provisional remedies rule 60 section 1
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Provisional Remedies Section 1 1
G.R. No. 169596 March 28, 2007
SUPERLINES TRANSPORTATION COMPANY, INC., Petitioner,
vs.
PHILIPPINE NATIONAL CONSTRUCTION COMPANY and
PEDRO BALUBAL, Respondents
D E C I S I O N
CARPIO MORALES, J.:
Assailed via petition for review is the Court of Appeals’Decision1 dated September 6, 2005 dismissing for lack of merit
the appeal of petitioner Superlines Transportation Company, Inc.
(petitioner), docketed as CA-G.R. CV No. 61144.
Petitioner is a corporation engaged in the business of providing
public transportation. On December 13, 1990, one of its buses,
while traveling north and approaching the Alabang northbound
exit lane, swerved and crashed into the radio room of respondent
Philippine National Construction Company (PNCC).
The incident was initially investigated by respondent PNCC’s toll
way patrol, Sofronio Salvanera, and respondent Pedro Balubal(Balubal), then head of traffic control and security department of
the South Luzon tollway.2 The bus3was thereafter turned over to
the Alabang Traffic Bureau for it to conduct its own investigation
of the incident. Because of lack of adequate space, the bus was, on
request of traffic investigator Pat. Cesar Lopera (Lopera), towed
by the PNCC patrol to its compound where it was stored .4
Subsequently, petitioner made several requests for PNCC to
release the bus, but respondent Balubal denied the same, despite
petitioner’s undertaking to repair the damaged radio room.
Respondent Balubal instead demanded the sum of P40,000.00, or
a collateral with the same value, representing respondent PNCC’sestimate of the cost of reconstruction of the damaged radio room.
By petitioner’s estimate, however, the damage amountedto P10,000.00 only.5
Petitioner thus filed a complaint for recovery of personal
property (replevin) with damages6 against respondents PNCC
and Balubal with the Regional Trial Court of Gumaca, Quezon,
praying as follows:
x x x x
2. after trial on the issues, judgment be rendered –
a) adjudging that plaintiff has the right to the
possession of subject personal property and awardingthe material possession of said property to plaintiff as
the sole and absolute owner thereof;
b) ordering defendants jointly and severally to pay the
plaintiff the following:
(1) the sum of P500,000.00 representing
unrealized income as of the date of the filing of
the instant complaint and, thereafter, the sum
of P7,500.00 daily until subject passenger bus
shall have been delivered to and in actua
material possession of plaintiff;
(2) the sum of P100,000.00 as and for
attorney’s fees;
(3) the sum of P20,000.00 as litis expenses
and
(4) the cost of suit .7
In view of its inability to put up the bond for the issuance of a
writ of replevin, petitioner opted to forego the same and just wait
for the court’s final judgment.
In respondents’ Answer8 to the complaint, they claimed that they
merely towed the bus to the PNCC compound for safekeeping
pursuant to an order from the police authorities; that respondent
Balubal did not release the bus to petitioner in the absence of an
order from the police authorities; that petitioner, in claiming the
bus, failed to present the certificate of registration and officia
receipt of payment to establish ownership thereof; and that the
bus subject of the complaint was not the same bus involved in the
December 13, 1990 accident.
By way of Counterclaim, respondents prayed for the award
of P40,326.54 in actual damages, P50,000.00 in exemplary
damages, and P130,000.00 in attorney’s fees and litigation
expenses.
By Decision of December 9, 1997, the trial court dismissed
petitioner’s complaint. On respondents’ Counterclaim, it ordered
petitioner to pay respondent PNCC the amount of P40,320.00
representing actual damages to the radio room.
Petitioner appealed to the Court of Appeals9 which held that the
storage of the bus for safekeeping purposes partakes of the
nature of a deposit, hence, custody or authority over it remainedwith Lopera who ordered its safekeeping; and that Lopera acted
as respondent PNCC’s agent, hence, absent any instruction fromhim, respondent PNCC may not release the bus.
The appellate court thus concluded that the case should have
been brought against the police authorities instead o
respondents.
Hence, the present petition for review.
The petition is impressed with merit.
Before proceeding to the substantive issues raised in the petitionthe Court resolves to dispose first the procedural issues raised by
respondents in their Comment .10
Respondents contend that the petition raises only questions o
fact and suffers from a procedural defect in that it failed to
include "such material portions of the record as would support
the petition" as required under Section 4, Rule 45 11 of the Rules
of Court, hence, it should be dismissed outright.
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Provisional Remedies Section 1 2
Contrary to respondents’ contention, the petition raisesquestions of law foremost of which is whether the owner of a
personal property may initiate an action for replevin against a
depositary and recover damages for illegal distraint.
In any event, while it is settled that this Court is not a trier of
facts and does not, as a rule, undertake a re-examination of the
evidence presented by the parties, a number of exceptions have
nevertheless been recognized by the Court. These exceptions are
enumerated in Insular Life Assurance Company, Ltd. v. Court of
Appeals:12
It is a settled rule that in the exercise of the Supreme Court’spower of review, the Court is not a trier of facts and does not
normally undertake the re-examination of the evidence
presented by the contending parties during the trial of the case
considering that the findings of facts of the CA are conclusive and
binding on the Court. However, the Court had recognized several
exceptions to this rule, to wit: (1) when the findings are grounded
entirely on speculation, surmises or conjectures; (2) when the
inference made is manifestly mistaken, absurd or impossible; (3)
when there is grave abuse of discretion; (4) when the judgment is
based on a misapprehension of facts; (5) when the findings of
facts are conflicting; (6) when in making its findings the Court of
Appeals went beyond the issues of the case, or its findings arecontrary to the admissions of both the appellant and the appellee;
(7) when the findings are contrary to the trial court; (8) when the
findings are conclusions without citation of specific evidence on
which they are based; (9) when the facts set forth in the petition
as well as in the petitioner’s main and reply briefs are not
disputed by the respondent; (10) when the findings of fact are
premised on the supposed absence of evidence and contradicted
by the evidence on record; and (11) when the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a different
conclusion. x x x (Italics in original; underscoring supplied;
citations omitted)
As will be discussed below, number 11 of the foregoing
enumeration applies in the present case.
Respecting the second procedural issue, as a rule, the failure of a
petitioner to comply with any of the requirements under Section
4, Rule 45 of the Rules of Court regarding the contents of and the
documents which should accompany the petition constitutes
sufficient ground for its dismissal.13
In the exercise of its equity jurisdiction, however, procedural
lapses may be disregarded so that a case may be resolved on its
merits. As held in Durban Apartments Corporation v. Catacutan:14
It is well to remember that this Court, in not a few cases, has
consistently held that cases shall be determined on the merits,after full opportunity to all parties for ventilation of their causes
and defense, rather than on technicality or some procedural
imperfections. In so doing, the ends of justice would be better
served. The dismissal of cases purely on technical grounds is
frowned upon and the rules of procedure ought not be applied in
a very rigid, technical sense, for they are adopted to help secure,
not override, substantial justice, and thereby defeat their very
ends. Indeed, rules of procedure are mere tools designed to
expedite the resolution of cases and other matters pending in
court. A strict and rigid application of the rules that would result
in technicalities that tend to frustrate rather than promote justice
must be avoided.
x x x x (Emphasis supplied; citations omitted)
The facts and circumstances attendant to the case dictate that, in
the interest of substantial justice, this Court resolves it on the
merits.
On to the substantive issues. Tillson v. Court o
Appeals15 discusses the term replevin as follows:
The term replevin is popularly understood as "the return to or
recovery by a person of goods or chattels claimed to
be wrongfully taken or detained upon the person’s givingsecurity to try the matter in court and return the goods i
defeated in the action;" "the writ by or the common-law action in
which goods and chattels are replevied," i.e., taken or gotten back
by a writ for replevin;" and to replevy, means to recover
possession by an action of replevin; to take possession of goods
or chattels under a replevin order. Bouvier’s Law Dictionarydefines replevin as "a form of action which lies to regain the
possession of personal chattels which have been taken from the
plaintiff unlawfully x x x, (or as) the writ by virtue of which the
sheriff proceeds at once to take possession of the propertytherein described and transfer it to the plaintiff upon his giving
pledges which are satisfactory to the sheriff to prove his title, or
return the chattels taken if he fail so to do; the same authority
states that the term, "to replevy" means " to re-deliver goods
which have been distrained to the original possessor of them, on
his giving pledges in an action of replevin." The term therefore
may refer either to the action itself, for the recovery o
personality, or the provisional remedy traditionally associated
with it, by which possession of the property may be obtain[ed] by
the plaintiff and retained during the pendency of the action
(Emphasis and underscoring supplied; citations omitted)
In a complaint for replevin, the claimant must convincingly show
that he is either the owner or clearly entitled to the possession othe object sought to be recovered,16 and that the defendant, who
is in actual or legal possession thereof, wrongfully detains the
same.17
Petitioner’s ownership of the bus being admitted byrespondents,18 consideration of whether respondents have been
wrongfully detaining it is in order.
Following the conduct of an investigation of the accident, the bus
was towed by respondents on the request of Lopera.19 It was thus
not distrained or taken for a tax assessment or a fine pursuant to
law, or seized under a writ of execution or preliminary
attachment, or otherwise placed under custodia legis.
In upholding the dismissal of petitioner’s complaint, the Court o
Appeals held that while "there is no law authorizing the
impounding of a vehicle involved in an accident by the police
authorities, x x x neither is there a law making the impounding of
vehicles involved in accidents illegal." It added that "the Supreme
Court is of the view that there is yet no clear-cut policy or rule on
the matter."20 The appellate court is mistaken.
The Constitution grants the right against unreasonable seizures
Thus, Section 2, Article III provides:
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The right of the people to be secure in their persons, houses,
papers, and effects against unreasonable searches and seizures of
whatever nature and for any purpose shall be inviolable, and no
search warrant or warrant of arrest shall issue except upon
probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and
the witnesses he may produce, and particularly describing the
place to be searched and the persons or things to be seized.
(Underscoring supplied)
The seizure and impounding of petitioner’s bus, on Lopera’srequest, were unquestionably violative of "the right to be let
alone" by the authorities as guaranteed by the Constitution .21
The Court of Appeals’ reliance on Victory Liner, Inc. v.Bellosillo 22 to justify the impounding of vehicles involved in
accidents by police authorities is misplaced. The Victory Liner
case was an administrative case against a trial court judge. This
Court explicitly declined to rule on the legality of such an order:
In the same vein, this administrative case is not the right forum to
determine the issue of the legality of respondent’s order
requiring VLI to post a cash bond for the release of its impounded
vehicle. VLI should have raised that issue in the proper courts
and not directly to us, and much less by way of an administrativecase. x x x
x x x x
To allow VLI to raise that issue before us and obtain a ruling
thereon directly from us through an administrative case would
be to countenance a disregard of the established rules of
procedure and of the hierarchy of courts. VLI would thus be able
to evade compliance with the requirements inherent in the filing
of a property petition, including the payment of docket fees.
