THIRD DIVISION rental payments to be filed against Lui Enterprises, Inc.
and/or
March 12, 2014
G.R. No. 193494
LUI ENTERPRISES, INC., Petitioners,
vs.
ZUELLIG PHARMA CORPORATION and the PHILIPPINE BANK
OF COMMUNICATIONS, Respondents.
DECISION
LEONEN, J.:
There should be no inexplicable delay in the filing of a motion to
set aside order of default. Even when a motion is filed within the
required period, excusable negligence must be properly alleged
and proven.
This is a petition for review on certiorari of the Court of Appeals'
1 2
decision dated May 24, 2010 and resoluticm dated August 13,
2010 in CA- G.R. CV No. 88023. The Court of Appeals affirmed in
toto the Regional
3
Trial Court of Makatis decision dated July 4, 2006.
The facts as established from the pleadings of the parties are as
follows:
On March 9, 1995, Lui Enterprises, Inc. and Zuellig Pharma
4
Corporation entered into a 10-year contract of lease over a parcel
of land located in Barrio Tigatto, Buhangin, Davao City. The parcel
of land was covered by Transfer Certificate of Title No. T-166476
5
and was registered under Eli L. Lui.
6
On January 10, 2003, Zuellig Pharma received a letter from the
Philippine Bank of Communications. Claiming to be the new
owner of the leased property, the bank asked Zuellig Pharma to
pay rent directly to it. Attached to the letter was a copy of
Transfer Certificate of Title No. 336962 under the name of the
7
Philippine Bank of Communications. Transfer Certificate ofTitle
No. 336962 was derived fromTransfer Certificate ofTitle No.T-
8
166476.
Zuellig Pharma promptly informed Lui Enterprises of the
Philippine Bank of Communications claim. On January 28, 2003,
Lui Enterprises wrote to Zuellig Pharma and insisted on its right
9
to collect the leased propertysrent.
Due to the conflicting claims of Lui Enterprises and the Philippine
Bank of Communications over the rental payments, Zuellig
10
Pharma filed a complaint for interpleader with the Regional Trial
Court of Makati. In its complaint, Zuellig Pharma alleged that it
already consigned in court P604,024.35 as rental payments.
Zuellig Pharma prayed that it be allowed to consign in court its
succeeding monthly rental payments and that Lui Enterprises and
the Philippine Bank of Communications be ordered to litigate
11
their conflicting claims.
12
The Philippine Bank of Communications filed its answer to the
complaint. On the other hand, Lui Enterprises filed a motion to
13
dismiss on the ground that Zuellig Pharmas alleged
representative did not have authority to file the complaint for
interpleader on behalf of the corporation. Under the secretarys
14
certificate dated May 6, 2003 attached to the complaint, Atty.
Ana L.A. Peralta was only authorized to "initiate and represent
[Zuellig Pharma] in the civil proceedings for consignation of
Prov Rem
15
[the Philippine Bank of Communications]."
According to Lui Enterprises, an earlier filed nullification of deed
of dation in payment case pending with the Regional Trial Court
16
of Davao barred the filing of the interpleader case. Lui
Enterprises filed this nullification case against the Philippine Bank
of Communications with respect to several properties it dationed
to the bank in payment of its obligations. The property leased by
Zuellig Pharma was among those allegedly dationed to the
17
Philippine Bank of Communications.
In the nullification of deed of dation in payment case, Lui
Enterprises raised the issue of which corporation had the better
18
right over the rental payments. Lui Enterprises argued that the
same issue was involved in the interpleader case. To avoid
possible conflicting decisions of the Davao trial court and the
Makati trial court on the same issue, Lui Enterprises argued that
the subsequently filed interpleader case be dismissed.
