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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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:








































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.








































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












































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


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


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




























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




























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
































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.












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-

http://www.lawphil.net/judjuris/juri2007/sep2007/gr_148980_2007.html#fnt1







































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

























































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




























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.








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





















































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








































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.



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.



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:























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.

































provisional remedies rule 60 section 1

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