Hence, we shall shun from passing upon that issue in this
case.23 (Underscoring supplied)
This Court’s statement in Victory Liner on the lack of a "clear -cut
policy" refers to the practice, rightly or wrongly, of trial court
judges of issuing orders for the impounding of vehicles involved
in accidents. It has no application to the instant case which
involves the seizure and distraint implemented by respondents
upon a verbal order by Lopera without the benefit or color of
legality afforded by a court process, writ or order.
That a year after the incident the driver of the bus was criminally
charged for reckless imprudence resulting to damage to property
in which the bus could possibly be held as evidence does not
affect the outcome of this case.24As explained in Bagalihog v.
Fernandez:25
It is true that property held as evidence in a criminal case cannot
be replevied. But the rule applies only where the property
is lawfully held, that is, seized in accordance with the rule against
warrantless searches and seizures or its accepted exceptions.
Property subject of litigation is not by that fact alone in custodia
legis. As the Court said in Tamisin v. Odejar, 26 "A thing is in
custodia legis when it is shown that it has been and is subjected
to the official custody of a judicial executive officer in pursuance
of his execution of a legal writ." Only when property
is lawfullytaken by virtue of legal process is it considered in the
custody of the law, and not otherwise. (Emphasis and
underscoring supplied; italics in the original; citations omitted)
Petitioner’s prayer for recovery of possession of the bus is, in
light of the foregoing discussion, thus in order.
As for petitioner’s claim for damages, the Court finds that icannot pass upon the same without impleading Lopera and any
other police officer responsible for ordering the seizure and
distraint of the bus. The police authorities, through Lopera
having turned over the bus to respondents for safekeeping, acontract of deposit 27 was perfected between them and
respondents.
Petitioner’s failure to implead indispensable parties is not, o
course, fatal to its cause of action, misjoinder or non-joinder of
parties not being a ground for its dismissal.28 Domingo v
Scheer29 elucidates:
However, the non-joinder of indispensable parties is not a ground
for the dismissal of an action. Parties may be added by order o
the court on motion of the party or on its own initiative at any
stage of the action and/or such times as are just. If the
petitioner/plaintiff refuses to implead an indispensable party
despite the order of the court, the latter may dismiss thecomplaint/petition for the petitioner/plaintiff’s failure to comply
therefor. The remedy is to implead the non-party claimed to be
indispensable. (Emphasis and underscoring supplied; citations
omitted)
For petitioner to pursue its claim for damages then, it or the tria
court motu proprio may implead as defendants the indispensable
parties ─ Lopera and any other responsible police officers.
WHEREFORE, the assailed Court of Appeals Decision is
REVERSED and SET ASIDE.
The prayer of petitioner, Superlines Transportation CompanyInc., for recovery of possession of personal property is GRANTED.
The records of the case are REMANDED to the court of origin, the
Regional Trial Court, Branch 62, Gumaca, Quezon, which is
DIRECTED to REINSTATE petitioner’s complaint to its docket if
petitioner is still interested to pursue its claim for damages and
to act in accordance with the foregoing pronouncement of the
Court.
SO ORDERED.
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G.R. No. 148132 January 28, 2008
SMART COMMUNICATIONS, INC., petitioner,
vs.
REGINA M. ASTORGA, respondent.
x---------------------------------------------------x
G.R. No. 151079 January 28, 2008
SMART COMMUNICATIONS, INC., petitioner,
vs.
REGINA M. ASTORGA, respondent.
x---------------------------------------------------x
G.R. No. 151372 January 28, 2008
REGINA M. ASTORGA, petitioner,
vs.
SMART COMMUNICATIONS, INC. and ANN MARGARET V.
SANTIAGO, respondents.
D E C I S I O N
NACHURA, J.:
For the resolution of the Court are three consolidated petitions
for review on certiorari under Rule 45 of the Rules of Court. G.R.
No. 148132 assails the February 28, 2000 Decision1 and the May
7, 2001 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP.
No. 53831. G.R. Nos. 151079 and 151372 question the June 11,
2001 Decision3 and the December 18, 2001 Resolution4 in CA-
G.R. SP. No. 57065.
Regina M. Astorga (Astorga) was employed by respondent Smart
Communications, Incorporated (SMART) on May 8, 1997 asDistrict Sales Manager of the Corporate Sales Marketing Group/
Fixed Services Division (CSMG/FSD). She was receiving a
monthly salary of P33,650.00. As District Sales Manager, Astorga
enjoyed additional benefits, namely, annual performance
incentive equivalent to 30% of her annual gross salary, a group
life and hospitalization insurance coverage, and a car plan in the
amount of P455,000.00.5
In February 1998, SMART launched an organizational
realignment to achieve more efficient operations. This was made
known to the employees on February 27, 1998.6 Part of the
reorganization was the outsourcing of the marketing and sales
force. Thus, SMART entered into a joint venture agreement with
NTT of Japan, and formed SMART-NTT Multimedia, Incorporated(SNMI). Since SNMI was formed to do the sales and marketing
work, SMART abolished the CSMG/FSD, Astorga’s division.
To soften the blow of the realignment, SNMI agreed to absorb the
CSMG personnel who would be recommended by SMART. SMART
then conducted a performance evaluation of CSMG personnel and
those who garnered the highest ratings were favorably
recommended to SNMI. Astorga landed last in the performance
evaluation, thus, she was not recommended by SMART. SMART,
nonetheless, offered her a supervisory position in the Customer
Care Department, but she refused the offer because the position
carried lower salary rank and rate.
Despite the abolition of the CSMG/FSD, Astorga continued
reporting for work. But on March 3, 1998, SMART issued a
memorandum advising Astorga of the termination of her
employment on ground of redundancy, effective April 3, 1998
Astorga received it on March 16, 1998.7
The termination of her employment prompted Astorga to file a
Complaint 8 for illegal dismissal, non-payment of salaries andother benefits with prayer for moral and exemplary damages
against SMART and Ann Margaret V. Santiago (Santiago). She
claimed that abolishing CSMG and, consequently, terminating her
employment was illegal for it violated her right to security of
tenure. She also posited that it was illegal for an employer, like
SMART, to contract out services which will displace the
employees, especially if the contractor is an in-house agency.9
SMART responded that there was valid termination. It argued
that Astorga was dismissed by reason of redundancy, which is an
authorized cause for termination of employment, and the
dismissal was effected in accordance with the requirements o
the Labor Code. The redundancy of Astorga’s position was the
result of the abolition of CSMG and the creation of a specializedand more technically equipped SNMI, which is a valid and
legitimate exercise of management prerogative.10
In the meantime, on May 18, 1998, SMART sent a letter to
Astorga demanding that she pay the current market value of the
Honda Civic Sedan which was given to her under the company’scar plan program, or to surrender the same to the company for
proper disposition.11 Astorga, however, failed and refused to do
either, thus prompting SMART to file a suit for replevin with the
Regional Trial Court of Makati (RTC) on August 10, 1998. The
case was docketed as Civil Case No. 98-1936 and was raffled to
Branch 57.12
Astorga moved to dismiss the complaint on grounds of (i) lack ofjurisdiction; (ii) failure to state a cause of action; (iii) litis
pendentia; and (iv) forum-shopping. Astorga posited that the
regular courts have no jurisdiction over the complaint because
the subject thereof pertains to a benefit arising from an
employment contract; hence, jurisdiction over the same is vested
in the labor tribunal and not in regular courts.13
Pending resolution of Astorga’s motion to dismiss
the replevin case, the Labor Arbiter rendered a Decision14 dated
August 20, 1998, declaring Astorga’s dismissal from employmen
illegal. While recognizing SMART’s right to abolish any of itsdepartments, the Labor Arbiter held that such right should be
exercised in good faith and for causes beyond its control. The
Arbiter found the abolition of CSMG done neither in good faithnor for causes beyond the control of SMART, but a ploy to
terminate Astorga’s employment. The Arbiter also ruled thatcontracting out the functions performed by Astorga to an in-
house agency like SNMI was illegal, citing Section 7(e), Rule VIII-
A of the Rules Implementing the Labor Code.
Accordingly, the Labor Arbiter ordered:
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WHEREFORE, judgment is hereby rendered declaring
the dismissal of [Astorga] to be illegal and unjust.
[SMART and Santiago] are hereby ordered to:
1. Reinstate [Astorga] to [her] former position or to a
substantially equivalent position, without loss of
seniority rights and other privileges, with full
backwages, inclusive of allowances and other benefits
from the time of [her] dismissal to the date of
reinstatement, which computed as of this date, are as
follows:
(a) Astorga
BACKWAGES; (P33,650.00 x 4 months) = P134,600.00
UNPAID SALARIES (February 15, 1998-April 3, 1998
February 15-28, 1998 = P 16,823.00
March 1-31, [1998] = P 33,650.00
April 1-3, 1998 = P 3,882.69
CAR MAINTENANCE ALLOWANCE
(P2,000.00 x 4)
= P 8,000.00
FUEL ALLOWANCE
(300 liters/mo. x 4 mos. at P12.04/liter)
= P 14,457.83
TOTAL = P211,415.52
x x x x
3. Jointly and severally pay moral damages in the
amount of P500,000.00 x x x and exemplary damages in
the amount of P300,000.00. x x x
4. Jointly and severally pay 10% of the amount due as
attorney’s fees.
SO ORDERED.15
Subsequently, on March 29, 1999, the RTC issued an
Order16 denying Astorga’s motion to dismiss the replevin case. Inso ruling, the RTC ratiocinated that:
Assessing the [submission] of the parties, the Court
finds no merit in the motion to dismiss.
As correctly pointed out, this case is to enforce a right of
possession over a company car assigned to the
defendant under a car plan privilege arrangement. The
car is registered in the name of the plaintiff. Recovery
thereof via replevin suit is allowed by Rule 60 of the
1997 Rules of Civil Procedure, which is undoubtedlywithin the jurisdiction of the Regional Trial Court.
In the Complaint, plaintiff claims to be the owner of the
company car and despite demand, defendant refused to
return said car. This is clearly sufficient statement of
plaintiff’s cause of action.
Neither is there forum shopping. The element of litis
penden[t]ia does not appear to exist because the
judgment in the labor dispute will not constitute res
judicata to bar the filing of this case.
WHEREFORE, the Motion to Dismiss is hereby denied
for lack of merit.