To support its argument, Lui Enterprises cited a writ of
19
preliminary injunction dated July 2, 2003 issued by the Regional
Trial Court of Davao, ordering Lui Enterprises and the Philippine
20
Bank of Communications "[to maintain] status quo" with respect
to the rent. By virtue of the writ of preliminary injunction, Lui
Enterprises argued that it should continue collecting the rental
payments from its lessees until the nullification of deed of dation
in payment case was resolved. The writ of preliminary injunction
dated July 2, 2003 reads:
WHEREAS, on June 30, 2003, the Court issued an Order, a portion
of which is quoted:
WHEREFORE, PREMISES CONSIDERED, let a Writ of Preliminary
Injunction issue, restraining and enjoining [the Philippine Bank of
Communications], its agents or [representative], the Office of the
Clerk of Court- Sheriff and all persons acting on their behalf, from
conducting auction sale on the properties of [Lui Enterprises] in
EJF-REM Case No. 6272-03 scheduled on July 3, 2003 at 10:00
a.m. at the Hall of Justice, Ecoland, Davao City, until the final
termination of the case, upon plaintiff [sic] filing of a bond in the
amount of P1,000,000.00 to answer for damages that the
enjoined parties may sustain by reason of the injunction if the
Court should finally decide that applicant is not entitled thereto.
WHEREAS, that plaintiff posted a bond of P1,000,000.00 duly
approved by this Court.
IT IS HEREBY ORDERED by the undersigned Judge that, until
further orders, [the Philippine Bank of Communications] and all
[its] attorneys, representatives, agents and any other persons
assisting [the bank], are directed to restrain from conducting
auction sale on the Properties of [Lui Enterprises] in EJF-REM Case
No. 6272-03 scheduled on July 3, 2003 at 10:00 a.m. at the Hall of
Justice, Ecoland, Davao City, until the final termination of the
21
case.
22
Zuellig Pharma filed its opposition to the motion to dismiss. It
argued that the motion to dismiss should be denied for having
been filed late. Under Rule 16, Section 1 of the 1997 Rules of Civil
Procedure, a motion to dismiss should be filed within the
required time given to file an answer to the complaint, which is
23
15 days from service of summons on the defendant. Summons
was served on Lui Enterprises on July 4, 2003. It had until July 19,
2003 to file a motion to dismiss, but Lui Enterprises filed the
24
motion only on July23, 2003.
As to Lui Enterprises claim that the interpleader case was filed
without authority, Zuellig Pharma argued that an action
interpleader "is a necessary consequence of the action for
Rule 62 Fulltext Page 1 of 22
 25
consignation." Zuellig Pharma consigned its rental payments
because of "the clearly conflicting claims of [Lui Enterprises] and
26
[the Philippine Bank of Communications]." Since Atty. Ana L.A.
Peralta was authorized to file a consignation case, this authority
necessarily included an authority to file the interpleader case.
Nevertheless, Zuellig Pharma filed in court the secretarys
27
certificate dated August 28, 2003, which expressly stated that
Atty. Ana L.A. Peralta was authorized to file a consignation and
28
interpleader case on behalf of Zuellig Pharma.
With respect to the nullification of deed of dation in payment
case, Zuellig Pharma argued that its pendency did not bar the
filing of the interpleader case. It was not a party to the
29
nullification case.
As to the writ of preliminary injunction issued by the Regional
Trial Court of Davao, Zuellig Pharma argued that the writ only
pertained to properties owned by Lui Enterprises. Under the writ
of preliminary injunction, the Regional Trial Court of Davao
enjoined the July 3, 2003 auction sale of Lui Enterprises
properties, the proceeds of which were supposed to satisfy its
obligations to the Philippine Bank of Communications. As early as
April 21, 2001, however, the Philippine Bank of Communications
already owned the leased property as evidenced by Transfer
Certificate of Title No. 336962. Thus, the writ of preliminary
30
injunction did not apply to the leased property.
Considering that Lui Enterprises filed its motion to dismiss
beyond the 15-day period to file an answer, Zuellig Pharma
31
moved that Lui Enterprises be declared in default.
32
In its compliance dated September 15, 2003, the Philippine Bank
of Communications "[joined Zuellig Pharma] in moving to declare
[Lui Enterprises] in default, and in [moving for] the denial of [Lui
33
Enterprises] motion to dismiss."
The Regional Trial Court of Makati found that Lui Enterprises
failed to file its motion to dismiss within the reglementary period.
34
Thus, in its order dated October 6, 2003, the trial court denied
35
Lui Enterprisesmotion to dismiss and declared it in default.
Lui Enterprises did not move for the reconsideration of the order
dated October 6, 2003. Thus, the Makati trial court heard the
interpleader case without Lui Enterprisesparticipation.
