullify the same. x x x"
Alleged Injustice Committed on the Part of Petitioners
Petitioners contend that "if the Court allows these machineries to be seized, then its workers would be out
of work and thrown into the streets."31 They also allege that the seizure would nullify all efforts to
rehabilitate the corporation.
Petitioners arguments do not preclude the implementation of the Writ.1wphi1 As earlier discussed, law
and jurisprudence support its propriety. Verily, the above-mentioned consequences, if they come true,
should not be blamed on this Court, but on the petitioners for failing to avail themselves of the remedy
under Section 5 of Rule 60, which allows the filing of a counter-bond. The provision states:
"SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicants bond, or of
the surety or sureties thereon, he cannot immediately require the return of the property, but if he does not
so object, he may, at any time before the delivery of the property to the applicant, require the return
thereof, by filing with the court where the action is pending a bond executed to the applicant, in double the
value of the property as stated in the applicants affidavit for the delivery thereof to the applicant, if such
delivery be adjudged, and for the payment of such sum to him as may be recovered against the adverse
party, and by serving a copy bond on the applicant."
WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED.
Costs against petitioners. SO ORDERED.
SECTION 4
RIVERA VS. VARGAS (supra)
A.M. No. P-00-1391 September 28, 2001
(Formerly AM OCA IPI-98-506-P)
LIBRADA D. TORRES, complainant, vs.
NELSON C. CABESUELA, Sheriff III, Metropolitan Trial Court, Branch 9, Manila, respondent.
On July 3, 1998, this Court received from the Deputy Ombudsman for the Military the complete records of
OMB-1-97-0659 entitled "Librada D. Torres versus Senior Inspector Elmer Beltejar, SPO1 Alfredo Caday,
PO3 Armando Francisco, PO3 Randy Beltran, all members of the Philippine National Police Station, San
Antonio, Nueva Ecija and Sheriff Nelson C. Cabesuela of the Metropolitan Trial Court (MeTC), Branch 9,
Manila" for violation of Section 3(e) of Republic Act No. 30191 (Anti-Graft and Corrupt Practices Act)
relative to Civil Case No. 151528-CV of the MeTC, Branch 9, Manila docket.
It appears from the records that complainant Torres executed an affidavit-complaint dated December 20,
1996 alleging that she is one of the owners of San Antonio High School in San Antonio, Nueva Ecija. Said
school is the owner of a Mitsubishi Pajero mortgaged to Philam Savings Bank, Inc. The school failed to
pay its obligation so the bank filed a complaint for replevin and damages. On September 6, 1996, Judge
Amelia A. Fabros of MeTC, Branch 9, Manila, granted the bank's prayer for a writ of replevin.
Consequently, a writ of replevin addressed to respondent sheriff was issued. On December 2, 1996, said
vehicle was taken from complainant's residence by the members of the PNP, San Antonio, Nueva Ecija,
named herein. Later on, complainant filed a motion to amend the complaint to include herein sheriff as
respondent in the complaint since it was by virtue of the "Sheriffs Deputization" issued by respondent that
respondent police officers were able to "implement" the writ.
Respondent sheriff filed a motion to dismiss alleging that after Judge Fabros came out with the writ of
seizure, he issued the "Sheriffs Deputization" addressed to the Chief of Police of San Antonio, Nueva
Ecija requesting for assistance in the implementation of said writ. According to him, he "deputized" the
police officers only after he attempted to implement the writ and found the vehicle at a local motorshop
undergoing repairs. Because of this, he opted to "constructively seize" the vehicle by serving copies of
the complaint, summons and bond to complainant and a certain Ignacio Gonzales.
Complainant filed her opposition and/or comment thereto contending that the act of the respondent in
deputizing the police officers in implementing the writ of seizure did not find support in law and in the
Rules of Court. She stated that respondent usurped the powers of Judge Fabros.
On September 26, 1997, the motion to dismiss was denied.
On November 20, 1997, the Deputy Ombudsman for the Military issued a resolution recommending the
filing of an information for violation of Section 3(e) of RA No. 3019 against the police officers and herein
respondent but dismissing the case for violation of R.A. No. 6713 and Article 177 of the Revised Penal
Code. The same resolution likewise directed that a copy of the resolution be furnished the Supreme Court
thru the Court Administrator for administrative proceedings against herein respondent.
On February 12, 1999, the Court Administrator required herein respondent to comment on the affidavit-
complaint and amended complaint.
In his comment, respondent claimed that he issued the "Sheriff's Deputization" in good faith although he
admitted that his act was unlawful. He contended that his only purpose for issuing the same was to seek
the assistance of the Chief of Police of Nueva Ecija because he was not familiar with the place and for
said Chief of Police to seize the vehicle. Moreover, he opined that complainant was a very powerful and
influential person as shown by her ability to remove the vehicle from the motorshop without seeking the
permission of the court.
On July 3, 2000, the Court issued a resolution directing the docketing of the case as a regular
administrative proceeding and requiring the parties to manifest if they are willing to submit the case as the
basis of the pleadings already filed. Only respondent sheriff filed a manifestation. Complainant's silence
was considered as a conforme to the submission of the case for resolution on the basis of the pleadings
thus filed.
In his report, the Court Administrator found the complaint meritorious and recommended that a fine of
P5,000.00 be imposed upon the respondent, viz:
The act of respondent in issuing the Sheriff s Deputization is without legal basis.
First, respondent should have known that under Administrative Circular No. 12 (5) it is
provided that "No sheriff or deputy sheriff shall execute a court writ outside his territorial
jurisdiction without first notifying in writing and seeking the assistance of, the sheriff of the
place where the execution shall take place".
Respondent's act of implementing the writ in Nueva Ecija when his territorial jurisdiction is
confined only to Manila is a clear violation of the law. The proper recourse would have been to
seek the assistance of the sheriff of Nueva Ecija rather than deputizing the police officer of
said place.
Furthermore, in Tordesillas vs. Basco (108 SCRA 551,556) it was held that under Sections 3
and 4 of Rule 60 of the Rules of Court, it is the personal duty and responsibility of the sheriff
to personally implement the writ and it constitutes serious misconduct and gross negligence for
a sheriff to delegate his primary role in implementing a writ of seizure. Respondent's absence
during the seizure of the subject vehicle by the police officers falls squarely within this
prohibition for which he should be held liable.
We agree with the Court Administrator and hereby adopt his findings and recommendation.
Sheriffs are ministerial officers. Their office is to execute all writs returnable to the court, unless another is
appointed, by special order of the court, for the purpose.2
As a ministerial officer, respondent sheriff should have known that it was his duty, in the absence of
instructions, to faithfully perform what was incumbent upon him to do. Administrative Circular No. 12 was
promulgated in order to streamline the service and execution of court writs and processes in the
reorganized courts under Batas Pambansa Blg. 129 and to better serve the public good and facilitate the
administration of justice. Paragraph 5 of said Circular is clear and self-explanatory. "No sheriff or deputy
sheriff shall execute a court writ outside his territorial jurisdiction without first notifying in writing, and
seeking the assistance of the sheriff of the place where the execution shall take place." Accordingly, as
sheriff of the MeTC, Branch 9 of the City of Manila, respondent sheriff should have notified in writing, and
should have sought the assistance of, the sheriff of San Antonio, Nueva Ecija, to enforce the subject writ
instead of unlawfully deputizing the Chief of Police of San Antonio, Nueva Ecija.
Officers of the court and all court personnel are exhorted to be vigilant in the execution of the law.
Sheriffs, as agents of the law, are therefore called upon to discharge their duties with due care and
utmost diligence. They cannot afford to err in serving court writs and processes and in implementing court
orders lest they undermine the integrity of their office and the efficient administration of justice.3
WHEREFORE, respondent NELSON C. CABESUELA is hereby found GUlLTY of abuse of authority and
isORDERED to pay a FINE in the amount of FIVE THOUSAND PESOS (P5,000.00) with a stern warning
that a repetition of similar acts in the future shall be dealt with more severely.1wphi1.ntSO ORDERED.
A.M. No. P-98-1283 May 9, 2000
(formerly OCA IPI No. 96-140-P)
JOHNNY GOMEZ and MAR GUIDOTE for SABINO S. RAMOS, complainants,
vs. RODOLFO A. CONCEPCION, Deputy Sheriff, Regional Trial Court, Branch 28, Cabanatuan
City, respondent.
This administrative case originated from a letter, dated 10 April 1996, sent by Johnny Gomez and Mar
Guidote, both of Radio Veritas, relative to the complaint of Sabino S. Ramos against Rodolfo A.
Concepcion, Deputy Sheriff of the Regional Trial Court, Branch 28, of Cabanatuan City.
It would appear that on 10 March 1996, Sabino Ramos, while driving his owner-type jeep, figured in a
vehicular accident. The vehicle was bumped by a passenger jeepney, with Plate No. DLZ-588, causing
damage to the jeep of Ramos and injuries to the passengers. The offending vehicle, the passenger
jeepney, turned out to be under the custody of respondent Sheriff. When required to comment on the
complaint, he averred that the passenger jeepney was carnapped in front of his residence on 10 March
1996, between 12:00 p.m. to 1:00 p.m., which incident he immediately reported to the Philippine National
Police of Cabanatuan City.
On 21 April 1997, the Court resolved, among other things, to dispense with the filing of a reply by
complainant to the comment; instead, it referred the case on 30 July 1997 to Executive Judge Federico B.
Fajardo, Jr., of the Regional Trial Court of Cabanatuan City for investigation, report and recommendation.
In his report, dated 30 April 1998, the Investigating Judge informed the Court that complainant Ramos
had repeatedly failed to appear in his sala despite having been notified of the scheduled hearings. At one
time, a relative of complainant appeared before Judge Fajardo to inform the latter that the complainant
was indisposed, his feet being in cast which prevented him from travelling all the way to Cabanatuan City.
Complainant was directed to submit a medical certificate but he failed to comply. The Investigating Judge
recommended the dismissal of the complaint, additionally noting that the sworn statements of Sabino
Ramos and Edna Ramos had failed to mention any possible personal gain on the part of respondent
Sheriff in the use of the passenger jeepney.
In its resolution, dated 20 July 1998, the Court referred the report of the Investigating Judge to the Office
of the Court Administrator ("OCA") for evaluation, report and recommendation. The case was docketed as
a regular administrative matter in another resolution of 02 December 1998, and the parties were required
to manifest whether they would submit the case for resolution on the basis of the records before the
Court. For failure of the parties to comply therewith, the Court, in its 24 November 1999 resolution,
resolved to dispense with the required manifestation.
In the memorandum submitted by OCA, through DCA Bernardo T. Ponferrada, in compliance with the
Court's resolution of 20 July 1998, the OCA recommended that respondent Sheriff be meted the penalty
of two (2) months suspension without pay, the period of which should not be chargeable against his
accumulated leave, with a warning that a repetition of the same or any other act calling for disciplinary
action will be dealt with severely. The OCA observed:
While we conform with the opinion of the investigating judge that there is no evidence to
substantiate the allegation that respondent sheriff leased the passenger jeepney in question (Plate
No. DLZ-588) to a third party for personal gain and that complainant Sabino Ramos clearly
manifested his lack of interest to prosecute this case, we beg to disagree with the recommendation
to dismiss the case on these grounds alone.
It is an undisputed fact that the aforesaid vehicle was under the custody of the law as shown by the
respondent's report to the PNP of Cabanatuan City, when he stated that, "between the hour of 12:00