SO ORDERED.17
Astorga filed a motion for reconsideration, but the RTC denied i
on June 18, 1999.18
Astorga elevated the denial of her motion via certiorari to the CA
which, in its February 28, 2000 Decision,19reversed the RTC
ruling. Granting the petition and, consequently, dismissing
the replevin case, the CA held that the case is intertwined with
Astorga’s complaint for illegal dismissal; thus, it is the labortribunal that has rightful jurisdiction over the complaint
SMART’s motion for reconsideration having been denied,20 i
elevated the case to this Court, now docketed as G.R. No. 148132.
Meanwhile, SMART also appealed the unfavorable ruling of the
Labor Arbiter in the illegal dismissal case to the National Labor
Relations Commission (NLRC). In its September 27, 1999
Decision,21
the NLRC sustained Astorga’s dismissal. Reversing theLabor Arbiter, the NLRC declared the abolition of CSMG and the
creation of SNMI to do the sales and marketing services for
SMART a valid organizational action. It overruled the Labor
Arbiter’s ruling that SNMI is an in-house agency, holding that i
lacked legal basis. It also declared that contracting
subcontracting and streamlining of operations for the purpose of
increasing efficiency are allowed under the law. The NLRC
further found erroneous the Labor Arbiter’s disquisition thatredundancy to be valid must be impelled by economic reasons
and upheld the redundancy measures undertaken by SMART.
The NLRC disposed, thus:
WHEREFORE, the Decision of the Labor Arbiter ishereby reversed and set aside. [Astorga] is further
ordered to immediately return the company vehicle
assigned to her. [Smart and Santiago] are hereby
ordered to pay the final wages of [Astorga] after [she]
had submitted the required supporting papers therefor.
SO ORDERED.22
Astorga filed a motion for reconsideration, but the NLRC denied it
on December 21, 1999.23
Astorga then went to the CA via certiorari. On June 11, 2001, the
CA rendered a Decision24 affirming with modification the
resolutions of the NLRC. In gist, the CA agreed with the NLRC thathe reorganization undertaken by SMART resulting in the
abolition of CSMG was a legitimate exercise of management
prerogative. It rejected Astorga’s posturing that her nonabsorption into SNMI was tainted with bad faith. However, the CA
found that SMART failed to comply with the mandatory one-
month notice prior to the intended termination. Accordingly, the
CA imposed a penalty equivalent to Astorga’s one-month salary
for this non-compliance. The CA also set aside the NLRC’s orderfor the return of the company vehicle holding that this issue is
not essentially a labor concern, but is civil in nature, and thus
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within the competence of the regular court to decide. It added
that the matter had not been fully ventilated before the NLRC, but
in the regular court.
Astorga filed a motion for reconsideration, while SMART sought
partial reconsideration, of the Decision. On December 18, 2001,
the CA resolved the motions, viz .:
WHEREFORE, [Astorga’s] motion for reconsideration ishereby PARTIALLY GRANTED. [Smart] is hereby
ordered to pay [Astorga] her backwages from 15February 1998 to 06 November 1998. [Smart’s] motion
for reconsideration is outrightly DENIED.
SO ORDERED.25
Astorga and SMART came to us with their respective petitions for
review assailing the CA ruling, docketed as G.R Nos. 151079 and
151372. On February 27, 2002, this Court ordered the
consolidation of these petitions with G.R. No. 148132.26
In her Memorandum, Astorga argues:
I
THE COURT OF APPEALS ERRED IN UPHOLDING THE
VALIDITY OF ASTORGA’S DISMISSAL DESPITE THE
FACT THAT HER DISMISSAL WAS EFFECTED IN CLEAR
VIOLATION OF THE CONSTITUTIONAL RIGHT TO
SECURITY OF TENURE, CONSIDERING THAT THERE
WAS NO GENUINE GROUND FOR HER DISMISSAL.
II
SMART’S REFUSAL TO REINSTATE ASTORGA DURING
THE PENDENCY OF THE APPEAL AS REQUIRED BY
ARTICLE 223 OF THE LABOR CODE, ENTITLES
ASTORGA TO HER SALARIES DURING THE PENDENCY
OF THE APPEAL.
III
THE COURT OF APPEALS WAS CORRECT IN HOLDING
THAT THE REGIONAL TRIAL COURT HAS NO
JURISDICTION OVER THE COMPLAINT FOR RECOVERY
OF A CAR WHICH ASTORGA ACQUIRED AS PART OF
HER EMPLOYEE (sic) BENEFIT.27
On the other hand, Smart in its Memoranda raises the following
issues:
I
WHETHER THE HONORABLE COURT OF APPEALS HAS
DECIDED A QUESTION OF SUBSTANCE IN A WAY
PROBABLY NOT IN ACCORD WITH LAW OR WITH
APPLICABLE DECISION OF THE HONORABLE SUPREME
COURT AND HAS SO FAR DEPARTED FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE
POWER OF SUPERVISION WHEN IT RULED THAT
SMART DID NOT COMPLY WITH THE NOTICE
REQUIREMENTS PRIOR TO TERMINATING ASTORGA
ON THE GROUND OF REDUNDANCY.
II
WHETHER THE NOTICES GIVEN BY SMART TO
ASTORGA AND THE DEPARTMENT OF LABOR AND
EMPLOYMENT ARE SUBSTANTIAL COMPLIANCE WITH
THE NOTICE REQUIREMENTS BEFORE TERMINATION.
III
WHETHER THE RULE ENUNCIATED IN SERRANO VS
NATIONAL LABOR RELATIONS COMMISSION FINDS
APPLICATION IN THE CASE AT BAR CONSIDERING
THAT IN THE SERRANO CASE THERE WAS
ABSOLUTELY NO NOTICE AT ALL.28
IV
WHETHER THE HONORABLE COURT OF APPEALS HAS
DECIDED A QUESTION OF SUBSTANCE IN A WAY
PROBABLY NOT IN ACCORD WITH LAW OR WITHAPPLICABLE DECISION[S] OF THE HONORABLE
SUPREME COURT AND HAS SO FAR DEPARTED FROM
THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE
POWER OF SUPERVISION WHEN IT RULED THAT THE
REGIONAL TRIAL COURT DOES NOT HAVE
JURISDICTION OVER THE COMPLAINT FOR REPLEVIN
FILED BY SMART TO RECOVER ITS OWN COMPANY
VEHICLE FROM A FORMER EMPLOYEE WHO WAS
LEGALLY DISMISSED.
V
WHETHER THE HONORABLE COURT OF APPEALS HASFAILED TO APPRECIATE THAT THE SUBJECT OF THE
REPLEVIN CASE IS NOT THE ENFORCEMENT OF A CAR
PLAN PRIVILEGE BUT SIMPLY THE RECOVERY OF A
COMPANY CAR.
VI
WHETHER THE HONORABLE COURT OF APPEALS HAS
FAILED TO APPRECIATE THAT ASTORGA CAN NO
LONGER BE CONSIDERED AS AN EMPLOYEE OF SMART
UNDER THE LABOR CODE.29
The Court shall first deal with the propriety of dismissing thereplevin case filed with the RTC of Makati City allegedly for lack
of jurisdiction, which is the issue raised in G.R. No. 148132.
Replevin is an action whereby the owner or person entitled to
repossession of goods or chattels may recover those goods or
chattels from one who has wrongfully distrained or taken, or who
wrongfully detains such goods or chattels. It is designed to
permit one having right to possession to recover property in
specie from one who has wrongfully taken or detained the
property.30 The term may refer either to the action itself, for the
recovery of personalty, or to the provisional remedy traditionally
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associated with it, by which possession of the property may be
obtained by the plaintiff and retained during the pendency of the
action.31
That the action commenced by SMART against Astorga in the RTC
of Makati City was one for replevin hardly admits of doubt.
In reversing the RTC ruling and consequently dismissing the case
for lack of jurisdiction, the CA made the following disquisition,
viz.:
[I]t is plain to see that the vehicle was issued to
[Astorga] by [Smart] as part of the employment
package. We doubt that [SMART] would extend [to
Astorga] the same car plan privilege were it not for her
employment as district sales manager of the company.
Furthermore, there is no civil contract for a loan
between [Astorga] and [Smart]. Consequently, We find
that the car plan privilege is a benefit arising out of
employer-employee relationship. Thus, the claim for
such falls squarely within the original and exclusive
jurisdiction of the labor arbiters and the NLRC.32
We do not agree. Contrary to the CA’s ratiocination, the RTC
rightfully assumed jurisdiction over the suit and acted wellwithin its discretion in denying Astorga’s motion to dismiss.
SMART’s demand for payment of the market value of the car or,
in the alternative, the surrender of the car, is not a labor, but a
civil, dispute. It involves the relationship of debtor and creditor
rather than employee-employer relations.33 As such, the dispute
falls within the jurisdiction of the regular courts.
In Basaya, Jr. v. Militante,34 this Court, in upholding the
jurisdiction of the RTC over the replevin suit, explained:
Replevin is a possessory action, the gist of which is the
right of possession in the plaintiff. The primary relief
sought therein is the return of the property in specie
wrongfully detained by another person. It is an ordinary
statutory proceeding to adjudicate rights to the title or
possession of personal property. The question of
whether or not a party has the right of possession over
the property involved and if so, whether or not the
adverse party has wrongfully taken and detained said
property as to require its return to plaintiff, is outside
the pale of competence of a labor tribunal and beyond
the field of specialization of Labor Arbiters.
x x x x
The labor dispute involved is not intertwined with the
issue in the Replevin Case. The respective issues raisedin each forum can be resolved independently on the
other. In fact in 18 November 1986, the NLRC in the
case before it had issued an Injunctive Writ enjoining
the petitioners from blocking the free ingress and
egress to the Vessel and ordering the petitioners to
disembark and vacate. That aspect of the controversy is
properly settled under the Labor Code. So also with
petitioners’ right to picket. But the determination of thequestion of who has the better right to take possession
of the Vessel and whether petitioners can deprive the
Charterer, as the legal possessor of the Vessel, of that
right to possess in addressed to the competence of Civi
Courts.
In thus ruling, this Court is not sanctioning split
jurisdiction but defining avenues of jurisdiction as laid
down by pertinent laws.
The CA, therefore, committed reversible error when it
overturned the RTC ruling and ordered the dismissal of the
replevin case for lack of jurisdiction.
Having resolved that issue, we proceed to rule on the validity o
Astorga’s dismissal.