Despite having been declared in default, Lui Enterprises filed the
36
manifestation with prayer dated April 15, 2004. It manifested
that the Regional Trial Court of Davao allegedly issued the
37
order dated April 1, 2004, ordering all of Lui Enterprises lessees
38
to "observe status quo with regard to the rental payments" and
continue remitting their rental payments to Lui Enterprises while
the nullification of deed of dation in payment case was being
resolved. The order dated April 1, 2004 of the Regional Trial Court
of Davao reads:
ORDER
Posed for Resolution is the Motion for Amendment of Order filed
by [Lui Enterprises] on September 23, 2003 seeking for the
preservation of status quo on the payment/remittance of rentals
to [it] and the disposal/construction of the properties subject
matter of this case.
xxxx
As elsewhere stated, [the Philippine Bank of Communications] did
not oppose the instant motion up to the present. In fact, during
the hearing held on March 15, 2004, [the banks] counsel
manifested in open court that except for the rentals due from
Prov Rem
[Zuellig Pharma] which are the subject of a consignation suit
before a Makati Court, the other rental payments are
continuously received by [Lui Enterprises].
There being no objection from [the Philippine Bank of
Communications], and in order to protect the right of [Lui
Enterprises] respecting the subject of the action during the
pendency of this case, this Court, in the exercise of its discretion
hereby grants the motion.
Accordingly, consistent with the order of this Court dated June
30, 2003, the parties are hereby directed to further observe status
quo with regard to the rental payments owing or due from the
lessees of the properties subject of the first set of deeds of dacion
and that the defendants are enjoined from disposing of the
properties located at Green Heights Village, Davao City until the
case is finally resolved.
With the order dated April 1, 2004 issued by the Regional Trial
Court of Davao as basis, Lui Enterprises argued that Zuellig
Pharma must remit its rental payments to it and prayed that the
interpleader case be dismissed.
The Regional Trial Court of Makati only noted the manifestation
with prayer dated April 15, 2004.
39
It was only on October 21, 2004, or one year after the issuance of
the order of default, that Lui Enterprises filed a motion to set
40
aside order of default in the Makati trial court on the ground of
excusable negligence. Lui Enterprises argued that its failure to file
a motion to dismiss on time "was caused by the negligence of
41
[Lui Enterprises] former counsel." This negligence was allegedly
excusable because "[Lui Enterprises] was prejudiced and
42
prevented from fairly presenting [its] case."
For its allegedly meritorious defense, Lui Enterprises argued that
the earlier filed nullification of deed of dation in payment case
barred the filing of the interpleader case. The two actions
allegedly involved the same parties and the same issue of which
corporation had the better right over the rental payments. To
prevent "the possibility of two courts x x x rendering conflicting
43
rulings [on the same issue]," Lui Enterprises argued that the
subsequently filed interpleader case be dismissed.
44
Zuellig Pharma filed its opposition to the motion to set aside
order of default. It argued that a counsels failure to file a timely
answer was inexcusable negligence which bound his client.
Further, Zuellig Pharma argued that the pending case for
nullification of deed of dation in payment "[did] not preclude
[Zuellig Pharma] from seeking the relief prayed for in the
45
[interpleader case]."
While the motion to set aside order of default was still pending
for resolution, Lui Enterprises filed the manifestation and motion
46
to dismiss dated April 21, 2005 in the Makati trial court. It
manifested that the Davao trial court issued another
47
order dated April 18, 2005 in the nullification of deed of dation
in payment case. In this order, the Davao trial court directed the
Philippine Bank of Communications to inform Zuellig Pharma to
pay rent to Lui Enterprises while the Davao trial courts order
dated April 1, 2004 was subsisting. The order datedApril 18, 2005
of the Davao trial court reads:
ORDER
Plaintiffs move for execution or implementation of the Order
dated September 14, 2004. In substance, [Lui Enterprises] seek[s]
to compel the remittance in their favor of the rentals from
[Zuellig Pharma], one of the lessees alluded to in the September
Rule 62 Fulltext Page 2 of 22
14, 2004 Order whose rental payments "must be remitted to and
collected by [Lui Enterprises]." [The Philippine Bank of
Communications] did not submit any opposition.