high noon and 1:00 P.M., 10 March 1996, the Passenger Type Jeep with Plate No. DLZ-588, which
was placed under his custody and parked in front his residence at Sapiandante this City, was lost.
 The undersigned cannot find a valid explanation why the passenger jeepney under custodia
legisshould be placed infront of respondent's residence without taking into account the problem of
safety and security. He unduly exposed the jeep to undesirable elements, making it an "easy prey"
for thieves and carnappers.
Sec. 4, Rule 60 of the Rules of Court provides: . . . When the officer has taken property as herein
provided, he must keep it in a secure place and shall be responsible for it and ultimately deliver it to
the party entitled thereto upon receiving his fees and necessary expenses for taking and keeping
the same.
Evidently, the respondent was remiss in the performance of his official duty and responsibility to
safely secure the property in his custody until its delivery to the party entitled to it, as mandated by
the rules. The vehicle could have been deposited in the premises of the court where it is secured,
or, at any other place where the required security is provided for and available. For after all, the
respondent should have known that his office could have charged the party entitled to it, allowable
fees for storage, necessary in safely keeping the property in custodia legis.
But, for reasons only known to the respondent, he breached his official duty and responsibility
making him answerable for the consequences of his lapses.
The conduct and behavior of everyone connected with an office charged with the dispensation of
justice, from the presiding judge to the sheriff, should be circumscribed with the heavy burden of
responsibility. This is especially true of sheriffs (Cunanan vs. Tuazon, A.M. No. P-93-776, Oct. 7,
1994). As a sheriff, the respondent is bound to discharge his duties with prudence, caution and
attention which careful men usually exercise in the management of their affairs (Evangelista vs.
Penserga, 242 SCRA
702). 1
The Court agrees with the above findings and recommendations of the OCA.
In Gacho vs. Fuentes, Jr.,2 the Court has said, now here reiterated, that proceedings in administrative
cases against public officers and employees should not be made to depend on the whims and caprices of
complainants who, verily, are to be deemed mere witnesses therein. Once the Court has taken
cognizance of an administrative case, a complaint can not be withdrawn on just the "say-so" of the
complainant. The apparent lack of interest of herein complainant to pursue the matter will not be enough
to warrant the dismissal of the case since the records on hand could amply show the culpability of
respondent for which he should be held administratively liable. Sheriffs play an important role in the
administration of justice, and being agents of the law and the courts, high standards are expected of
them.3 Respondent Sheriff did not proffer any explanation for parking the vehicle in his custody in front of
his residence instead of having it stored in a secure place.4 Respondent Sheriff has clearly been remiss in
the performance of his assigned task.
WHEREFORE, respondent Rodolfo A. Concepcion is found guilty of dereliction of duty and is hereby
SUSPENDED for two (2) months, without pay, with a warning that the commission of similar acts in the
future shall be dealt with most severely by this Court. SO ORDERED.
A.M. No. P-07-2384 June 18, 2008
KENNETH HAO, complainant, vs.
ABE C. ANDRES, Sheriff IV, Regional Trial Court, Branch 16, Davao City, respondent.
Before us is an administrative complaint for gross neglect of duty, grave abuse of authority (oppression)
and violation of Republic Act No. 30191 filed by complainant Kenneth Hao against respondent Abe C.
Andres, Sheriff IV of the Regional Trial Court (RTC) of Davao City, Branch 16.
The antecedent facts are as follows:
Complainant Hao is one of the defendants in a civil case for replevin docketed as Civil Case No. 31, 127-
20052entitled "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,
Branch 16.
On October 17, 2005, Judge Renato A. Fuentes3 issued an Order of Seizure4 against 22 motor vehicles
allegedly owned by the complainant. On the strength of the said order, Andres was able to seize two of
the subject motor vehicles on October 17, 2005; four on October 18, 2005, and another three on October
19, 2005, or a total of nine motor vehicles.5
In his Affidavit-Complaint6 against Andres before the Office of the Court Administrator (OCA), Hao alleged
that Andres gave undue advantage to Zenaida Silver in the implementation of the order and that Andres
seized the nine motor vehicles in an oppressive manner. Hao also averred that Andres was accompanied
by unidentified armed personnel on board a military vehicle which was excessive since there were no
resistance from them. Hao also discovered that the compound where the seized motor vehicles were
placed is actually owned by Silver.7
On October 21, 2005, in view of the approval of the complainants counter-replevin bond, Judge
Emmanuel C. Carpio8 ordered Andres to immediately cease and desist from further implementing the
order of seizure, and to return the seized motor vehicles including its accessories to their lawful owners. 9
However, on October 24, 2005, eight of the nine seized motor vehicles were reported missing. In his
report,10Andres stated that he was shocked to find that the motor vehicles were already missing when he
inspected it on October 22, 2005. He narrated that on October 21, 2005, PO3 Rodrigo Despe, one of the
policemen guarding the subject motor vehicles, reported to him that a certain "Nonoy" entered the
compound and caused the duplication of the vehicles keys. 11 But Andres claimed the motor vehicles
were still intact when he inspected it on October 21, 2005.
Subsequently, Hao reported that three of the carnapped vehicles were recovered by the police.12 He then
accused Andres of conspiring and conniving with Atty. Oswaldo Macadangdang (Silvers counsel) and the
policemen in the carnapping of the motor vehicles. Hao also accused Andres of concealing the depository
receipts from them and pointed out that the depository receipts show that Silver and Atty. Macadangdang
were the ones who chose the policemen who will guard the motor vehicles.
In his Comment13 dated March 3, 2006, Andres vehemently denied violating Rep. Act No. 3019 and
committing gross neglect of duty.
Andres denied implementing the Order of Seizure in an oppressive manner. He said he took the vehicles
because they were the specific vehicles ordered to be seized after checking their engine and chassis
numbers. Andres likewise denied that he was accompanied by military personnel in the implementation of
the order. He claimed that he was merely escorted by policemen pursuant to the directive of Police Senior
Supt. Catalino S. Cuy, Chief of the Davao City Police Office. Andres also maintained that no form of
harassment or oppression was committed during the implementation of the order, claiming that the
presence of the policemen was only for the purpose of preserving peace and order, considering there
were 22 motor vehicles specified in the Order of Seizure. Andres added that he exercised no discretion in
the selection of the policemen who assisted in the implementation of the order, much less of those who
will guard the seized motor vehicles.
Andres disputed the allegation that he neglected his duty to safeguard the seized vehicles by pointing out
that he placed all the motor vehicles under police watch. He added that the policemen had control of the
compound where the seized motor vehicles were kept.
Andres likewise contended that after the unauthorized duplication of the vehicles keys was reported to
him, he immediately advised the policemen on duty to watch the motor vehicles closely. 14 He negated the
speculations that he was involved in the disappearance of the seized motor vehicles as he claims to be
the one who reported the incident to the court and the police.
As to the allegation of undisclosed depository receipts, Andres maintained that he never denied the
existence of the depository receipts. He said the existence of the depository receipts was immediately
made known on the same day that the subject motor vehicles were discovered missing. He even used the
same in the filing of the carnapping case against Silver and her co-conspirators.
Finally, Andres insisted that the guarding of properties under custodia legis by policemen is not
prohibited, but is even adopted by the court. Hence, he prays that he be held not liable for the loss of the
vehicles and that he be relieved of his duty to return the vehicles.15
After the OCA recommended that the matter be investigated, we referred the case to Executive Judge
Renato A. Fuentes for investigation, report and recommendation.16
In his Investigation Report17 dated September 21, 2006, Judge Fuentes found Andres guilty of serious
negligence in the custody of the nine motor vehicles. He recommended that Andres be suspended from
office.
Judge Fuentes found numerous irregularities in the implementation of the writ of replevin/order of seizure,
to wit: (1) at the time of the implementation of the writ, Andres knew that the vehicles to be seized were
not in the names of any of the parties to the case; (2) one vehicle was taken without the knowledge of its
owner, a certain Junard Escudero; (3) Andres allowed Atty. Macadangdang to get a keymaster to
duplicate the vehicles keys in order to take one motor vehicle; and (4) Andres admitted that prior to the
implementation of the writ of seizure, he consulted Silver and Atty. Macadangdang regarding the
implementation of the writ and was accompanied by the latter in the course of the implementation. Judge
Fuentes observed that the motor vehicles were speedily seized without strictly observing fairness and
regularity in its implementation.18
Anent the safekeeping of the seized motor vehicles, Judge Fuentes pointed out several instances where
Andres lacked due diligence to wit: (1) the seized motor vehicles were placed in a compound surrounded
by an insufficiently locked see-through fence; (2) three motor vehicles were left outside the compound; (3)
Andres turned over the key of the gate to the policemen guarding the motor vehicles; (4) Andres does not
even know the full name of the owner of the compound, who was merely known to him as "Gloria"; (5)
except for PO3 Despe and SPO4 Nelson Salcedo, the identities of the other policemen tapped to guard
the compound were unknown to Andres; (6) Andres also admitted that he only stayed at least one hour
each day from October 19-21, 2005 during his visits to the compound; and (7) even after it was reported
to him that a certain "Nonoy" entered the compound and duplicated the keys of the motor vehicles, he did
not exert his best effort to look for that "Nonoy" and to confiscate the duplicated keys. 19
Judge Fuentes also observed that Andres appeared to be more or less accommodating to Silver and her
counsel but hostile and uncooperative to the complainant. He pointed out that Andres depended solely on
Silver in the selection of the policemen who would guard the seized motor vehicles. He added that even
the depository receipts were not turned over to the defendants/third-party claimants in the replevin case
but were in fact concealed from them. Andres also gave inconsistent testimonies as to whether he has in
his possession the depository receipts.20
The OCA disagreed with the observations of Judge Fuentes. It recommended that Andres be held liable
only for simple neglect of duty and be suspended for one (1) month and one (1) day.21
We adopt the recommendation of the investigating judge.
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. To recapitulate what should be
common knowledge to sheriffs, the pertinent provisions of Rule 60, of the Rules of Court are quoted
hereunder:
SEC. 4. Duty of the sheriff.Upon receiving such order, the sheriff must serve a copy thereof
on the adverse party, together with a copy of the application, affidavit and bond, and must
forthwith take the property, if it be in the possession of the adverse party, or his agent,
and retain it in his custody. If the property or any part thereof be concealed in a building or
enclosure, the sheriff must demand its delivery, and if it be not delivered, he must cause the
building or enclosure to be broken open and take the property into his possession. After the
sheriff has taken possession of the property as herein provided, he must keep it in a
secure place and shall be responsible for its delivery to the party entitled thereto upon
receiving his fees and necessary expenses for taking and keeping the same. (Emphasis
supplied.)
SEC. 6. Disposition of property by sheriff.If within five (5) days after the taking of the
property by the sheriff, the adverse party does not object to the sufficiency of the bond, or of