Astorga was terminated due to redundancy, which is one of the
authorized causes for the dismissal of an employee. The nature of
redundancy as an authorized cause for dismissal is explained in
the leading case of Wiltshire File Co., Inc. v. National Labor
Relations Commission,35 viz :
x x x redundancy in an employer’s personnel forcenecessarily or even ordinarily refers to duplication o
work. That no other person was holding the same
position that private respondent held prior totermination of his services does not show that his
position had not become redundant. Indeed, in any wel
organized business enterprise, it would be surprising to
find duplication of work and two (2) or more people
doing the work of one person. We believe that
redundancy, for purposes of the Labor Code, exists
where the services of an employee are in excess of wha
is reasonably demanded by the actual requirements of
the enterprise. Succinctly put, a position is redundant
where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors
such as overhiring of workers, decreased volume o
business, or dropping of a particular product line or
service activity previously manufactured or undertaken
by the enterprise.
The characterization of an employee’s services as superfluous orno longer necessary and, therefore, properly terminable, is an
exercise of business judgment on the part of the employer. The
wisdom and soundness of such characterization or decision is no
subject to discretionary review provided, of course, that a
violation of law or arbitrary or malicious action is not shown .36
Astorga claims that the termination of her employment was
illegal and tainted with bad faith. She asserts that the
reorganization was done in order to get rid of her. But except for
her barefaced allegation, no convincing evidence was offered to
prove it. This Court finds it extremely difficult to believe that
SMART would enter into a joint venture agreement with NTTform SNMI and abolish CSMG/FSD simply for the sole purpose o
easing out a particular employee, such as Astorga. Moreover
Astorga never denied that SMART offered her a supervisory
position in the Customer Care Department, but she refused the
offer because the position carried a lower salary rank and rate. I
indeed SMART simply wanted to get rid of her, it would not have
offered her a position in any department in the enterprise.
Astorga also states that the justification advanced by SMART is
not true because there was no compelling economic reason for
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redundancy. But contrary to her claim, an employer is not
precluded from adopting a new policy conducive to a more
economical and effective management even if it is not
experiencing economic reverses. Neither does the law require
that the employer should suffer financial losses before he can
terminate the services of the employee on the ground of
redundancy. 37
We agree with the CA that the organizational realignment
introduced by SMART, which culminated in the abolition of
CSMG/FSD and termination of Astorga’s employment was anhonest effort to make SMART’s sales and marketing departmentsmore efficient and competitive. As the CA had taken pains to
elucidate:
x x x a careful and assiduous review of the records will
yield no other conclusion than that the reorganization
undertaken by SMART is for no purpose other than its
declared objective – as a labor and cost savings device.
Indeed, this Court finds no fault in SMART’s decision tooutsource the corporate sales market to SNMI in order
to attain greater productivity. [Astorga] belonged to the
Sales Marketing Group under the Fixed Services
Division (CSMG/FSD), a distinct sales force of SMART in
charge of selling SMART’s telecommunications servicesto the corporate market. SMART, to ensure it can
respond quickly, efficiently and flexibly to its customer’srequirement, abolished CSMG/FSD and shortly
thereafter assigned its functions to newly-created SNMI
Multimedia Incorporated, a joint venture company of
SMART and NTT of Japan, for the reason that CSMG/FSD
does not have the necessary technical expertise
required for the value added services. By transferring
the duties of CSMG/FSD to SNMI, SMART has created a
more competent and specialized organization to
perform the work required for corporate accounts. It is
also relieved SMART of all administrative costs –
management, time and money-needed in maintaining
the CSMG/FSD. The determination to outsource the
duties of the CSMG/FSD to SNMI was, to Our mind, asound business judgment based on relevant criteria and
is therefore a legitimate exercise of management
prerogative.
Indeed, out of our concern for those lesser circumstanced in life,
this Court has inclined towards the worker and upheld his cause
in most of his conflicts with his employer. This favored treatment
is consonant with the social justice policy of the Constitution. But
while tilting the scales of justice in favor of workers, the
fundamental law also guarantees the right of the employer to
reasonable returns for his investment .38 In this light, we must
acknowledge the prerogative of the employer to adopt such
measures as will promote greater efficiency, reduce overhead
costs and enhance prospects of economic gains, albeit alwayswithin the framework of existing laws. Accordingly, we sustain
the reorganization and redundancy program undertaken by
SMART.
However, as aptly found by the CA, SMART failed to comply with
the mandated one (1) month notice prior to termination. The
record is clear that Astorga received the notice of termination
only on March 16, 199839 or less than a month prior to its
effectivity on April 3, 1998. Likewise, the Department of Labor
and Employment was notified of the redundancy program only
on March 6, 1998.40
Article 283 of the Labor Code clearly provides:
Art. 283. Closure of establishment and reduction o
personnel. — The employer may also terminate the
employment of any employee due to the installation o
labor saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation
of the establishment or undertaking unless the closingis for the purpose of circumventing the provisions o
this Title, by serving a written notice on the workers
and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof x x x.
SMART’s assertion that Astorga cannot complain of lack of noticebecause the organizational realignment was made known to al
the employees as early as February 1998 fails to persuade
Astorga’s actual knowledge of the reorganization cannot replace
the formal and written notice required by the law. In the written
notice, the employees are informed of the specific date of the
termination, at least a month prior to the effectivity of such
termination, to give them sufficient time to find other suitable
employment or to make whatever arrangements are needed tocushion the impact of termination. In this case, notwithstanding
Astorga’s knowledge of the reorganization, she remaineduncertain about the status of her employment until SMART gave
her formal notice of termination. But such notice was received by
Astorga barely two (2) weeks before the effective date o
termination, a period very much shorter than that required by
law.
Be that as it may, this procedural infirmity would not render the
termination of Astorga’s employment illegal. The validity otermination can exist independently of the procedural infirmity
of the dismissal.41 In DAP Corporation v. CA,42 we found the
dismissal of the employees therein valid and for authorized cause
even if the employer failed to comply with the noticerequirement under Article 283 of the Labor Code. This Court
upheld the dismissal, but held the employer liable for non
compliance with the procedural requirements.
The CA, therefore, committed no reversible error in sustaining
Astorga’s dismissal and at the same time, awarding indemnity for
violation of Astorga's statutory rights.
However, we find the need to modify, by increasing, the
indemnity awarded by the CA to Astorga, as a sanction on SMART
for non-compliance with the one-month mandatory notice
requirement, in light of our ruling in Jaka Food Processing
Corporation v. Pacot ,43 viz .:
[I]f the dismissal is based on a just cause under Article
282 but the employer failed to comply with the notice
requirement, the sanction to be imposed upon him
should be tempered because the dismissal process was
in effect, initiated by an act imputable to the employee
and (2) if the dismissal is based on an authorized cause
under Article 283 but the employer failed to comply
with the notice requirement, the sanction should
bestiffer because the dismissal process was initiated by
the employer’s exercise of his management prerogative
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We deem it proper to increase the amount of the penalty on
SMART to P50,000.00.
As provided in Article 283 of the Labor Code, Astorga is, likewise,
entitled to separation pay equivalent to at least one (1) month
salary or to at least one (1) month’s pay for every year of service,whichever is higher. The records show that Astorga’s length of
service is less than a year. She is, therefore, also entitled to
separation pay equivalent to one (1) month pay.
Finally, we note that Astorga claimed non-payment of wages fromFebruary 15, 1998. This assertion was never rebutted by SMART
in the proceedings a quo. No proof of payment was presented by
SMART to disprove the allegation. It is settled that in labor cases,
the burden of proving payment of monetary claims rests on the
employer.44 SMART failed to discharge the onus probandi.
Accordingly, it must be held liable for Astorga’s salary from
February 15, 1998 until the effective date of her termination, on
April 3, 1998.
However, the award of backwages to Astorga by the CA should be
deleted for lack of basis. Backwages is a relief given to an illegally
dismissed employee. Thus, before backwages may be granted,
there must be a finding of unjust or illegal dismissal from
work .45 The Labor Arbiter ruled that Astorga was illegallydismissed. But on appeal, the NLRC reversed the Labor Arbiter’sruling and categorically declared Astorga’s dismissal valid. Thisruling was affirmed by the CA in its assailed Decision. Since
Astorga’s dismissal is for an authorized cause, she is not entitled
to backwages. The CA’s award of backwages is totallyinconsistent with its finding of valid dismissal.
WHEREFORE, the petition of SMART docketed as G.R. No.
148132 is GRANTED. The February 28, 2000 Decision and the
May 7, 2001 Resolution of the Court of Appeals in CA-G.R. SP. No.
53831 are SET ASIDE. The Regional Trial Court of Makati City,
Branch 57 is DIRECTED to proceed with the trial of Civil Case No.
98-1936 and render its Decision with reasonable dispatch.
On the other hand, the petitions of SMART and Astorga docketed
as G.R. Nos. 151079 and 151372 are DENIED. The June 11, 2001
Decision and the December 18, 2001 Resolution in CA-G.R. SP.
No. 57065, are AFFIRMEDwith MODIFICATION. Astorga is
declared validly dismissed. However, SMART is ordered to pay
AstorgaP50,000.00 as indemnity for its non-compliance with
procedural due process, her separation pay equivalent to one (1)
month pay, and her salary from February 15, 1998 until the
effective date of her termination on April 3, 1998. The award of
backwages is DELETED for lack of basis.
SO ORDERED.
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G.R. No. 148980 September 21, 2007
PCI LEASING & FINANCE, INC., Petitioner,
vs.
SPOUSES GEORGE M. DAI and DIVINA DAI, Respondents.
D E C I S I O N
CARPIO MORALES, J.:
Respondents, spouses George and Divina Dai, obtained a loan on
June 16, 1994 from petitioner, PCI Leasing and Finance, Inc.,
evidenced by a promissory not e1 for the sum of P3,352,892
payable in monthly installments ofP152,265 starting on July 16,
1994. The proceeds of the loan partly financed the purchase by
respondents of a vessel-fishing boat which was named "F/B Sea
Doll." To secure the payment of the loan, respondents executed a
chattel mortgage2 over the vessel in favor of petitioner.
Both the promissory note and the chattel mortgage provided
that, in case of failure to pay the installments or interest due
thereon, the entire amount remaining unpaid shall immediately
become due and payable.3
Respondents failed to pay the second and third installments
which fell due on August 16, 1994 and September 16, 1994,
respectively, prompting petitioner to file on October 27, 1994
before the Regional Trial Court (RTC) of Cebu City a complaint for
replevin and damages, docketed as Civil Case No. CEB-16691,
praying that the trial court:
a) . . . issue a writ of replevin ordering the seizure of the
vessel xxx complete with all its accessories and
equipments [sic], together with the registration
certificate and direct the delivery thereof to plaintiff in
accordance with law and after due hearing, declare that
plaintiff is entitled to the possession of the vessel and
confirm its seizure and delivery to plaintiff;
b) In the event that manual delivery of the said vessel
cannot be effected, . . . render judgment in favor of
plaintiff and against defendants ordering them to pay
the plaintiff, 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 [;]
c) In either case, . . . order defendants to pay jointly and
severally the sum of P1,225,733.25 as attorney’s
fees and liquidated damages, plus bonding fees and
other expenses incurred in the seizure of the said vessel
which will be proved during the trial.4 (Emphasis and
underscoring supplied)
In their Answer, respondents claimed that, inter alia, thepossession of the vessel including its registration certificate had
been surrendered to petitioner before the filing of the complaint.