the surety or sureties thereon; or if the adverse party so objects and the court affirms its
approval of the applicants bond or approves a new bond, or if the adverse party requires the
return of the property but his bond is objected to and found insufficient and he does not
forthwith file an approved bond, the property shall be delivered to the applicant. If for any
reason the property is not delivered to the applicant, the sheriff must return it to the adverse
party. (Emphasis supplied.)
First, the rules provide that property seized under a writ of replevin is not to be delivered immediately to
the plaintiff.22 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.
Records show that Andres took possession of two of the subject motor vehicles on October 17, 2005, four
on October 18, 2005, and another three on October 19, 2005. Simultaneously, as evidenced by the
depository receipts, on October 18, 2005, Silver received from Andres six of the seized motor vehicles,
and three more motor vehicles on October 19, 2005. Consequently, there is no question that 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.23 Hence, the act
of Andres in delivering the seized vehicles immediately after seizure to Silver for whatever purpose,
without observing the five-day requirement finds no legal justification.
In Pardo v. Velasco,24 this Court held that
Respondent as an officer of the Court is charged with certain ministerial duties which must
be performed faithfully to the letter. Every provision in the Revised Rules of Court has a
specific reason or objective. In this case, the purpose of the five (5) days is to give a
chance to the defendant to object to the sufficiency of the bond or the surety or sureties
 thereon or require the return of the property by filing a counterbond.25 (Emphasis
supplied.)
In Sebastian v. Valino,26 this Court reiterated that
Under the Revised Rules of Court, the property seized under a writ of replevin is not to be
delivered immediately to the plaintiff. The sheriff must retain it in his custody for five
days and he shall return it to the defendant, if the latter, as in the instant case, requires its
return and files a counterbond.27 (Emphasis supplied.)
Likewise, Andres claim that he had no knowledge that the compound is owned by Silver fails to convince
us. Regardless of who actually owns the compound, the fact remains that Andres delivered the vehicles
to Silver prematurely. It violates the rule requiring him to safekeep the vehicles in his custody. 28 The
alleged lack of facility to store the seized vehicles is unacceptable considering that he should have
deposited the same in a bonded warehouse. If this was not feasible, he should have sought prior
authorization from the court issuing the writ before delivering the vehicles to Silver.
Second, it must be stressed that 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.
Third, we are appalled that even after PO3 Despe reported the unauthorized duplication of the vehicles
keys, Andres failed to take extra precautionary measures to ensure the safety of the vehicles. It is
obvious that the vehicles were put at risk by the unauthorized duplication of the keys of the vehicles.
Neither did he immediately report the incident to the police or to the court. The loss of the motor vehicles
could have been prevented if Andres immediately asked the court for an order to transfer the vehicles to
another secured place as soon as he discovered the unauthorized duplication. Under these
circumstances, even an ordinary prudent man would have exercised extra diligence. His warning to the
policemen to closely watch the vehicles was insufficient. Andres cannot toss back to Silver or to the
policemen the responsibility for the loss of the motor vehicles since he remains chiefly responsible for
their safekeeping as legal custodian thereof. Indeed, Andres failure to take the necessary precaution and
proper monitoring of the vehicles to ensure its safety constitutes plain negligence.
Fourth, despite the cease and desist order, Andres failed to return the motor vehicles to their lawful
owners. Instead of returning the motor vehicles immediately as directed, he opted to write Silver and
demand that she put up an indemnity bond to secure the third-party claims. Consequently, due to his
delay, the eventual loss of the motor vehicles rendered the order to return the seized vehicles ineffectual
to the prejudice of the complaining owners.
It must be stressed that as court custodian, it was Andres responsibility to ensure that the motor vehicles
were safely kept and that the same were readily available upon order of the court or demand of the
parties concerned. Specifically, sheriffs, being ranking officers of the court and agents of the law, must
discharge their duties with great care and diligence. In serving and implementing court writs, as well as
processes and orders of the court, they cannot afford to err without affecting adversely the proper
dispensation of justice. Sheriffs play an important role in the administration of justice and as agents of the
law, high standards of performance are expected of them.29Hence, his failure to return the motor vehicles
at the time when its return was still feasible constitutes another instance of neglect of duty.
Fifth, as found by the OCA, we agree that Andres also disregarded the provisions of Rule 14130 of the
Rules of Court with regard to payment of expenses.
Under Section 9,31 Rule 141 of the Rules of Court, the procedure for the execution of writs and other
processes are: First, the sheriff must make an estimate of the expenses to be incurred by him; Second,
he must obtain court approval for such estimated expenses; Third, the approved estimated expenses
shall be deposited by the interested party with the Clerk of Court and ex officio sheriff; Fourth, the Clerk of
Court shall disburse the amount to the executing sheriff; and Fifth, the executing sheriff shall liquidate his
expenses within the same period for rendering a return on the writ.
In this case, no estimate of sheriffs expenses was submitted to the court by Andres. Without approval of
the court, he also allowed Silver to pay directly to the policemen the expenses for the safeguarding of the
motor vehicles including their meals.32 Obviously, this practice departed from the accepted procedure
provided in the Rules of Court.
In view of the foregoing, there is no doubt that Andres failed to live up to the standards required of his
position. The number of instances that Andres strayed from the regular course observed in the proper
implementation of the orders of the court cannot be countenanced. Thus, taking into account the
numerous times he was found negligent and careless of his duties coupled with his utter disregard of
legal procedures, he cannot be considered guilty merely of simple negligence. His acts constitute gross
negligence.
As we have previously ruled:
Gross negligence refers to negligence characterized by the want of even slight care,
acting or omitting to act in a situation where there is a duty to act, not inadvertently but
willfully and intentionally, with a conscious indifference to consequences in so far as
other persons may be affected. It is the omission of that care which even inattentive and
thoughtless men never fail to take on their own property.33(Emphasis supplied.)
Gross neglect, on the other hand, is such neglect from the gravity of the case, or the
frequency of instances, becomes so serious in its character as to endanger or threaten
the public welfare. The term does not necessarily include willful neglect or intentional official
wrongdoing.34 (Emphasis supplied.)
Good faith on the part of Andres, or lack of it, in proceeding to properly execute his mandate would be of
no moment, for he is chargeable with the knowledge that being an officer of the court tasked therefor, it
behooves him to make due compliance. He is expected to live up to the exacting standards of his office
and his conduct must at all times be characterized by rectitude and forthrightness, and so above
suspicion and mistrust as well.35 Thus, an act of gross neglect resulting in loss of properties in custodia
legis ruins the confidence lodged by the parties to a suit or the citizenry in our judicial process. Those
responsible for such act or omission cannot escape the disciplinary power of this Court.
Anent the allegation of grave abuse of authority (oppression), we likewise agree with the observations of
the investigating judge. Records show that Andres started enforcing the writ of replevin/order of seizure
on the same day that the order of seizure was issued. He also admitted that he took the vehicles of
persons who are not parties to the replevin case.36 He further admitted that he took one vehicle belonging
to a certain Junard Escudero without the latters knowledge and even caused the duplication of its keys in
order that it may be taken by Andres.37Certainly, these are indications that Andres enforced the order of
seizure with undue haste and without giving the complainant prior notice or reasonable time to deliver the
motor vehicles. Hence, Andres is guilty of grave abuse of authority (oppression).
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.38 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.
True, sheriffs must comply with their mandated ministerial duty to implement writs promptly and
expeditiously, but equally true is the principle that sheriffs by the nature of their functions must at all times
conduct themselves with propriety and decorum and act above suspicion. There must be no room for
anyone to conjecture that sheriffs and deputy sheriffs as officers of the court have conspired with any of
the parties to a case to obtain a favorable judgment or immediate execution. The sheriff is at the front line
as representative of the judiciary and by his act he may build or destroy the institution.39
However, as to the charge of graft and corruption, it must be stressed that the same is criminal in nature,
thus, the resolution thereof cannot be threshed out in the instant administrative proceeding. We also take
note that there is a pending criminal case for carnapping against Andres;40 hence, with more reason that
we cannot rule on the allegation of graft and corruption as it may preempt the court in its resolution of the
said case.
We come to the matter of penalties. The imposable penalty for gross neglect of duty is dismissal. While
the penalty imposable for grave abuse of authority (oppression) is suspension for six (6) months one (1)
day to one (1) year.41Section 55, Rule IV, of the Uniform Rules on Administrative Cases in the Civil
Service provides that if the respondent is found guilty of two or more charges or counts, the penalty to be
imposed should be that corresponding to the most serious charge or count and the rest shall be
considered as aggravating circumstances.
In the instant case, the penalty for the more serious offense which is dismissal should be imposed on
Andres. However, following Sections 5342 and 54,43 Rule IV of the Uniform Rules on Administrative Cases
in the Civil Service, we have to consider that Andres is a first-time offender; hence, a lighter penalty than
dismissal from the service would suffice. Consequently, instead of imposing the penalty of dismissal, the
penalty of suspension from office for one (1) year without pay is proper for gross neglect of duty, and
another six (6) months should be added for the aggravating circumstance of grave abuse of authority
(oppression).
WHEREFORE, the Court finds Abe C. Andres, Sheriff IV, RTC of Davao City, Branch 16, GUILTY of
gross neglect of duty and grave abuse of authority (oppression) and is SUSPENDED for one (1) year and
six (6) months without pay. He is also hereby WARNED that a repetition of the same or similar offenses
in the future shall be dealt with more severely. SO ORDERED.
SECTION 5
CITIBANK VS. CA (supra)
A.M. No. P-04-1920 August 17, 2007
SPOUSES NORMANDY and RUTH BAUTISTA, Complainants, vs.
ERNESTO L. SULA, Sheriff IV, Regional Trial Court, Branch 98, Quezon City, Respondent.
On 6 December 2003, Ruth B. Bautista (Ruth) borrowed P300,000 from Ceniza C. Glor (Glor). The loan,
payable in three months, bore a monthly interest of five percent. The three-month period commenced on
6 December 2003 and expired on 6 March 2004. To secure the loan, Ruth executed a chattel mortgage
over her Honda CRV in favor of Glor.1
Upon maturity of the loan, Glor repeatedly demanded payment from Ruth. Despite the repeated
demands, Ruth refused to pay her debt, or surrender possession of the vehicle.2 Thus, on 6 May 2004,
Glor filed with the Regional Trial Court, Branch 98, Quezon City (trial court), a civil case3 for judicial
foreclosure of chattel mortgage with prayer for the issuance of a writ of replevin.
Thereafter, the trial court issued a writ of replevin4 dated 14 May 2004 directing Ernesto L. Sula
(respondent), Sheriff IV of the trial court, to take possession of the vehicle and keep it in his custody:
WHEREAS, plaintiff Ceniza C. Glor, in the above-entitled case, having filed an application with this Court
praying for the seizure and delivery to Ceniza C. Glor of the property, more particularly described
hereafter, and having filed the affidavit required by the Rules of Court and executed to the defendant a
bond in the sum of EIGHT HUNDRED THOUSAND PESOS ONLY (P800,000.00).
You are hereby ordered to take immediate possession of the following property which is now detained by
the defendant, to wit: (Honda CRV station wagon) xxx
and to keep the said property in your possession for five (5) days. At the expiration of the said period, you
shall deliver, subject to the provisions of Sections 5, 6 and 7 of Rule 60 of the Rules of Court, to the
plaintiff the said property, provided that your legal fees and all the necessary expenses are fully paid.
Respondent enforced the writ on 17 May 2004.5 On 20 May 2004, spouses Normandy R. Bautista and
Ruth B. Bautista (complainants) filed with the trial court an urgent motion6 for the return of the vehicle and
submission of counter-bond. On 21 May 2004, complainants filed a motion7 to withdraw the urgent
motion, attaching thereto an omnibus motion8 for entry of appearance, urgent setting of hearing, and
redelivery of the vehicle to them. Pursuant to Section 5 of Rule 60, complainants required the return of
the vehicle to them by filing a counter-bond and serving Glor a copy of the counter-bond.9
Because the trial court failed to approve complainants counter-bond within the five-day period provided in
Section 6 of Rule 60, Glor, in a letter10 dated 24 May 2004, asked respondent to deliver the vehicle to her.
In a letter11 dated 26 May 2004, complainants asked respondent not to deliver the vehicle to Glor
because (1) pursuant to Section 5, they had required the return of the vehicle to them and filed the
corresponding counter-bond; (2) the vehicles delivery to Glor was not justified under Section 6; and (3)
there was no order from the trial court directing the delivery to Glor. In a letter12 dated 26 May 2004, Glor
reiterated her demand on respondent to deliver the vehicle to her; otherwise, she would be constrained to
pursue legal actions against him.
On 26 May 2004, complainants alleged that respondent approached them in the Quezon City Hall of
Justice building asking them to wait for him by the benches at the back of the second floor. There,
respondent told them that he was willing to ignore Glors request in exchange for P20,000. With a little
hesitation, they offered him P3,000 and promised to give the balance on the following day. Respondent
agreed and immediately received the P3,000. On the next day, however, complainants did not give the
balance. They asked respondent if he could give them more time to raise the money. Respondent was
irked by this. Complainants alleged that:
At 4:50 P.M. he came to us at the designated place and while we were reading his Sheriffs Manifestation,
he said he had not eaten lunch yet because in his words "dahil sa paggawa ko ng Manifestation at sama
ng loob dahil ako ang naipit dito sa kaso nyo, si judge kasi ang bagal mag-release ng order. Kakasuhan
na ko sa Ombudsman ngplaintiff." Trying to clarify what he meant about this, we ask [sic] him what we on
our part need [sic] to do so that the property will be ensured that its [sic] under the custody of the court or
"custodia legis" until such time that the Honorable Court could resolve our motion. However we were
totally surprised when he said that "Nasa sa inyo yan pero yun kasing kabila talagang desidido na
makuha ang property, kung makapagbigay kayo ng kahit Twenty (20) Thousand sa akin magagawan
natin yan ng paraan na di makuha ng plaintiff, yun ay kung gusto nyo lang, kasi pag napunta yan sa
kanila baka di nyo na makita yan".
[With] those words from Sheriff IV Ernesto L. Sula it became clear to us that he was asking money to
favor us in the disposition of the property, I replied that the only cash we have [sic] at the time was only
Three (3) Thousand Pesos and ask [sic] him if he could accept it for the meantime and that we will come
up with the balance on the following morning. He said "Cge pero siguraduhin nyo lang maibigay nyo ang
balanse bukas ng maaga kasi meron din akong bibigyan para safe din ako. Ganito kasi dito kailangan
may nakakaalam na mas mataas para may proteksiyon tayo." At this point I asked my wife, Ruth B.
Bautista what she thought about it and she said its [sic] up to me and thereafter I gestured to give him the
Three (3) Thousand Pesos which he said "Isimple mo lang ang abot para walang makapansin" and I
simply slipped the money in his hand and after he received the money put his hand immediately in his
pocket. x x x
[O]n the following day 27th May 2004 at 8:10 A.M. We met him at the benches at the back of the 3rd floor
of the Justice Hall Bldg. We immediately apologized and told him that we failed to borrow money for the
balance of our agreement and ask [sic] if he could wait until at [sic] Friday 29th May 2004 to come up with
the balance of our agreement because it might take some time before we can raise it. x x x He answered
that "Medyo mahirap pala kayong kausap" and left us.13
On 27 May 2004, respondent filed a sheriffs manifestation asking the trial courts guidance on whether he
should deliver the vehicle to Glor or keep it in custodia legis:
[T]his Manifestation is respectfully filed before the Honorable Court, in order that he maybe [sic] guided
on whether he should release the vehicle as demanded by plaintiff or hold its release until such time that
the Motions and Counter[-]bond filed by defendants is [sic] resolved as requested by the defendant.14
Without waiting for the trial courts instructions regarding the vehicle, respondent filed his sheriffs return
on 28 May 2004 stating that he had already delivered the vehicle to Glor:
[O]n May 27, 2004, after the expiration of the five (5) days [sic] period and in the absence of any Court
Order/s, undersigned turned-over the possession of the motor vehicle to the Plaintiff as per Court/Sheriffs
Receipt hereto attached.15
On 31 May 2004, complainants alleged that they went to the trial court to check on the vehicle and to look
for respondent. There, respondent admitted to them that he had already delivered the vehicle to Glor
he acted on his own discretion. Complainants asked respondent how much he received from Glor and
why he did not give them a chance to fulfill their agreement. He just said "pasensiyahan na lang tayo."16
On 2 and 7 June 2004, complainants filed with the Office of the Ombudsman and the Office of the Court
Administrator (OCA), respectively, a joint affidavit-complaint17 against respondent. Since the acts
complained of were related to respondents functions as an officer of the court, the Office of the
Ombudsman, in its 1st Indorsement18 dated 20 July 2004, referred the matter to the OCA.
In his comment19 dated 4 August 2004, respondent prayed that the instant case be dismissed because:
1. Complainants accusations against him were malicious and unfounded. They filed the
instant case against him because they "amassed so much anxiety and wrath against
respondent to the point of even telling telltales." They felt aggrieved because of the vehicles
delivery to Glor and its subsequent foreclosure.
2. He was only guided by the orders of the court and, in their absence, by the Rules of Court
particularly Rule 60. Under Section 6 of the said Rule, the vehicles delivery to Glor followed as
a matter of course because she posted a bond which was approved by the court. On the other
hand, up to the time of the delivery, complainants counter-bond had not been approved by the
court.
3. Complainants accusation that he asked for P20,000 was incredulous and a total lie. He
never dealt clandestinely with complainants, much less demanded money from them. He did
not personally know Glor, nor was he acquainted with complainants.
4. Complainants had no evidence to support their accusation. If it were true that he asked and
received money from them, it would have been easy for them to entrap him, yet, they did not
do so.
5. He enjoyed the presumption of regularity in the performance of his duties.
In their comment20 to respondents comment dated 4 August 2004, complainants prayed that respondent
be preventively suspended pending the investigation of the case. They alleged that they had a witness
who was willing to testify on the circumstances surrounding respondents demand and receipt of the
money from them. However, the witness did not want to testify unless respondent was placed under
preventive suspension because she was afraid that her testimony would endanger her means of
livelihood inside the Hall of Justice building.
The Office of the Court Administrators
Report and Recommendations
In its memorandum21 dated 14 October 2004, the OCA found that respondent erred when he released the
vehicle to Glor without waiting for the trial courts instructions on who had a better right over the vehicle.
The OCA recommended that the case be re-docketed as a regular administrative matter and that
respondent be held liable for grave abuse of authority and fined P4,000. The OCA recommended that the
charges for violation of the Anti-Graft and Corrupt Practices Act, gross ignorance of the law, and conduct
prejudicial to the best interest of the service be dismissed for insufficiency of evidence.
In a Resolution22 dated 8 December 2004, the Court ordered the re-docketing of the case as a regular
administrative matter and, in a Resolution23 dated 16 March 2005, the Court required the parties to
manifest if they were willing to submit the case for decision based on the pleadings already filed.
Complainants filed a motion24 for further investigation and preventive suspension of respondent pending
the investigation of the case. They prayed that the case be referred to the Executive Judge of the
Regional Trial Court, Quezon City, for investigation. They also prayed that respondent be placed under
preventive suspension to allow their witness to testify without fear of being harassed by respondent.
The Court noted complainants motion for further investigation and preventive suspension and referred
the case to the OCA for investigation, report, and recommendation.25 In an Order26 dated 24 August
2005, the OCA set the case for investigation on 15 and 16 September 2005. In the investigation, only
respondent appeared.27 The complainants filed a manifestation and motion28 dated 10 September 2005
stating that although they were willing to participate in the investigation, they could not convince their
witness to testify unless respondent was preventively suspended.
In a letter29 dated 20 September 2005, the OCA returned the rollo of the case together with complainants
manifestation and motion to the Court for further instructions. In a Resolution30 dated 10 October 2005,
the Court noted the said letter and referred the same to the OCA for report and recommendation.
Accordingly, the OCA set the case for investigation on 23 and 24 August 2006.31 Again, only respondent
appeared in the investigation. The complainants reiterated their claim that they could not participate in the
investigation unless respondent was preventively suspended.32
In its Report33 dated 13 September 2006, the OCA recommended that (1) the motion to preventively
suspend respondent be denied; (2) the previous recommendation imposing a fine of P4,000 on
respondent for grave abuse of authority be adopted; and (3) the charges for violation of the Anti-Graft and
Corrupt Practices Act, gross ignorance of the law, and conduct prejudicial to the best interest of the
service be dismissed for insufficiency of evidence.
The Courts Ruling
The Court finds respondent liable for simple misconduct.
On the Charge of Violation of the
Anti-Graft and Corrupt Practices Act,
Gross Ignorance of the Law, and
Conduct Prejudicial to the Best Interest of the Service
Complainants bear the burden of proving, by substantial evidence, the allegations in the complaint.
"Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion."34
In the instant case, complainants failed to substantiate the allegation that respondent violated the Anti-
Graft and Corrupt Practices Act. Aside from their bare allegation that respondent demanded and received
money from them, complainants did not present any substantial evidence to support the charge. The only
pieces of evidence they offered were (1) respondents admission in his reply that he approached
complainants in the Hall of Justice building and (2) a witness who could testify on respondents alleged
acts of demanding and receiving money from the complainants:
From the very words of the respondent Sheriff himself (page 5 of his Reply), he admitted to have
[sic]APPROACHED US when he furnished us a copy of his Manifestation x x x. Why then did the
respondent Sheriff approached [sic] us when his Manifestation is addressed and concerns only the
Court? To put to rest that this is just a bare allegation, a third person is willing to present herself to
the investigation of this Honorable Office to testify to the truth of the circumstances of the said
incident which she personally witnessed but which [sic] we could not reveal her identity at the moment
upon her own request because the said person makes her living in the hallway of the Hall of Justice of
Quezon City.35
Complainants, however, never appeared in any of the investigations, nor presented their witness. The
fact that respondent approached complainants in the Hall of Justice building is not enough basis for this
Court to conclude that respondent demanded and received money from them. On complainants witness,
the OCA found that "[t]he alleged fear from harassment of the complainants unnamed witness
[precluding her] to testify against the respondent unless the latter is suspended from office is purely
speculative."36 Complainants failed to present the quantum of evidence required to hold respondent
liable.
There is also no sufficient evidence to prove that respondent is guilty of gross ignorance of the law and
conduct prejudicial to the best interest of the service. As the OCA correctly held, "[t]he charges for Gross
Ignorance of the Law and Conduct Prejudicial to the Best Interest of the Service must likewise fail, for
insufficiency of evidence; if there was any fault by herein respondent, it was his overzealousness to
perform his duty."37
On the Charge of Simple Misconduct
The Court, however, finds respondent liable for simple misconduct. Simple misconduct has been defined
as an unacceptable behavior that transgresses the established rules of conduct for public officers. 38 It is
an unlawful behavior.39 "Misconduct in office is any unlawful behavior by a public officer in relation to the
duties of his office, willful in character. It generally means wrongful, improper, unlawful conduct motivated
by a premeditated, obstinate, or intentional purpose although it may not necessarily imply corruption or
criminal intent."40
The OCA found that respondent erred when he delivered the vehicle to Glor without waiting for the trial
courts instructions on the matter:
In this case, plaintiff/applicant had posted a replevin bond duly approved by the court. Nevertheless, one
of the elements upon which the property subject of replevin may be delivered to the plaintiff/applicant is
lacking. There appears to be no court order issued yet for the release of the aforementioned property to
the plaintiff/applicant. The order dated 12 May 2004 issued by the court only directed respondent to take
into his custody the subject motor vehicle. Further, respondent filed a manifestation seeking guidance
from the court on the disposal of the seized property. Hence, respondents justification that the
release of the seized property to the plaintiff/applicant follows as a matter of course because the
applicant/plaintiff had already filed a replevin bond to answer for any damage that may be
suffered by complainants may not be given weight.
It must be stressed that the prerogatives of Sheriffs do not give them any discretion to determine who
among the parties is entitled to possession of the subject property. The appropriate course of action
should have been for respondent to wait for the instructions of the court as to whom he will
release the property since he had already asked for its guidance through his Manifestation which
was submitted to the court virtually at the close of office hours on 26 May 2004. Yet the following
morning, he suddenly decided to release the car to the plaintiff without waiting for any court order
on the matter. Such apparent haste raised questions on his actions and leaves doubts as to his intent or
interest in the case.
Moreover, under the Revised Rules of Court, the property seized under a writ of replevin is not to
be delivered immediately to the plaintiff. This is because a possessor has every right to be respected
in its possession and may not be deprived of it without due process.
The purpose of the five (5) day period in Section 6, Rule 60 is to give defendants in a replevin case a
chance to require the return of the property by filing a counter[-]bond. Considering that there was no
court order to release the property to the applicant/plaintiff and the complainants were able to
require the return of the property and file their counter[-]bond within the five (5) day period
required by the Rules, respondent should have been more circumspect in releasing the property
to the plaintiff/applicant. By hastily deciding to release the seized property to the plaintiff/applicant
without waiting for the courts order, respondent patently abused his authority. (Emphasis ours)
Indeed, respondent went beyond the call of his duties when he delivered the vehicle to Glor. The writ of
replevin issued by the trial court specifically stated that the vehicle shall be delivered to Glor subject to the
provisions of Sections 5 and 6 of Rule 60. Yet, respondent opted to ignore these provisions.
Good faith on respondents part, or lack of it, would be of no moment for he is chargeable with the
knowledge that being an officer of the court, his duty is to comply with the Rules. 41 Sections 5 and 6 of
Rule 60 provide that:
SEC. 5. Return of property. If the adverse party objects to the sufficiency of the applicants bond, or of
the surety or sureties thereon, he cannot immediately require the return of the property, but if he does not
so object, he may, at any time before the delivery of the property to the applicant, require the
return thereof, by filing with the court where the action is pending a bond executed to the
applicant, in double the value of the property as stated in the applicants affidavit for the delivery
thereof to the applicant, if such delivery be adjudged, and for the payment of such sum to him as may be
recovered against the adverse party, and by serving a copy of such bond on the applicant.
SEC. 6. Disposition of property by sheriff. If within five (5) days after the taking of the property by
the sheriff, the adverse party does not object to the sufficiency of the bond, or of the surety or sureties
thereon; or if the adverse party so objects and the court affirms its approval of the applicants bond or
approves a new bond, or if the adverse party requires the return of the property but his bond is
objected to and found insufficient and he does not forthwith file an approved bond, the property
shall be delivered to the applicant. If for any reason the property is not delivered to the applicant, the
sheriff must return it to the adverse party. (Emphasis ours)
Under Section 5, complainants may require the return of the vehicle by (1) posting a counter-bond in
double the value of the vehicle and (2) serving Glor with a copy of the counter-bond. Both requirements
must be complied with before the vehicle is delivered to Glor. Put differently:
If a defendant in a replevin action wishes to have the property taken by the sheriff restored to him, he
should within five days from such taking, (1) post a counter-bond in double the value of said property, and
(2) serve plaintiff with a copy thereof, both requirements as well as compliance therewith within the
five-day period mentioned being mandatory. x x x
Conformably, a defendant in a replevin suit may demand the return of possession of the property
replevined by filing a redelivery bond executed to the plaintiff in double the value of the property as stated
in the plaintiffs affidavit within the period specified in Sections 5 and 6. 42
Under Section 6, the vehicle shall be delivered to Glor only under the following instances:
1. If within five days after the taking of the vehicle, complainants do not object to the
sufficiency of the bond or of the surety or sureties thereon;
2. If within five days after the taking of the vehicle, complainants object to the sufficiency of the
bond and the trial court affirms its approval of Glors bond or approves a new bond; or
3. If within five days after the taking of the vehicle, complainants require the return of the
vehicle and their bond is objected to and found insufficient and they do not forthwith file an
approved bond.
In the instant case, complainants duly complied with all of the requirements under Sections 5 and 6 for
the return of the vehicle. Respondent took possession of the vehicle on 17 May 2004. On 20 May 2004,
complainants filed their urgent motion for the return of the vehicle and submission of counter-bond and,
on 21 May 2004, they filed a motion to withdraw the urgent motion and change the same with an omnibus
motion. Both the urgent motion and the omnibus motion were filed before the delivery of the vehicle
to Glor and before the expiration of the five-day period. Later, the trial court approved complainants
counter-bond. Thus, respondent committed an irregularity when he hastily delivered the vehicle to Glor.
Under the Rules of Court, the sheriff should not immediately deliver the property seized under a writ of
replevin to the plaintiff. This is because defendants have every right to be respected in their possession
and may not be deprived of it without due process.43 The purpose of the five-day period in Section 6 is to
give defendants in a replevin case a chance to require the return of the property by filing a counter-bond.
In Pardo v. Velasco,44 this Court held that:
Respondent as an officer of the Court is charged with certain ministerial duties which must be performed
faithfully to the letter. Every provision in the Revised Rules of Court has a specific reason or objective. In
this case, the purpose of the five (5) days is to give a chance to the defendant to object to the sufficiency
of the bond or the surety or sureties thereon or require the return of the property by filing a counter[-
]bond.
In Sebastian v. Valino,45 this Court held that:
Under the Revised Rules of Court, the property seized under a writ of replevin is not to be delivered
immediately to the plaintiff. The sheriff must retain it in his custody for five days and he shall return it
to the defendant, if the latter, as in the instant case, requires its return and files a counter[-
]bond (Sec. 4, Rule 60, Revised Rules of Court). (Emphasis ours)
The prerogatives of sheriffs do not include the discretion to determine who among the parties is entitled to
the possession of the property. Even when placed in a difficult situation, they are not called to exercise
their own discretion. In Cruz v. Villar,46 the Court agreed with the OCAs observations:
The nature of their functions is essentially ministerial. Their prerogatives do not give them any discretion
to determine who among the parties is entitled to possession of the subject properties. The appropriate
course of action should have been for respondents to inform their judge of the situation by way of a partial
Sheriffs Return and wait for instructions on the proper procedure to be observed. These respondents
failed to do.
Similarly, in Mamanteo v. Magumun,47 this Court held that:
[T]he novelty of his predicament did not call for him to use his discretion x x x without waiting for
instructions from his judge. A sheriffs prerogative does not give him the liberty to determine who among
the parties is entitled to the possession of the attached property.
Respondents act of filing the manifestation seeking the trial courts guidance virtually at the close of office
hours on 26 May 2004 then delivering the vehicle to Glor in the morning of 27 May 2004 is highly
questionable. As the OCA held:
[R]espondent filed a Manifestation seeking guidance from the court on the disposal of the seized
property. Hence, respondents justification that the release of the seized property to plaintiff/applicant
follows as a matter of course because the applicant/plaintiff had already filed a replevin bond to answer
for any damage that may be suffered by complainants may not be given weight.
The appropriate course of action should have been for respondent to wait for the instructions of the court
as to whom he will release the property since he had already asked for its guidance through his
Manifestation which was submitted to the court virtually at the close of office hours on 26 May 2004. Yet
the following morning, he suddenly decided to release the car to the plaintiff without waiting for any court
order on the matter. Such apparent haste raised questions on his action and leaves doubts as to his
intent or interest in the case.1avvphi1
Since respondent had filed a manifestation seeking the trial courts guidance, the most appropriate course
of action should have been for him to wait for the trial courts instructions on what he should do with the
vehicle. Assuming that the issue may have been too technical for respondent to decide on the spot, it
would have been prudent for him to let the trial court decide on the matter. However, he was overzealous
and delivered the vehicle to Glor without even giving the trial court a chance to act on his manifestation.