Respondents thus prayed for the award of damages and
attorney’s fees by way of Counterclaim.
Following the filing by respondents of their Answer, petitioner
foreclosed the chattel mortgage and bought the vessel at the
public auction conducted on January 13, 1995 for P2,000,000 .5 A
Certificate of Sale of the vessel in favor of petitioner was
subsequently issued on January 16, 1995.
More than eight months later or on September 29, 1995, the Pre-
trial of the case was conducted during which the following were
defined as issues:
1. Whether or not [petitioner] is entitled to recover
damages from the [respondents]; and
2. Whether or not [respondents] are entitled to recover
damages in accordance with their counterclaim.6
By Decision7 of February 3, 1997, Branch 58 of the Cebu RTC
resolved both issues in the negative in this wise:
The evidence further shows that defendants were not able to pay
off their obligation to plaintiff due to the fact that their fishing
area in Batanes and their boat were badly damaged. Defendants
in fact informed plaintiff of their predicament by sending plaintiff
a copy of a letter explaining such predicament (Exh. "2"). There
was no bad faith on defendants’ part when they failed to complywith their obligation.
The Court is convinced that plaintiff is not entitled to recover
from defendants attorney’s fees and liquidated damages in the
sum of P1,225,733.25. "In determining whether a penalty clause
is ‘iniquitous and unconscionable,’ a court may very well take
into account the actual damages sustained by a creditor who has
been compelled to sue the defaulting debtor x x x." (Pacific Mills
Inc. vs. Court of Appeals, G.R. No. 87182, February 17, 1992, 206
SCRA 317, 327) No substantial damage having been sustained by
plaintiff as it already had in its possession the certificate o
registration of the vessel and had in fact foreclosed the mortgage
on said vessel, its claim for attorney’s fees and liquidated
damages must fail.
On the second issue –
Defendants have not presented sufficient and convincing
evidence to support their claim for moral and exemplary
damages and attorney’s fees. Hence, said claim is hereby deniedfor lack of merit .8 (Emphasis and underscoring supplied)
Accordingly, the trial court dismissed the parties’ respective
claims for damages and attorney’s fees. No appeal having beentaken from the trial court’s decision, it became final and
executory.
More than a year and a half following the promulgation by the
trial court of its decision in Civil Case No. CEB-16691 or on
August 26, 1998, petitioner filed a complaint 9 for deficiencyjudgment and/or collection of sum of money before the Cebu RTC
where it was docketed as Civil Case No. CEB-22585. In itscomplaint, petitioner alleged, inter alia, as follows:
x x x x
10. Subsequent to the aforesaid sale the outstanding obligation of
defendants to the plaintiff, inclusive of interest, and net of its
P2,000,000.00, representing the proceeds of the aforesaid sale o
the mortgaged property is Philippine Pesos: Nine Hundred Sixty-
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One Thousand (P961,000.00) as of January 16, 1995 exclusive of
cost of suit and collection expenses;
11. Payment of the aforesaid outstanding obligation representing
the deficiency claims of the plaintiff arising from the said
promissory note (Annex "A") is now long overdue but defendants
failed and refused and still fail and refuse to pay the same despite
demand from plaintiff;
12. It is expressly stipulated in the promissory note (Annex "A")
that in case the same is referred to an attorney-at-law forcollection defendants shall pay attorney’s fees in a sum
equivalent to ten percent (10%) of the amount due and twenty-
five percent (25%) of the total amount due as liquidated
damages aside from expenses of collectionan[d] costs of suit
which amount is equivalent to P336,350.00[.]
x x x x10 (Underscoring supplied)
Petitioner thus prayed that the court render judgment in its favor
and against respondents, ordering them to pay.
1. The amount of P961,000.00 representing the
outstanding obligation of the defendants to the plaintiffexclusive of interest, and net of the proceeds of the
aforesaid sale of the mortgaged property plus interest
from January 16, 1995;
2. The amount of P336,350.00 as attorney’s fees and
liquidated damages;
3. The costs of suit and collection expenses.
x x x x11 (Underscoring supplied)
In their Answer12 to the complaint in Civil Case No. CEB-22585,
respondents pleaded bar by prior judgment 13 and Article 1484 of
the Civil Code14 which provides:
Art. 1484. In a contract of sale of personal property the price of
which is payable in installments, the vendor may exercise any of
the following remedies:
(1) Exact fulfillment of the obligation, should the vendee
fail to pay;
(2) Cancel the sale, should the vendee’s failure to paycover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold, if
one has been constituted, should the vendee’s failure topay cover two or more installments. In this case, he
shall have no further action against the purchaser to
recover any unpaid balance of the price. Any agreement
to the contrary shall be void. (Underscoring supplied)
By Decision of November 22, 1999, Branch 58 of the Cebu RTC,
the same branch and presided by the same judge which decided
Civil Case No. CEB-16691, dismissed Civil Case No. CEB-22585 in
this wise:
It is . . . apparent that plaint iff’s present action for deficiencyjudgment is barred by the prior judgment in CEB-16691. The
parties and the cause of action in CEB-16691 and the instant case
are the same. Plaintiff’s prayer in CEB-16691 is in the alternative
Having availed of foreclosure of the chattel mortgage, plaintif
cannot anymore come to court again and avail of its second
alternative prayer. The instant case should, therefore, be
dismissed. (Section 1(f), Rule 16, 1997 Rules of Civil Procedure).
Parenthetically, let it be noted [that] in CEB-16691, plaintiff had
foreclosed the mortgage and a certificate of sale was issued in itsfavor even before the pre-trial conference therein was
conducted. Plaintiff did not make any move to amend the pre
trial order which limited the issues to be resolved therein to the
damages claimed by the parties.15(Emphasis and underscoring
supplied)
On appeal, the Court of Appeals, by Decision16 dated March 12
2001, brushed aside respondents’ invocation of Article 1484 o
the Civil Code on the ground that the same applies only to a case
of sale of [personal] property payable in installments which is
secured by a chattel mortgage between the vendor and the
vendee over the thing sold,17 citing Bicol Savings & Loan
Association v. Guinhawa.18
The appellate court nevertheless affirmed the decision of the tria
court on the ground of res judicata. Thus it held:
. . . [I]t is clear that appellant’s present claim for deficiencyjudgment is among those matters which could have been
adjudged in CEB-16691. While that earlier case is for replevin
and damages, the appellant during the pendency of that case had
extrajudicially foreclosed the chattel mortgage and the Certificate
of Sale had been issued to it by the Provincial Sheriff as the
highest bidder. Appellant after realizing the amount o
P2,000,000.00 from the proceeds of the foreclosure sale, could
have prayed for a deficiency judgment in the same action as in
fact it pursued its claim for attorney’s fees and liquidated
damages therein, which claim was however, dismissed by thetrial court. Appellant, however, did not press any demand for
such deficiency judgment in said case and instead filed this
present suit for deficiency judgment long after the trial court
rendered judgment in the earlier case. It cannot, however, evade
the application of res judicata by varying the form of its action
herein since the causes of action in the first case and in the
present suit are clearly identical[.] The same evidence which is
necessary to sustain the second action would have been sufficient
to authorize a recovery in the first, even if the forms or nature of
the two actions are different. That appellant’s cause of action assuch creditor-mortgagee of the defendant-appellees had already
been fully determined and tried in the earlier case would have
been sufficient to put an end to litigation of such claim or
demand. The principle of res judicata is based on the salutary
public policy against unnecessary multiplicity of suits. Indeed, it
is to the interest of the public that there should be an end to
litigation by the parties over a subject fully and fairly adjudicated
and an individual should not be vexed twice for the same
cause.19 (Underscoring supplied)
Its Motion for Reconsideration20 having been denied by the
appellate court ,21 petitioner filed the present Petition for
Review22 raising the issue of "whether or not a judgment in a
replevin case and/or delivery of personal property would bar a
subsequent action for deficiency judgment."23
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For res jusdicata to apply, four requisites must be met: (1) the
former judgment or order must be final; (2) it must be a
judgment or an order on the merits; (3) it must have been
rendered by a court having jurisdiction over the subject matter
and the parties; and (4) there must be, between the first and
second actions, identity of parties, of subject matter and cause of
action.24
Petitioner denies the existence of identity of causes of action
between the replevin case and the case for deficiency judgment
or collection of sum of money, thus:
Being a preparatory action for the foreclosure of the mortgage,
necessarily therefore, the claim of the petitioner (deficiency
judgment) which is the subject of Civil Case No. CEB-22585
was not yet covered or an issue in the said civil case . The
deficiency claim of the petitioner is only determined after the
extrajudicial foreclosure.
In this connection, Section 9 of Rule 60 of the 1997 Rules of Civil
Procedure categorically defines or limits the judgment or
decision that may be rendered by the court in an action for
replevin, thus:
Section 9. Judgment. – After trial of the issues, the court shalldetermine 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.
Careful reading of the above-quoted procedural law would show
that it does not authorize the court to render judgment on the
deficiency after foreclosure.25 (Underscoring supplied)
Petitioner’s position fails.