His unusual zeal and precipitate decision to give possession of the vehicle to Glor effectively destroyed
the presumption of regularity in the performance of his duties.48 "While the expeditious and efficient
execution of court orders and writs is commendable, it should not, under any circumstances, be done by
departing from the Rules governing the same."49
Respondent should execute the directives of the trial court strictly "in accordance with the letter thereof
and without any deviation therefrom."50 As an officer of the court, he should follow the provisions of the
Rules to the letter especially when the law is clear.
When, as in this case, the law is clear, respondent owes it to himself and to the public he serves to
adhere to its dictates. The failure to do so exposes the wrongdoer to administrative sanctions. When the
inefficiency of an officer of the court springs from a failure to consider so basic and elemental a rule, a law
or a principle in the discharge of his duties, he is either too incompetent and undeserving of the position
and title he holds or is too vicious that the oversight or omission was deliberately done in bad faith or with
grave abuse of authority.51
Section 52(B)(2)52 of the Revised Uniform Rules on Administrative Cases in the Civil Service53 classifies
simple misconduct as a less grave offense punishable by suspension of one month and one day to six
months for the first offense. Having been in the service for more than 26 years, 54 respondent cannot
wrongly interpret basic rules without appearing grossly incompetent or having acted in bad faith.
WHEREFORE, we find respondent Ernesto L. Sula, Sheriff IV, Regional Trial Court, Branch 98, Quezon
City,GUILTY of SIMPLE MISCONDUCT. Accordingly, we SUSPEND him for six months without pay
and STERNLY WARN him that a repetition of the same or similar acts shall be dealt with more severely.
SO ORDERED.
RIVERA vs. VARGAS (supra)
SECTION 6
CITIBANK vs. CA (supra)
BAUTISTA vs. SULA (supra)
A.M. No. P-05-1942 January 17, 2005
ALIBSAR ADOMA, complainant, vs.
ROMEO GATCHECO, Sheriff III, and Eugenio Taguba, Process Server, of Branches 1 and 2,
respectively, of the Municipal Trial Court in Cities of Santiago City, respondents.
The instant administrative complaint filed against respondents for violation of Republic Act No. 3019 (Anti-
Graft and Corrupt Practices Act) and conduct unbecoming a court employee, arose from the execution of
a writ of replevin inAdoma v. Spouses Edmundo Andres and Luzviminda Andres, docketed as Civil Case
No. 1404-1-669, for recovery of possession of motor vehicle with prayer for the issuance of a writ of
replevin before Branch 1 of the Municipal Trial Court in Cities (MTCC) of Santiago City, presided by
Judge Ruben Plata.
Complainant Alibsar Adoma claimed that on August 16, 2003 a writ of replevin1 for the recovery of an L-
300 van was issued in his favor. On the same day, respondent sheriff Romeo Gatcheco implemented the
writ. He was accompanied by respondent Eugenio Taguba, a process server of Branch 2 of MTCC,
Santiago City, who volunteered to assist respondent sheriff. After the two respondents seized the vehicle,
they demanded payment of P8,000.00, allegedly promised by complainant but the latter was able to give
only P1,000.00 and another P1,000.00 the following day.2
The writ of replevin stated that the vehicle will be delivered to complainant after 5 days from the
implementation thereof. With the vehicle still undelivered on the 7th day, complainant threatened to file an
administrative case against respondent sheriff. Finally, on August 29, 2003, the latter was forced to
release the vehicle to complainant. Respondents, however, continued to demand P6,000.00, hence
complainant filed the instant administrative case.3
Respondents, on the other hand, denied soliciting and receiving any amount from the complainant.
Respondent sheriff admitted, however, that complainant promised to give him P10,000.00 if the vehicle
will be sold.4
On September 10, 2003, the Court referred the instant administrative complaint to Judge Fe Albano
Madrid, Executive Judge, Regional Trial Court, Santiago City, Isabela, for investigation, report and
recommendation.5
In her investigation report, Judge Madrid found the testimony of complainant which was corroborated by
two witnesses, to be more credible. She refused to believe the claim of respondent sheriff that he did not
release the vehicle to complainant after 5 days from the implementation of the writ on August 16, 2003,
because he was awaiting instructions from Judge Plata. However, she found that respondent sheriff did
not actually demand money for the implementation of the writ because it was complainant who promised
to give money in exchange for the implementation of the writ of replevin. Nevertheless, she concluded
that respondent sheriff is guilty of misconduct considering that he accepted partial payment and insisted
on its full payment.
As to respondent Taguba, Judge Madrid recommended that he be reprimanded for trying to abet the
misconduct of respondent sheriff.
Upon receipt of the report of Judge Madrid, the Court referred the case to the Office of the Court
Administrator (OCA) for evaluation, report and recommendation.6
In its Memorandum dated June 4, 2004, the OCA affirmed the investigating Judges report. It
recommended that respondent sheriff be fined in the amount of P5,000.00 for conduct unbecoming a
court employee and that respondent Taguba be reprimanded for trying to abet the misconduct of a fellow
employee of another court.
On July 5, 2004, the Court required the parties to manifest whether they are willing to submit the case for
resolution based on the pleadings filed. However, to date, the parties have yet to file their manifestation.
Hence, we are constrained to dispense the filing of such manifestation.
The Court agrees with the findings of the investigating Judge and the OCA that respondents received the
amount of P2,000.00 and that they demanded the payment of an additional P6,000.00 from complainant.
The testimony of complainant before the investigating Judge is worthy of belief because the same was
not only candid and direct but also corroborated by two witnesses who attested to the veracity of
complainants accusations. The writ of replevin has been implemented and the vehicle is now in
complainants possession.
Under Section 9, Rule 141 of the Rules of Court, the procedure for the execution of writs and other
processes are:first, the sheriff must make an estimate of the expenses to be incurred by him; second, he
must obtain court approval for such estimated expenses; third, the approved estimated expenses shall be
deposited by the interested party with the Clerk of Court and ex-oficio sheriff; fourth, the Clerk of Court
shall disburse the amount to the executing sheriff; and fifth, the executing sheriff shall liquidate his
expenses within the same period for rendering a return on the writ. Any amount received by the sheriff in
excess of the lawful fees allowed by the Rules of Court is an unlawful exaction which renders him liable
for grave misconduct and gross dishonesty.71awphi1.nt
In the instant case, respondent sheriff totally disregarded the aforecited procedure. He failed to make and
submit estimate of the sheriffs expenses. The amounts received and demanded by him are therefore
unauthorized fees. His acts of accepting and soliciting said monetary considerations make him liable not
only for conduct unbecoming a court employee but also for grave misconduct and dishonesty.
As correctly found by the OCA, respondent sheriff deliberately failed to place complainant in possession
of the vehicle after five days from the implementation of the writ because the latter failed to give the whole
amount he promised. Since the adverse party did not object to the complainants bond nor posted a
redelivery bond to recover possession of the vehicle taken under the writ of replevin, respondent sheriff is
under obligation to deliver the van to complainant. However, it took respondent sheriff 13 days before he
released the vehicle to complainant, a clear violation of Section 6, Rule 60 of the 1997 Revised Rules of
Civil Procedure which provides
SEC. 6. Disposition of property by sheriff.If within five (5) days after the taking of the property by the
sheriff, the adverse party does not object to the sufficiency of the bond, or of the surety or sureties
thereon; or if the adverse party so objects and the court affirms its approval of the applicants bond or
approves a new bond, or if the adverse party requires the return of the property but his bond is objected
to and found insufficient and he does not forthwith file an approved bond, the property shall be delivered
to the applicant. If for any reason the property is not delivered to the applicant, the sheriff must return it to
the adverse party. (6a)
In Apuyan, Jr. v. Sta Isabel ,8 citing Alvarez, Jr. v. Martin ,9 a sheriff was similarly found guilty of grave
misconduct, dishonesty and conduct grossly prejudicial to the best interest of the service for receiving and
soliciting money from the complainant and for deliberately ignoring the rules for the implementation of a
writ of attachment, thus
Furthermore, respondents act of demanding money and receiving P1,500.00 from the complainant for
the lunch andmerienda of the policemen who will accompany him in executing the decision of the Court is
a clear violation of section 9, Rule 141. The Rules require the sheriff to estimate his expenses in the
execution of the decision. The prevailing party will then deposit the said amount to the Clerk of Court who
will disburse the amount to the sheriff, subject to liquidation. Any unspent amount will have to be returned
to the prevailing party. In this case, no estimate of sheriffs expenses was submitted to the court by
respondent. In fact, the money which respondent deputy sheriff had demanded and received from
complainant was not among those prescribed and authorized by the Rules of Court. This Court has ruled
that any amount received by the sheriff in excess of the lawful fees allowed by the Rules of Court is an
unlawful exaction and renders him liable for grave misconduct and gross dishonesty.
Finally, the procedure for execution of a final judgment is the same as that in carrying out a writ of
preliminary attachment, as set forth in Rule 141 of the Rules of Court
Clearly, in this case, respondent not only utterly failed to live up to the high ethical standards required of a
sheriff, but also, he totally ignored Section 9, Rule 141 of the Rules of Court. Respondent failed to
demonstrate that he followed the procedure laid down by Rule 141.
The OCAs recommendation that respondent be found guilty of grave misconduct, dishonesty and
conduct grossly prejudicial to the best interest of the service is firmly supported by the records of this
case.
received the amount of P2,000.00, respondent Taguba assisted respondent sheriff in soliciting money
from complainant. Note that respondent Taguba is a process server of another branch of the MTCC of
Santiago City but he volunteered to aid respondent sheriff in the implementation of the writ. He not only
demanded P8,000.00 from complainant after the implementation of the writ but also tagged along with
respondent sheriff when the latter tried to exact P6,000.00 from complainant before the vehicle was
released to the latter. Furthermore, respondent Taguba had been previously suspended for 1 month
in Albano-Madrid v. Apolonio ,12 for simple misconduct in playing cards with other court personnel inside
the Judges chambers during office hours. Indeed, reprimand is not commensurate to his incorrigible
conduct. Under the circumstances, the penalty of 6 months suspension is appropriate.
At the grassroots of our judicial machinery, sheriffs are indispensably in close contact with the litigants,
hence, their conduct should be geared towards maintaining the prestige and integrity of the court, for the
image of a court of justice is necessarily mirrored in the conduct, official or otherwise, of the men and
women who work thereat, from the judge to the least and lowest of its personnel; hence, it becomes the
imperative sacred duty of each and everyone in the court to maintain its good name and standing as a
temple of justice.13
WHEREFORE, in view of all the foregoing, respondent Romeo Gatcheco, Sheriff III, Municipal Trial Court
in Cities, Branch 1, Santiago City is found GUILTY of Grave Misconduct, Dishonesty and Conduct
Grossly Prejudicial to the Best Interest of the Service and is SUSPENDED for one (1) year, without pay.
Respondent Eugenio Taguba, Process Server, Municipal Trial Court in Cities, Branch 2, Santiago City is
found GUILTY of Conduct Prejudicial to the Best Interest of the Service and is SUSPENDED for six (6)
months without pay.
Respondents are warned that a repetition of the same or any other act of infraction in the future shall be
dealt with most severely. SO ORDERED.

Section 52, Rule IV of the Uniform Rules on Administrative Cases in the Civil Service (Resolution No.
991936, effective September 27, 1999), provides

Section 52. Classification of Offenses. - Administrative offenses with corresponding penalties are
classified into grave, less grave or light, depending on their gravity or depravity and effects on the
government service.

A. The following are grave offenses with their corresponding penalties:

1. Dishonesty
1st Offense Dismissal

3. Grave Misconduct
1st Offense Dismissal

20. Conduct prejudicial to the best interest of the service
1st offense Suspension (6 mos. 1 day to 1 year)
2nd offense Dismissal

The imposable penalty for commission of the first offense of grave misconduct and dishonesty is
dismissal. In the cases of Apuyan, Jr. v. Sta Isabel,10 and Albello v. Galvez ,11 however, the fact that the
respondent sheriffs were first time offenders was considered a mitigating circumstance, hence they were
meted the penalty of 1 year suspension instead of dismissal. Accordingly, since this is respondent
sheriffs first offense, the penalty of 1 year suspension will suffice.

With respect to respondent Taguba, we find the sanction of reprimand too light a penalty for his
transgression. Although it was not him who deliberately delayed the delivery of the vehicle to force
complainant to yield to the sheriffs demand, and that complainant did not point to him as the one who
 SECTION 9
G.R. No. 164521 December 18, 2008
ALLANDALE SPORTSLINE, INC., AND MELBAROSE R. SASOT, petitioners, vs.
THE GOOD DEVELOPMENT CORPORATION, respondent.
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
May 15, 2003 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 59475 which dismissed the
petition of Allandale Sportsline, Inc. and Melbarose R. Sasot from the January 13, 1998 Decision2 of the
Regional Trial Court (RTC) of Pasig City, Branch 158 in Civil Case No. 61053; and the June 12, 2004 CA
Resolution3 which denied petitioners motion for reconsideration.
The relevant facts are as follows:
Allandale Sportsline, Inc. (ASI) obtained a loan of P204,000.00 from The Good Development Corp.
(GDC) under a Promissory Note signed by Melbarose R. Sasot (Melbarose) and Allandale R. Sasot
(Allandale), President and Vice-President, respectively, of ASI, with Theresa L. Manipon (Manipon) as
one of three co-makers.4 The Promissory Note provides that the loan is payable in daily equal
installments of P2,000.00 with interest at the rate of 26.002% per annum. In case of default in the
payment of any installment, the entire balance of the obligation shall become immediately due and
payable, and subject to liquidated penalty/ collection charge equivalent to 2% of the principal.5
To provide additional security, ASI and Melbarose executed in favor of GDC a Deed of Mortgage6 in
which they acceded that:
xxxx should the MORTGAGORS fail to comply with any of the terms of the promissory note
and this mortgage contract, the MORTGAGEE shall automatically have the absolute right
without need of prior notice or demand to forthwith judicially or extrajudicially foreclose
this mortgage and proceed against all or any of the mortgaged rights, interests and properties
for the full satisfaction of the MORTGAGORS' entire obligation to the MORTGAGEE and, in
such event, the MORTGAGORS shall be further liable to the MORTGAGEE in the same
judicial or extrajudicial foreclosure proceedings for payment of attorney's fees in an amount
equivalent to twenty five (25%) per cent of the unpaid indebtedness but in no case less that
Five hundred pesos (500.00); liquidated damages in an amount equivalent to twenty-five
(25%) percent of said outstanding obligation and all the expenses and costs incidental to
the above proceeding xxx.7 (Emphasis supplied)
The properties subject of the mortgage are itemized in an inventory attached to the deed. They include:
List A -- all the merchandise and stocks in trade found in the commercial establishment owned by ASI
and Melbarose at #514 M.V. delos Santos St., Sampaloc, Manila, valued at P100,000.00; List B -- all the
furniture, fixtures, appliances, equipment and other personal property found in said business
establishment, valued at P3,500.00; and List C -- one Toyota Corona 2DR. HT. with Motor No. 18R-
1474348, valued at P40,000.00 and one Toyota Corolla 4DR. SDN with Motor No. 4K-5872110, valued
at P35,000.00.8
On June 24, 1991, GDC demanded that Melbarose pay the unpaid account of P179,000.00 or surrender
the mortgaged chattels within five days from notice.9
When no payment was made, GDC filed with the RTC a Complaint10 for Replevin and/or Sum of Money
with Damages against ASI, Melbarose, Manipon, Florante Edrino and John Doe.11 It is significant that
plaintiff GDC prayed for alternative reliefs, to wit:
WHEREFORE, for all the foregoing it is most respectfully prayed of this Honorable Court that:
1. A Writ of Replevin be issued ordering the seizure of the above described chattels or
personal property with all the accessories or equipments and directing their transfer to
Plaintiff for the purposes of foreclosure &/or transfer in accordance with the law to satisfy
Defendants' obligation in favor of Plaintiff; and
2. After due notice and trial:
a. to enforce said seizure and Plaintiff's right over aforedescribed chattels and/or
personal property; and
b. to order Defendants to pay Plaintiff jointly and severally the sum of P43,750.00
as and for attorney's fees and the sum equivalent to 25% of the obligation as and
for liquidated damages, plus other expenses of litigation and costs of suit.
On the Alternative Cause of Action, in the event that manual delivery of said chattels or
personal property cannot be obtained for some reason or another, to render judgment ordering
Defendants to pay plaintiff, jointly and severally as follows:
1. The sum of P175,000.00 plus interest thereon at 26.002% per annum from date of maturity
until said sum shall have been fully paid.
2. The sum of P43,750.00 as and for Attorney's fees, the sum equivalent to 25% of the
obligation as and for liquidated damages, such other expenses of litigation and costs of suit.12
The RTC issued a Writ of Replevin,13 and by virtue thereof, the Sheriff seized and delivered to GDC only
one unit of Toyota Corona with Motor No. 18R-1474348 and two appliances.14
On December 2, 1991, GDC filed an Amended Complaint to include in its application for replevin the
items under List A.15 After admitting the Amended Complaint, the RTC issued an Alias Writ of
Replevin16 over the items in List A, and, by virtue thereof, the Sheriff seized and delivered to GDC the
assorted items enumerated therein.17
It appears that a Second Alias Writ of Replevin18 was issued over one unit Toyota Corolla with Motor No.
4K-5872110, but the records do not indicate that the Sheriff made a return on the writ.
Meanwhile, ASI and Melbarose filed their Answer with Counterclaim.19 They claimed that their loan
obligation to GDC was only for P200,000.00, and after deducting P18,000.00, which amount was retained
by GDC as advanced interest payment, and P29,000.00, which represents payments made from June 4,
1991 to July 8, 1991, their unpaid obligation was only P171,000.00;20 that they repeatedly tendered
payment of this amount, but GDC rejected their efforts for no valid reason; that the unreasonable refusal
of GDC to accept their tender of payment relieved them of their loan obligation;21 that its Complaint being
obviously without merit, GDC should be held liable to them for damages.22
Manipon filed a separate Answer in which she did not deny the authenticity of her signature on the
Promissory Note, but argued that she did not knowingly or voluntarily sign the instrument as a co-maker,
for at that time she was under the impression that the instrument she was signing was her own loan
application with GDC.23
In its Pre-Trial Order dated May 22, 1992, the RTC identified only these issues: (a) whether GDC was
entitled to collect P175,000.00, as well as the interests, attorney's fees and other expenses and costs; (b)
whether ASI and Melbarose made a valid tender of payment; (c) whether Manipon was a real party-in-
interest; and (d) whether the prevailing party was entitled to damages.24
However, it is significant that at the trial that ensued, GDC disclosed that after it obtained possession of
the properties subject of the writs of replevin, it caused the auction sale of some of them and realized
proceeds amounting to P78,750.00.
While there is no certificate of sale in the records of the case, respondent's witness Leonila Buenviaje
testified thus:
ATTY. MAMARIL:
xxxx
Q - In this case, Miss witness, you were able to seize by way of a writ of replevin some
properties of the defendants. What did you do with these properties?
A - It was being sold by auction sale.
Q - Could you tell this Honorable Court if the auction sale pushed through?
A - Yes, sir.
Q - How much were you able to realize from the auction sale?
xxxx
A - We had pulled amounting to P55,050.00. The Karaoke P3,200.00; the t.v.
- P500.00; and athletic uniforms amounting to P20,000.00.
Q - So, all in all how much could that be?
xxxx
A - More than P78,000.00. I think P78,750.00.25
On cross-examination, the same witness further described the auction sale:
ATTY. QUINONES:
xxxx
Q - Are you sure that these has been sold already, Miss Buenviaje?
A - Yes, sir.
Q - When was it sold?
A - I forgot the exact date.
Q - Do you have any document that those items were already sold?
A - We have a certificate of sale from the Sheriff.
xxxx
Q - And the car Toyota Corona was also seized and sold?
A - Yes, sir.
Q - And in turn you were able to sell it to a third party?
A - Yes, sir.
Q - And that car was sold already in the amount of P56,000.00, is that correct?
A - P55,000.00.26
Moreover, GDC presented to the RTC a Statement of Account dated August 24, 1992, which indicated
that the total outstanding balance of the loan obligation of ASI and Melbarose was reduced
to P191,111.82 after the proceeds of the auction sale conducted on June 19, 1992 in the amount
of P78,750.00 was deducted from the earlier balance ofP266,126.17.27
The RTC rendered a Decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, judgment is rendered in favor of the plaintiff Good
Development Corporation against defendants Melbarose Sasot, Allandale Sportsline Inc., and
Ma. Theresa Manipon ordering them to pay the plaintiff jointly and severally the amount
of P269,611.82 plus legal interest thereon effective to date until the full amount is fully
paid, and 25% of the total amount due as liquidated damages.
SO ORDERED.28 (Emphasis supplied)
ASI, Sasot and Manipon appealed to the CA, which rendered the Decision assailed herein, to wit:
WHEREFORE, premises considered, the instant appeal is DENIED. The assailed decision of
the RTC of Pasig City, Branch 158 in Civil Case No. 61053 is hereby AFFIRMED.
SO ORDERED. 29
Their Motion for Reconsideration was also denied by the CA.30
Only ASI and Sasot (petitioners) took the present recourse, raising the following issues:
I. Whether or not petitioners check payment of Php171,000.00, PCIB Check No. 851688, to
cover the total balance of their loan to respondent, became a valid tender of payment by virtue
of the respondents acceptance thereof;
II. Whether or not the "parol evidence rule" applies on the promissory note in question when
the co-makers thereon are total strangers to one another;
III. Whether or not petitioners are entitled to the return of their properties pursuant to Section 9,
Rule 60 of the Rules of Court.
IV. Whether or not there is legal basis in the award of liquidated damages. 31
The second issue deserves scant consideration for lack of basis. Manipon did not join in the petition.
Hence, the finding of the RTC, as affirmed by the CA, that she was a co-maker of Promissory Note and a
real party-in-interest is already final and conclusive. Petitioners cannot now question this finding by
raising the defense that Manipon signed the promissory note without knowledge of the nature of her
liability under the instrument. Such defense is personal to Manipon and cannot be invoked by petitioners,
unless it is shown that their interests are so interwoven with
and dependent on Manipons as to be inseparable.32 However, in their pleadings, petitioners do not deny
the authenticity and due execution of the Promissory Note, whereas Manipon has maintained that said
instrument was not duly executed; hence, their defenses are clearly separate and distinct.
Only three issues are left to be resolved.
Anent the first issue, petitioners contend that they were relieved of their obligation to pay GDC
(respondent) when they made several attempts to tender payment but respondent refused to accept them
without any valid reason. Petitioners claim that the first tender of payment was made on July 3, 1991
when petitioner Sasot sent respondent a PCIB check postdated October 31, 1991 in the amount
of P171,000.00.33 Respondent rejected the check, citing that the amount was insufficient for, as of July 4,
1991, the balance of the principal loan was P175,000.00, notP171,000.00; and its maturity was
September 13, 1991, not October 31, 1991.34
On October 15, 1997, petitioners tendered payment of P171,000.00 in cash,35 but respondent refused to
accept it due to the insufficiency of the amount.36 Instead, respondent sent petitioners a Statement of
Account dated October 29, 1991, indicating that as of October 15, 1991 the total balance due
was P228,071.61.37
On October 29, 1991, petitioners tendered cash payment of P174,986.96,38 but respondent still refused to
accept it for insufficiency of the amount.39
The question then is whether petitioners tender of payment and respondents refusal thereof discharged
petitioners from their obligation.
Tender of payment, without more, produces no effect; rather, tender of payment must be followed by a
valid consignation in order to produce the effect of payment and extinguish an obligation. 40
Tender of payment is but a preparatory act to consignation. It is the manifestation by the debtor of a
desire to comply with or pay an obligation. If refused without just cause, the tender of payment will
discharge the debtor of the obligation to pay but only after a valid consignation of the sum due shall have
been made with the proper court.41
Consignation is the deposit of the proper amount with a judicial authority, before whom the debtor must
establish compliance with the following mandatory requirements: (1) there was a debt due; (2) the
consignation of the obligation had been made because the creditor to whom tender of payment was made
refused to accept it, or because he was absent or incapacitated, or because several persons claim to be
entitled to receive the amount due, or because the title to the obligation has been lost; (3) previous notice
of the consignation had been given to the person interested in the performance of the obligation; (4) the
amount due was placed at the disposal of the court; and (5) after the consignation had been made, the
person interested was notified thereof. Failure to prove any of these requirements is enough ground to
render a consignation ineffective.42
Petitioners did not allege or prove that after their tender of payment was refused by respondents, they
attempted or pursued consignation of the payment with the proper court. Their tender of payment not
having been followed by a valid consignation, it produced no effect whatsoever, least of all the
extinguishment of the loan obligation. Therefore, the first issue of the validity or invalidity of their tender of
payment is completely moot and academic, for either way the discussion will go, it will lead to no other
conclusion but that, without an accompanying valid consignation, the tender of payment did not result in
the payment and extinguishment of the loan obligation. The Court cannot take cognizance of such a
purely hypothetical issue.43
The third and fourth issues are interrelated because their resolution depends on the nature of the remedy
which respondent actually adopted.
As emphasized at the outset, the reliefs respondent prayed for in its Complaint and Amended Complaint
are in the alternative: delivery of the mortgaged properties preparatory to foreclosure or payment of the
unpaid loan.44
Moreover, after respondent acquired possession of the mortgaged properties through the writs of
replevin, it caused the auction sale of assorted sports outfits, one unit Sansio Karaoke, one unit Sony T.V.
Set and one unit Toyota Corona, and earned proceeds amounting to P78,750.00.45 While it appears that
respondent failed to obtain the other personal properties covered by the Deed of Mortgage and the writs
of replevin, there is no doubt that it had effectively elected the remedy of extra-judicial foreclosure of the
mortgage security over the remedy of collection of the unpaid loan.
The RTC was aware that respondent had elected one remedy. In its Decision, it cited the fact that some
of the mortgaged properties which were delivered to respondent by means of the Writs of Replevin had
been sold on auction, and acknowledged that the proceeds from said auction sale should be deducted
from the loan account of petitioners. The RTC noted:
The seized pieces of personal properties by virtue of the writ of replevin and alias writ of
replevin were sold in an auction sale where [respondent] realized P78,750.00 from the sale.46
xxxx
[Respondent] realized P78,500.00[sic] from the auction sale of the seized personal property by
virtue of the writ of replevin. The amount realized from the auction sale is clearly insufficient to
cover the unpaid balance, interest, attorneys fees, costs of the suit and other expenses
incidental to litigation. This amount was deducted from the [petitioners] total obligation in the
amount of P269,111.82 [sic] resulting in the net total obligation of P191,111.82 as of August
24, 1992.47 (Emphasis supplied)
Yet, it is curious that in the dispositive portion of its Decision, the RTC granted respondent the remedy of
collection of sum of money. The dispositive portion of the RTC Decision is reproduced below for
emphasis:
WHEREFORE, in view of the foregoing, judgment is rendered in favor of the [respondent]
Good Development Corporation against [petitioners] Melbarose Sasot, Allandale Sportsline
Inc., and Ma. Theresa Manipon ordering them to pay the [respondent] jointly and severally the
amount of P269,611.82 [sic] plus legal interest thereon effective to date until the full amount is
fully paid, and 25% of the total amount due as liquidated damages.
SO ORDERED.
Not only is there no more reference to the conduct of the auction sale of the mortgaged properties, there
is also no longer any acknowledgment that the proceeds earned from the auction sale should be
deducted from the total unpaid loan.
This is a glaring error.
In Bachrach Motor Co., Inc. v. Icarangal,48 the Court held that the remedies available to any mortgage
creditor are alternative, not cumulative or successive,49 viz.:
For non-payment of a note secured by mortgage, the creditor has a single cause of action
against the debtor. This single cause of action consists in the recovery of the credit with
execution of the security. In other words, the creditor in his action may make two demands, the
payment of the debt and the foreclosure of his mortgage. But both demands arise from the
same cause, the non-payment of the debt, and for that reason, they constitute a single cause
of action. Though the debt and the mortgage constitute separate agreements, the latter is
subsidiary to the former, and both refer to one and the same obligation. Consequently, there
exists only one cause of action for a single breach of that obligation. Plaintiff, then, by applying
the rules above stated, cannot split up his single cause of action by filing a complaint for
payment of the debt, and thereafter another complaint for foreclosure of the mortgage. If he
does so, the filing of the first complaint will bar the subsequent complaint. By allowing the
creditor to file two separate complaints simultaneously or successively, one to recover his
credit and another to foreclose his mortgage, we will, in effect, be authorizing him plural
redress for a single breach of contract at so much cost to the courts and with so much vexation
and oppression to the debtor. (Emphasis supplied)
By causing the auction sale of the mortgaged properties, respondent effectively adopted and pursued the
remedy of extra-judicial foreclosure,50 using the writ of replevin as a tool to get hold of the mortgaged
properties.51 As emphasized in Bachrach, one effect of respondents election of the remedy of extra-
judicial foreclosure is its waiver of the remedy of collection of the unpaid loan.
Therefore, there was no more legal basis for the RTC to grant respondent the relief of collecting from
petitioners "the amount of Php269,611.82 [sic] plus legal interest thereon effective to date until the full
amount is fully paid," nor for the CA to affirm it.
However, another effect of its election of the remedy of extra-judicial foreclosure is that whatever
deficiency remains after applying the proceeds of the auction sale to the total loan obligation may still be
recovered by respondent.52
But to recover any deficiency after foreclosure, the rule is that a mortgage creditor must institute an
independent civil action.53 However, in PCI Leasing & Finance, Inc. v. Dai54 the Court held that the claim
should at least be included in the pre-trial brief. In said case, the mortgage-creditor had foreclosed on the
mortgaged properties and sold the same at public auction during the trial on the action for damages with
replevin. After judgment on the replevin case was rendered, the mortgage-creditor filed another case, this
time for the deficiency amount. The Court dismissed the second case on the ground of res judicata,
noting that:
Petitioner ignores the fact that it prayed in the replevin case that in the event manual delivery
of the vessel could not be effected, the court "render judgment in its favor by ordering [herein
respondents] to pay x x x the sum of P3,502,095.00 plus interest and penalty thereon from
October 12, 1994 until fully paid as provided in the Promissory Note."
 Since petitioner had extrajudicially foreclosed the chattel mortgage over the vessel
even before the pre-trial of the case, it should have therein raised as issue during the
pre-trial the award of a deficiency judgment. After all, the basis of its above-stated
alternative prayer was the same as that of its prayer for replevin the default of respondents in
the payment of the monthly installments of their loan. But it did not. (Emphasis supplied)
3. Respondent is AWARDED 25% of the deficiency amount as liquidated damages.
The claim of petitioners Allandale Sportsline, Inc. and Melbarose R. Sasot to recover properties subject of
the writs of replevin is DENIED.