Petitioner ignores the fact that it prayed in the replevin case thatin the event manual delivery of the vessel could not be effected,
the court "render judgment in its favor by ordering [herein
respondents] to pay . . . the sum ofP3,502,095.00 plus interest
and penalty thereon from October 12, 1994 until fully paid as
provided in the Promissory Note."26
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.27 But it did not.1âwphi1
Section 49 of Rule 39 of the 1964 Rules of Court, which governed
petitioner’s complaint for replevin filed on October 27, 1994, and
which Section is reproduced as Section 47 of the present Rules,
reads:
SEC. 49. Effect of judgments or final orders. – The effect of a
judgment or final order rendered by a court of the Philippines,
having jurisdiction to pronounce the judgment or final order,
may be as follows:
(a) In case of a judgment or final order against a specific
thing, or in respect to the probate of a will, or the
administration of the estate of a deceased person, or in
respect to the personal, political, or legal condition or
status of a particular person or his relationship to
another, the judgment or final order is conclusive upon
the title to the thing, the will or administration, or the
condition, status or relationship of the person; however
the probate of a will or granting of letters of
administration shall only be prima facie evidence of the
death of the testator or intestate;
(b) In other cases, the judgment or final order is, with
respect to the matter directly adjudged or as to any
other matter that could have been raised in relation
thereto, conclusive between the parties and their
successors in interest by title subsequent to the
commencement of the action or special proceeding
litigating for the same thing and under the same title
and in the same capacity; and
(c) In any other litigation between the same parties or
their successors in interest, that only is deemed to have
been adjudged in a former judgment or final order
which appears upon its face to have been so adjudgedor which was actually and necessarily included therein
or necessary thereto. (Emphasis and underscoring
supplied)
Paragraph (a) is the rule on res judicata in judgments in rem
Paragraph (b) is the rule on res judicata in judgments in
personam. Paragraph (c) is the rule on conclusiveness o
judgment .28
Petitioner contends that Section 9 of Rule 60 of the 1997 Rules of
Court which reads:
Sec. 9. Judgment. – After trial of the issues, the court shal
determine who has the right of possession to and the value of theproperty 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 cannot be made, and also for such damages as
either party may prove, with costs, does not authorize the court
to render judgment on the deficiency after foreclosure, citing BA
Finance Corp. v. CA.29
But replevin is, as the above-cited BA Finance Corp. case holds
usually described as a mixed action.
Replevin, broadly understood, is both a form of principal remedy
and of a provisional relief. It may refer either to the action itself,
i.e., to regain the possession of personal chattels being wrongfully
detained from the plaintiff by another, or to the provisionaremedy that would allow the plaintiff to retain the thing during
the pendency of the action and hold it pendente lite. The action is
primarily possessory in nature and generally determines nothing
more than the right of possession. Replevin is so usually
described as a mixed action, being partly in rem and partly in
personam – in rem insofar as the recovery of specific property is
concerned, and in personam as regards to damages involved. As
an "action in rem," the gist of the replevin action is the right of
the plaintiff to obtain possession of specific personal property by
reason of his being the owner or of his having a special interest
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therein. (Citations omitted, italics in the original, underscoring
supplied)
Petitioner’s complaint for replevin was doubtless a mixed action– in rem with respect to its prayer for the recovery of the vessel,
and in personam with respect to its claim for damages. And it
was, with respect to its alternative prayer, clearly one in
personam.
Following paragraph (b) of Section 49, Rule 39 of the 1964 Rules
of Court, now 47 of Rule 39 of the present Rules, petitioner’ssecond complaint is unquestionably barred by res judicata.30
WHEREFORE, the petition is DENIED.
Costs against petitioner.
SO ORDERED.
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G.R. No. 165895 June 5, 2009
TERLYNGRACE RIVERA, Petitioner,
vs.
FLORENCIO L. VARGAS, Respondent.
D E C I S I O N
NACHURA, J.:
What is the effect of a writ of replevin that has been improperly
served?
This is the sole issue to be resolved in this petition for review on
certiorari seeking to set aside the Decision1 of the Court of
Appeals (CA) dated November 18, 2003 in CA-G.R. SP No. 78529,
as well as its October 20, 2004 Resolution,2 denying the petition
for certiorari filed by petitioner Terlyngrace Rivera (Rivera).
The facts follow.
On February 24, 2003, respondent Florencio Vargas (Vargas)
filed a complaint 3 against petitioner and several John Does before
Branch 02 of the Regional Trial Court (RTC) in Tuguegarao City,Cagayan, for the recovery of a 150 T/H rock crushing plant
located in Sariaya, Quezon. In his complaint and affidavit ,4 Vargas
claims ownership of the said equipment, having purchased and
imported the same directly from Hyun Dae Trading Co., in Seoul,
South Korea, in December 1993.5 The equipment was allegedly
entrusted to petitioner’s husband, Jan T. Rivera, who died
sometime in late 2002, as caretaker of respondent’s constructionaggregates business in Batangas. According to Vargas, petitioner
failed to return the said equipment aft er her husband’s death
despite his repeated demands, thus forcing him to resort to court
action.6 The complaint was accompanied by a prayer for the
issuance of a writ of replevin and the necessary bond amounting
to P2,400,000.00.
Summons7 dated February 24, 2003 was served upon petitioner
through her personal secretary on April 28, 2003 at her
residence in Parañaque City. Interestingly, however, the writ of
replevin8 was served upon and signed by a certain Joseph
Rejumo, the security guard on duty in petitioner’s crushing plant
in Sariaya, Quezon on April 29, 2003,9 contrary to the sheriff’s
return10 stating that the writ was served upon Rivera.
On May 8, 2003, Rivera filed her answer, manifestation, and
motion for the acceptance of petitioner’s redelivery bond.11 In
her answer, petitioner countered that the rock-crushing plant
was ceded in favor of her husband as his share following the
dissolution of the partnership formed between Jan Rivera and
respondent’s wife, Iluminada Vargas (Iluminada), on May 28,1998, while the partnership’s second rock -crushing plant in
Cagayan was ceded in favor of Iluminada.12 She further averred
that from the time that the partnership was dissolved sometime
in 2000 until Jan Rivera’s death in late 2002, it was petitioner’shusband who exercised ownership over the said equipment
without any disturbance from respondent .13
On May 12, 2003, the RTC issued an Order14 disapproving
petitioner’s redelivery bond application for failure to complywith the requirements under Sections 5 and 6 of Rule 60 of the
Rules of Court .15 Without directly saying so, the RTC faulted
petitioner for her failure to file the application for redelivery
bond within five (5) days from the date of seizure as provided in
the Rules of Court. Petitioner moved for reconsideration,16 bu
the same was also denied.17
Aggrieved, petitioner elevated the matter to the CA through a
petition for certiorari under Rule 65. This, too, was denied for
lack of merit .18 Petitioner moved for reconsideration,19 but it was
also denied.20
Undaunted, petitioner now comes to us via this Rule 45 petition.
Petitioner argues that the RTC committed grave abuse of
discretion in denying her counterbond on the ground that it was
filed out of time. She contends that the mandatory five-day
period did not even begin to run in this case due to the improper
service of the writ of replevin, contrary to Section 4 of Rule 60.21
We find the petition meritorious.
Replevin is one of the most ancient actions known to law, taking
its name from the object of its process.22 It originated in common
law as a remedy against the wrongful exercise of the right ofdistress for rent 23 and, according to some authorities, could only
be maintained in such a case.24 But by the weight of authority, the
remedy is not and never was restricted to cases of wrongful
distress in the absence of any statutes relating to the subject, but
is a proper remedy for any unlawful taking.25 "Replevied," used in
its technical sense, means delivered to the owner,26while the
words "to replevy" means to recover possession by an action o
replevin.27
Broadly understood in this jurisdiction, replevin is both a form o
principal remedy and of provisional relief. It may refer either to
the action itself, i.e., to regain the possession of personal chattels
being wrongfully detained from the plaintiff by another, or to the
provisional remedy that would allow the plaintiff to retain the
thing during the pendency of the action and to hold it pendente
lite.28 The action is primarily possessory in nature and generally
determines nothing more than the right of possession.29
The law presumes that every possessor is a possessor in good
faith.30 He is entitled to be respected and protected in his
possession31 as if he were the true owner thereof until a
competent court rules otherwise.32 Before a final judgment
property cannot be seized unless by virtue of some provision o
law.33 The Rules of Court, under Rule 60, authorizes such seizure
in cases of replevin. However, a person seeking a remedy in an
action for replevin must follow the course laid down in the
statute, since the remedy is penal in nature.34 When no attempt is
made to comply with the provisions of the law relating to seizure
in this kind of action, the writ or order allowing the seizure iserroneous and may be set aside on motion35 by the adverse party
Be it noted, however, that a motion to quash the writ of replevin
goes to the technical regularity of procedure, and not to the
merits of the case36 in the principal action.
The process regarding the execution of the writ of replevin in
Section 4 of Rule 60 is unambiguous: the sheriff, upon receipt o
the writ of replevin and prior to the taking of the property, must
serve a copy thereof to the adverse party (petitioner, in this case)
together with the application, the affidavit of merit, and the
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ASIAN TERMINALS, INC., G.R. No. 166901
Petitioner,
Present:
- versus -
PANGANIBAN, C.J.,
Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
HON. HELEN BAUTISTA- CHICO-
NAZARIO, JJ.
RICAFORT, Presiding Judge
of RTC, Branch 260, Paraaque Promulgated:
City; SAMUEL ROSETE, in
his personal capacity and as attorney- October 27, 2006
in-fact and in representation of NOEL
TABUELOG, proprietor of BEST
PART ENTERPRISES; ERNESTO
DE JESUS, President of EASTERN
METROPOLITAN BUS CORP.;
NORMA PONDEVIDA, proprietress
of NSP TRANSPORTATION SERVICES;
RENATO CLAROS, President of PRINCE
BUS AND TRUCK PARTS, INC.;
ERNESTO M. CHUA, President of EMC
TRANSPORTATION, INC.; CECILIA T. SAULOG, proprietress of MANSOUR
TRANSPORT SERVICES; JENELITA S.
NAPARATE, proprietress of SANEI
SOUGYO TRADING; RODOLFO J.
MAGO, proprietor of DNS SHUTTLE
SERVICES; and AMALIA C. EDAMURA,
Proprietress of DAMLAR TRADING,
Respondents.
x---------------------------------------------------------------------------------x
ASIAN TERMMINALS, INC. VS. RICAFORT
D E C I S I O N
CALLEJO, SR., J.:
Before us is a Petition for Review on Certiorari for the reversal of
the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No.
61562, affirming the Orders[2] of the Regional Trial Court (RTC)
of Paraaque City, Branch 260, in Civil Case No. 98-0435 for
replevin and damages.
Section 1, Republic Act (RA) No. 8506, which took effect on
February 22, 1998, provides that it shall be unlawful for any
person to import, cause the importation of, register, cause the
registration of, use or operate any vehicle with its steering wheel
right hand side thereof in any highway, street or road, whether
private or public, or at the national or local x x x.
Noel Tabuelog, Ernesto de Jesus, Norma Pondevida, Renato
Claros, Ernesto M. Chua, Cecilia T. Saulog, Jenelita S. Naprate,
Rodolfo F. Mago, and Amalia C. Edamura are duly-licensed
importers of vehicles. Sometime in April and May 1998, they
imported 72 secondhand right-hand drive buses
from Japan. When the shipment arrived at
the South Harbor, Port of Manila, the District Collector of
Customs impounded the vehicles and ordered them stored at the
warehouse of the Asian Terminals, Inc. (ATI), a customs-bonded
warehouse under the custody of the Aviation and Cargo Regional
Division. Conformably with Section 2607 of the Tariff and
Customs Code, the District Collector of Customs issued Warrants
of Distraint [3] against the shipment and set the sale at public
auction on September 10, 1998.[4]
In the meantime, on October 28, 1998, the Secretary o
Justice rendered Opinion No. 127,[5] Series of 1998, stating tha
shipments of right hand wheel vehicles loaded and exported at
the port of origin before February 22, 1998 were not covered by
RA No. 8506 unless the same were loaded and imported after
said date.