The question in the present case therefore is whether respondent instituted the proper action for the No costs.
deficiency amount or raised its claim at the pre-trial.
SO ORDERED.
An examination of the Complaint and Amended Complaint reveals that respondent did not allege any
deficiency account. Nor did it raise the matter in its Pre-Trial Brief.55 This is only to be expected because
the auction sale of the properties was apparently conducted on June 19, 1992, long after it filed its
Complaint/Amended Complaint and Pre-trial Brief.

However, the Court notes that evidence on the deficiency amount was duly presented by respondent and
examined by petitioners. Respondents employee Leonila Buenviaje testified that the proceeds
respondent earned from the auction sale of the mortgaged properties amounted to
only P78,750.00.56 Another employee, Grace Borja, testified that after applying the proceeds of P78,750
to the unpaid account of petitioners, there remained a deficiency ofP91,111.82.57 Documentary evidence
of the deficiency amount was also presented in the form of the August 24, 1992 Statement of Account
marked Exhibits "F-1" and "F-2."58 Thus, an independent action to recover the deficiency will merely entail
the presentation of the same evidence of the same claim, in the process taxing the time and resources of
the parties and the courts.59 Therefore, in the higher interest of justice and equity, the Court takes it upon
itself to grant the claim of respondent to the deficiency amount of P191,111.82, as stated in its August 24,
1992 Statement of Account.

Yet another effect of the election by respondent of the remedy of extra-judicial foreclosure is the
inapplicability of Section 9, Rule 60 of the Rules of Court, which states:

Section 9. Judgment. After trial of the issues, the court shall determine who has the right of
possession to and the value of the property and shall render judgment in the alternative for the
delivery thereof to the party entitled to the same, or for its value in case delivery can not be
made and also for such damages as either party may prove, with costs.

As already discussed, the properties of petitioners which were seized by virtue of the Writs of Replevin
were extra-judicially foreclosed and sold at public auction by respondent in the exercise of its absolute
right under the contract entered into by the parties, without need of prior notice or demand to forthwith
judicially or extra-judicially foreclose this mortgage and proceed against all or any of the mortgaged rights,
interests and properties for the full satisfaction of the mortgagors' entire obligation to the mortgagee.

Finally, under the same Deed of Mortgage, it is provided that in case of default, petitioners shall be liable
for liquidated penalty/collection charge in the amount equivalent to "twenty-five (25%) percent of said
outstanding obligation." It being settled that petitioners defaulted on their loan obligation to respondent,
the former are liable for liquidated damages.

WHEREFORE, the Court PARTLY GRANTS the petition and MODIFIES the May 15, 2003 Decision and
June 12, 2004 Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 59475, as follows:

1. The award in the January 13, 1998 Decision of the Regional Trial Court of Pasig City, Branch 158 in
Civil Case No. 61053, in favor of respondent, in "the amount of Php269,611.82 plus legal interest thereon
effective to date until the full amount is fully paid" is DELETED;

2. Respondent The Golden Development Corporation is AWARDED P191,111.82 as the deficiency

amount subject to legal interest effective September 12, 1997 up to the date of full payment;