On November 11, 1998, the importers, through their
Attorney-in-Fact Samuel N. Rosete, filed a complaint with the
RTC of Paraaque City, against the Secretary of Finance, Customs
Commissioner, and the Chief Executive of the Societe Generale
de Surillee, for replevin with prayer for the issuance of a writ of
preliminary and mandatory injunction and damages.
Plaintiffs averred, inter alia, that in accordance with the
opinion of the Assistant Director of the Customs Legal Service
and the Office of the Legal Affairs of the Department of Finance
the importation of right-hand drive vehicles are not prohibited
under RA No. 8506 provided that conversion kits are included
in the imported vehicles. As such, there was no factual and lega
basis for the seizure of the shipment and the storage thereof at
the ATI. The complaint contained the following prayer:
WHEREFORE, premises considered, it
is most respectfully prayed before this
Honorable Court that an Order be issued in the
following tenor:
A. PRIOR TO HEARING:
1. A Writ of Replevin be issued upon
the posting of a bond of PhP12,000,000.00
(double the value of the vehicles) executed in
favor of defendants to answer for damages,
and approved by this Court, directing the
Sheriff or his deputies to forthwith take
custody of the said vehicles which are in the
possession and custody of the defendants or
their agents at the Bureau of Customs Holding
Area, located at South Harbor, Port Area,
Manila City, and retain it in its custody;
B. AFTER HEARING:
1. To pay the sum of PhP6,000,000.00
if the Writ of Replevin cannot be implemented
successfully plus interest until fully paid;
2. To pay compensatory damages of
not less than PhP840,000.00 for unrealized
profits, moral damages of not less [than]PhP1,000,000.00, exemplary damages of not
less than PhP250,000.00, litigation and
necessary expenses of not less than
PhP500,000.00, attorneys fees on a contingent
basis, not less than P1,000,000.00 actual
damages if and when plaintiffs are legally
obliged to pay storage fees;
3. Such other reliefs just and equitable
under the premises.[6]
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The RTC granted the application for a writ of replevin
on a bond of P12,000,000.00.[7]
However, George Jeroes, the Chief of Customs Police and
four (4) customs policemen prevented the Sheriff and the
policemen assisting him from taking custody of the
vehicles.[8] He claimed that the District Collector of Customs had
jurisdiction over the vehicles. On motion of the plaintiffs, the
court issued an Order[9] on November 23, 1998, directing the
PNP Director to assist the Sheriff in implementing the writ it
issued and to arrest anyone who would obstruct the
implementation of its order. The Sheriff served a copy of the
Order on ATI and succeeded in taking custody of the vehicles
and signed a receipt therefor.[10] The District Collector of
Customs agreed to transfer the custody of the vehicles to the
RTC, on the condition that the required taxes, dues, and other
charges be paid. The Customs Commissioner approved the
decision of the District Collector.[11] Plaintiffs paid the requisite
taxes, dues, and other charges amounting
to P7,528,635.00. They were able to take possession of the
vehicles over the objections of ATI.[12]
On November 27, 1998, the defendants, through the
Office of the Solicitor General, filed an Omnibus Motion[13],
seeking the reconsideration of the RTC Order granting plaintiffs
plea for a writ of replevin. It likewise prayed that the writ ofreplevin issued by the court be quashed on the ground that the
RTC has no jurisdiction over the vehicles subject of seizure and
detention before the Bureau of Customs. The OSG declared that
the Bureau of Customs which had custody of the vehicles through
ATI had exclusive jurisdiction over said vehicles and on the
issues of the seizure and detention thereof. The ATI filed a
motion for the court to allow the vehicles to remain in its
warehouse.[14]
On December 1, 1998, the ATI filed a Third-Party
Claim[15] over the shipment, alleging that it had a lien over the
vehicles for accumulated and unpaid storage and arrastre
charges, and wharfage dues amounting to P13,036,480.94. It
prayed that the vehicles be returned and remain with it until
payment of said dues. On December 9, 1998, ATI filed a
Motion[16] seeking to require plaintiffs (third-party defendants)
to post a bond to insure payment of its claims against the
plaintiffs, or to order the Sheriff to return possession of the
vehicles to it.
Plaintiffs opposed the Third-Party Claim of ATI claiming
that it failed to allege in its Affidavit of Third-Party Claim any
factual and legal basis for its alleged lien and to present
documentary evidence to prove the same. ATI has no cause of
action against them for wharfage/arrastre services because there
was no contract to cover said charges.[17]
Before the court could resolve the motions, plaintiffs
filed a Motion/Notice to Dismiss/Withdraw Complaint [18] againstthe officials of the Bureau of Customs and Department of Finance,
on the ground that said defendants had agreed to the
implementation of the writ of replevin issued by the court on
condition that plaintiffs pay the taxes, dues, and other charges on
the importation amounting to P7,528,635.00 to the government
and that plaintiffs had paid the said amount. The OSG opposed
the motion, alleging that:
The instant Complaint states that the
subject importation is legal. This is a matter
which cannot be admitted by defendants
simply because the law and the Opinion of the
Secretary of Justice are crystal clear. Likewise,
all the erroneous statements of law and legal
conclusions stated therein cannot be
hypothetically admitted.
3. Hence, it is imperative that the
Omnibus Motion be resolved first prior to any
other incident for the same delves on the very
merits of the instant case.
4. The release of the imported right-
hand drive buses by the Bureau of Customs
cannot make the said importation legal;
otherwise, said act will constitute a violation
of R.A. No. 8506 which declares illegal the act
of importation of this type of vehicle.
5. The Bureau of Customs was
constrained to release the subject vehicles on
November 27, 1998 because of this Courts
Order dated November 23, 1998, the last
paragraph of which states:
Chief of PNP
General Roberto Lastimosois ordered to assist the
Sheriff in the
implementation of its order
dated November 11, 1998
and to effect the arrest of
persons who would
obstruct the
implementation of this
courts order.
The overwhelming number of PNP personnel
who accompanied the sheriff (there were at
least 20 police cars which swarmed over the
area), pitied against only three (3) hapless
Customs policemen, plus the threat to arrest
anyone who would obstruct the
implementation of the Order dated November
11, 1998 granting the application for a Writ of
Replevin, left the Bureau of Customs with no
choice but to allow the release of the subject
vehicles.[19]
On January 13, 1999, ATI filed a Motion for Intervention
and for Admission of its Complaint-in-Intervention, alleging tha
it had a lien on the vehicles to the extent of P13,820,150.93
representing accumulated storage and arrastre charges and
wharfage dues. ATI prayed that its Complaint-in-Intervention be
admitted, and that after due proceedings judgment be rendered
in its favor, thus:
WHEREFORE, it is respectfully
prayed of this Honorable Court that judgment
be rendered in this Complaint-in-Intervention
ordering plaintiffs to pay intervenor:
a) the sum of PESOS THIRTEEN
MILLION EIGHT HUNDRED TWENTY
THOUSAND ONE HUNDRED FIFTY AND
93/100 (P13,820,150.93), plus legal interest
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from the date of the filing of this Complaint-in-
Intervention.
b) the sum of PESOS ONE HUNDRED
THOUSAND (P100,000.00) as and for
attorneys fees; and
c) costs of suit .[20]
Plaintiffs opposed the motion of ATI on the following
grounds: (1) ATI failed to allege and present any contract
covering the deposit/storage of the vehicles in its warehouse; (2)
ATI has no legal interest over the matter in litigation; and (3) the
adjudication of the rights of the parties may be delayed or
prejudiced while those of ATI may be protected in a separate
proceeding.[21]
The OSG opposed the motion of the plaintiffs and the
notice to dismiss/withdraw the complaint, praying that the court
resolve its pending motions.[22]
On April 27, 1999, the court issued an Order dismissing
the complaint on the following grounds:
1. Plaintiffs themselves filed a Motion
to Dismiss against Secretary of Finance andCommissioner of Customs.
2. This Court has no jurisdiction over
the case. The Court of Tax Appeals exercises
exclusive appellate jurisdiction to review the
ruling of the Commissioner in seizure and
confiscation cases and that power is to the
exclusion of the Court of First Instance which
may not interfere with the Commissioners
decisions x x x
In view of the foregoing, let this case
be as it is hereby ordered Dismissed.
SO ORDERED.[23]
The OSG filed a motion for reconsideration of the April
27, 1999 Order, and prayed that the court resolve the issue as to
who is entitled to the possession of the vehicles as required by
Sections 9 and 10, Rule 60 of the Rules of Court. For its part, ATI
filed a motion for clarification of the order, alleging that the court
failed to resolve its motion. It also pleaded for the court to admit
its Complaint-in-Intervention and its motion seeking to require
plaintiffs to post a bond to insure payment of its claims for
wharfage/arrastre charges.[24]
On September 23, 1999, the RTC issued its Order
dismissing the Complaint-in-Intervention, thus:
Before this Court are the following
Motions:
1. Motion for Clarification, and
2. Motion for Reconsideration
The Complaint-in-Intervention of
Intervenor - ATI is likewise dismissed, it being
only an accessory to the principal case.
Plaintiff Samuel Rosete is hereby
ordered to return the possession of the subject
buses to Pedro Mendoza, in his capacity as
Customs Commissioner of the Bureau of
Customs.
SO ORDERED.[25]
ATI filed a motion for reconsideration, which the cour
denied on July 31, 2000. While it recognized the arguments of
ATI, the court held that its rights could be fully protected in a
separate proceeding. It declared that the subject buses were
under custodia legis by virtue of the writ of replevin it had issued
However, due to the dismissal of the plaintiffs complaint, the
subject buses have to be returned to the person who was in
custody prior to the implementation of the writ. The motion for
reconsideration filed by ATI and the opposition filed by plaintiffs
were likewise denied.[26]
ATI filed a Petition for Certiorari under Rule 65 before
the CA, assailing the RTC Orders dated April 27, 1999, September
23, 1999, and July 31, 2000. It raised the following questions:
WHETHER OR NOT THE LOWER COURTCOMMITTED GRAVE ABUSE OF DISCRETION
WHEN IT OUTRIGHTLY DISMISSED THE
SUBJECT COMPLAINT FILED BY PRIVATE
RESPONDENTS.
WHETHER OR NOT THE LOWER COURT
COMMITTED GRAVE ABUSE OF DISCRETION
WHEN IT DENIED THE MOTION FOR
RECONSIDERATION FILED BY THE
PETITIONER.
WHETHER OR NOT THE PUBLIC
RESPONDENTS COMMITTED GRAVE ABUSE
OF DISCRETION WHEN IT OUTRIGHTLY
DISMISSED THE COMPLAINT-IN-
INTERVENTION FILED BY PETITIONER.[27]
ATI averred that it filed its Complaint-in
Intervention before the RTC dismissing the complaint of private
respondents. It pointed out that the dismissal of the main case
does not necessarily result in the dismissal of its ancillary action
because it has a legal interest in the matter in litigation, that is, it
is so situated as to be adversely affected by the distribution or
other disposition of the property in question. It thus behooved
the court to have ordered respondents to post a bond following
its third-party claim over the property for the collection of the
wharfage and arrastre fees/charges.
On November 30, 2004, the CA rendered judgment
dismissing the petition for lack of merit .[28] The appellate cour
ruled that the RTC had no jurisdiction over the complaint filed by
respondents. Under the Customs and Tarriff Code, the Collector
of Customs sitting in seizure and forfeiture proceedings had the
exclusive jurisdiction to hear and determine all questions relating
on the seizure and forfeiture of dutiable goods. The RTC had no
review powers over such proceedings; it is the Court of Tax
Appeals under RA No. 1125. Since the RTC had no jurisdiction
over the main case, it was also bereft of authority to hear the
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third-party claim or the complaint-in-intervention filed by ATI.
Citing Saw v. Court of Appeals,[29] the appellate court ruled that
intervention was not an independent proceeding but merely an
ancillary and supplemental one, which, in the nature of things, is
subordinate to the main proceeding unless otherwise provided
for by statute or by the Rules of Court. The general rule is that an
intervention is limited to the field of litigation open to the
original parties. The RTC had dismissed the main action; thus,
there was no more principal proceeding in which petitioner ATI
may intervene.
ATI filed a motion for reconsideration, which the CA
denied through its January 28, 2005 Resolution.[30]
In the present petition, ATI (now petitioner) raises the
following issues:
1. THE COURT OF APPEALS COMMITTED
SERIOUS REVERSIBLE ERROR IN
DISMISSING THE THIRD-PARTY
CLAIM WHICH WAS CONVERTED
INTO A COMPLAINT-IN-
INTERVENTION BASED ON THE
GROUND THAT IT IS ANCILLARY TO
THE DISMISSED MAIN ACTION.
2. THE COURT OF APPEALS COMMITTED
SERIOUS REVERSIBLE ERROR IN
DISMISSING THE THIRD-PARTY
CLAIM WHICH WAS CONVERTED
INTO A COMPLAINT-IN-
INTERVENTION BASED ON THE
GROUND THAT THE COURT A
QUO HAS NO JURISDICTION OVER
THE PRINCIPAL ACTION.
3. THE COURT OF APPEALS COMMITTED
SERIOUS REVERSIBLE ERROR IN
DISMISSING THE COMPLAINT IN
INTERVENTION ON THE BASIS OF
THE RULING IN BARANGAY
MATICTIC VS. ELBINIAS (148 SCRA
83).[31]
Citing Metropolitan Bank and Trust Company v. The
Presiding Judge, RTC, Manila Branch 39,[32] petitioner maintains
that the dismissal of the original complaint filed by respondents
cannot, in any way, result in the denial of its complaint-in-
intervention. It posits that its consent as intervenor is necessary
for the dismissal of the main action, and that the original parties
cannot isolate it and agree, among themselves, to dismiss the
complaint. Petitioner asserts that, even if the original complaint
was properly dismissed, its complaint-in-intervention survives
the original complaint and may proceed as long as the existenceof an actual controversy had been established by the pleadings. It
insists that the intervention has to be heard regardless of the
disposition of the principal action.
Petitioner submits that even on the assumption that the
lower court has no jurisdiction over the principal action, the
third-party complaint may still be maintained.
Petitioner further contends that the appellate court
erred in relying on Barangay Matictic v. Elbinias[33] because in
that case, the third-party-complaint was filed after the decision in
the main case had already become final, whereas, in the present
case, the third-party claim and third-party complaint before the
RTC dismissed respondents action. Petitioner maintains that
the Metropolitancase is thus applicable, and points out that the
Court therein ruled that the complaint-in-intervention should be
preserved regardless of the outcome of the original complaint.
For their part, respondents assert that the CA decision
is in accord with the Rules of Court.
We are thus tasked to resolve the issue of whether the
CA erred in dismissing the petition for certiorari of the petitioner
The petition is denied for lack of merit.
We rule that the trial court acted in accordance with the Tarif
and Customs Code (TCC) and the rulings of this Court when it
issued the assailed Orders.
Section 602 of the TCC provides that the Bureau of
Customs shall exercise exclusive jurisdiction over seized and
forfeited cars. It is tasked to enforce tariff, and supervise and
control customs law and all other laws, rules and regulations
relating to the tariff and customs administration; and to
supervise and control all import and export cargoes, loaded or
stored in piers, terminal facilities, including container yards andfreight stations, for the protection of government revenues
Under Section 2301 of the TCC, the Collector of Customs is
empowered to make a seizure of cargoes and issue a receipt for
the detention thereof:
SEC. 2301. Warrant for Detention of
Property-Cash Bond . Upon making any seizure,
the Collector shall issue a warrant for the
detention of the property; and if the owner or
importer desires to secure the release of the
property for legitimate use, the Collector
shall, with the approval of the Commissioner
of Customs, surrender it upon the filing of a
cash bond , in an amount to be fixed by him,
conditioned upon the payment of the
appraised value of the article and/or any fine,
expenses and costs which may be adjudged in
the case: Provided, That such importation
shall not be released under any bond when
there is a prima facie evidence of fraud in the
importation of the article: Provided further,
That articles the importation of which is
prohibited by law shall not be released under
any circumstance whomsoever, Provided,
finally, That nothing in this section shall be
construed as relieving the owner or importer
from any criminal liability which may arise
from any violation of law committed in
connection with the importation of the article.(emphasis supplied)
Section 2530 of the TCC enumerates the properties
subject of seizure and forfeiture:
Section 2530. Property Subject of
Forfeiture Under Tariff and Customs Laws. Any
vehicle, vessel or aircraft, cargo, article and
objects shall, under the following conditions
be subject to forfeiture:
7/18/2019 Provisional Remedies Rule 60 Section 1
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x x x x
(f) Any article the importation or
exportation of which is effected or attempted
contrary to law, or any article of prohibited
importation or exportation, and all other
articles which, in the opinion of the Collector,
have been used, are or were entered to be
used as instruments in the importation or
exportation of the former.
As the Court ruled in Jao v. Court of Appeals,[34] Regional Trial
Courts are devoid of any competence to pass upon the validity or
regularity of seizure and forfeiture proceedings conducted by the
Bureau of Customs and to enjoin or otherwise interfere with
these proceedings. It is the Collector of Customs, sitting in seizure
and forfeiture proceedings, who has exclusive jurisdiction to hear
and determine all questions touching on the seizure and
forfeiture of dutiable goods. The Regional Trial Courts are
precluded from assuming cognizance over such matters even
through petitions of certiorari, prohibition or mandamus. The
Court further explained:
It is likewise well-settled that the
provisions of the Tariff and Customs Code andthat of Republic Act No. 1125, as amended,
otherwise known as An Act Creating the Court
of Tax Appeals, specify the proper fora and
procedure for the ventilation of any legal
objections or issues raised concerning these
proceedings. Thus, actions of the Collector of
Customs are appealable to the Commissioner
of Customs, whose decision, in turn, is subject
to the exclusive appellate jurisdiction of the
Court of Tax Appeals and from there to the
Court of Appeals.
The rule that Regional Trial Courts
have no review powers over such proceedings
is anchored upon the policy of placing no
unnecessary hindrance on the governments
drive, not only to prevent smuggling and
other frauds upon Customs, but more
importantly, to render effective and efficient
the collection of import and export duties due
the State, which enables the government to
carry out the functions it has been instituted to
perform.[35]
Thus, the RTC had no jurisdiction to take cognizance of
the petition for replevin by respondents herein, issue the writ of
replevin and order its enforcement. The Collector of Customs had
already seized the vehicles and set the sale thereof at public
auction. The RTC should have dismissed the petition for replevinat the outset. By granting the plea of respondents (plaintiffs
below) for the seizure of the vehicles and the transfer of custody
to the court, the RTC acted without jurisdiction over the action
and the vehicles subject matter thereof. It bears stressing that the
forfeiture of seized goods in the Bureau of Customs is a
proceeding against the goods and not against the owner. It is in
the nature of a proceeding in rem, i.e., directed against the res or
imported articles and entails a determination of the legality of
their importation. In this proceeding, it is, in legal contemplation,
the property itself which commits the violation and is treated as
the offender, without reference whatsoever to the character or
conduct of the owner .[36]
In fine, the initial orders of the RTC granting the
issuance of the writ of replevin and its implementation are
void.[37] While it is true that the District Collector of Customs
allowed the release of the vehicles and the transfer thereof to the
custody of the RTC upon the payment by the private respondents
of the required taxes, duties and charges, he did not thereby lose
jurisdiction over the vehicles; neither did it vest jurisdiction on
the RTC to take cognizance of and assume jurisdiction over the
petition for replevin. As very well explained by the Office of the
Solicitor General, the District Collector of Customs agreed to
transfer the vehicles to the custody of the RTC since the latter had
ordered the arrest of those who would obstruct the
implementation of the writ. The District Collector of Customs had
yet to resolve whether to order the vehicles forfeited in favor o
the government, in light of the opinion of the Secretary of Justice
that, under RA No. 8506, the importation was illegal.
The RTC cannot be faulted for dismissing petitioners
complaint-in-intervention. Considering that it had no jurisdiction
over respondents action and over the shipment subject of the
complaint, all proceedings before it would be void.[38] The RTC
had no jurisdiction to take cognizance of the complaint-in
intervention and act thereon except to dismiss the sameMoreover, considering that intervention is merely ancillary and
supplemental to the existing litigation and never an independent
action,[39] the dismissal of the principal action necessarily results
in the dismissal of the complaint-in-intervention. Likewise, a
court which has no jurisdiction over the principal action has no
jurisdiction over a complaint-in
intervention. Intervention presupposes the pendency of a suit in a
court of competent jurisdiction.[40] Jurisdiction of intervention is
governed by jurisdiction of the main action.[41]
IN LIGHT OF ALL THE FOREGOING, the petition
is DENIED. The Court of Appeals Decision in CA-G.R. SP No
61562 is AFFIRMED.
SO ORDERED.