It appears from the records that sometime in February 2003, after
being threatened with a lawsuit coming from [the Philippine Bank
of Communications], [Zuellig Pharma] stopped remitting its
rentals to [Lui Enterprises] and instead, has reportedly deposited
the monthly rentals before a Makati court for consignation.
As aptly raised by the plaintiffs, a possible impasse may insist
should the Makati Courts ruling be contrary to or in conflict with
the status quo order issued by this Court. To preclude this
spectacle, Zuellig Pharma should accordingly be advised with the
import of the Order dated September 14, 2004, the salient
portion of which is quoted:
x x x prior to the institution of the instant case and by agreement
of the parties, plaintiffs were given as they did exercise the right
to collect, receive and enjoy rental payments x x x.
Since the April 1, 2004 status quo order was a necessary
implement of the writ of preliminary injunction issued on June 30,
2003, it follows that plaintiff's right to collect and receive rental
payments which he enjoyed prior to the filing of this case, must
be respected and protected and maintained until the case is
resolved. As such, all rentals due from the above-enumerated
lessees must be remitted to and collectedby the Plaintiffs.
Status quo simply means the last actual peaceable uncontested
status that preceded the actual controversy. (Searth Commodities
Corp. v. Court ofAppeals, 207 SCRA 622).
As such, the [Philippine Bank of Communications] [is] hereby
directed to forthwith inform [Zuellig Pharma] of the April 1, 2004
status quo order and the succeeding September 14, 2004 Order,
and consequently, for the said lessee to remit all rentals due from
February 23, 2003 and onwards to [Lui Enterprises] in the
meanwhile that the status quo order is subsisting.
In its manifestation and motion to dismiss, Lui Enterprises
reiterated its prayer for the dismissal of the interpleader case to
prevent "the possibility of [the Regional Trial Court, Branch 143,
Makati City] and [the Regional Trial Court, Branch 16, Davao City]
rendering conflicting rulings [on the same issue of which
48
corporation has the better right to the rental payments]."
Without resolving the motion to set aside order of default, the
Makati trial court denied the manifestation with motion to
dismiss dated April 21, 2005 on the ground that Lui Enterprises
49
already lost its standing in court.
Lui Enterprises did not file any motion for reconsideration of the
denial of the manifestation and motion to dismiss dated April 21,
2005.
50
In its decision dated July 4, 2006, the Regional Trial Court of
Makati ruled that Lui Enterprises "[was] barred from any claim in
51
respect of the [rental payments]" since it was declared in
default. Thus, according to the trial court, there was no issue as to
which corporation had the better right over the rental
52
payments. The trial court awarded the total consigned amount
of P6,681,327.30 to the Philippine Bank of Communications and
ordered Lui Enterprises to pay Zuellig Pharma P50,000.00 in
53
attorneys fees.
54
Lui Enterprises appealed to the Court of Appeals.
The Court of Appeals found Lui Enterprises appellants brief
insufficient. Under Rule 44, Section 13 of the 1997 Rules of Civil
Prov Rem
Procedure, an appellants brief must contain a subject index, page
references to the record, table of cases, textbooks and statutes
cited, and the statement of issues, among others. However, Lui
Enterprises appellants brief did not contain these
55
requirements.
As to the denial of Lui Enterprises motion to dismiss, the Court of
Appeals sustained the trial court. The Court of Appeals found that
56
Lui Enterprises filed its motion to dismiss four days late.
With respect to Lui Enterprises motion to set aside order of
default, the Court ofAppeals found that Lui Enterprises failed to
show the excusable negligence that prevented it from filing its
motion to dismiss on time. On its allegedly meritorious defense,
the Court of Appeals ruled that the nullification of deed of dation
in payment case did not bar the filing of the interpleader case,
57
with Zuellig Pharma not being a party to the nullification case.
On the award of attorneys fees, the Court of Appeals sustained
the trial court since "Zuellig Pharma x x x was constrained to file
the action for interpleader with consignation inorder to protect
58
its interests x x x."
59
Thus, in its decision promulgated on May 24, 2010, the Court of
Appeals dismissed Lui Enterprisesappeal and affirmed in toto the
Regional Trial Court of Makatis decision.
Lui Enterprises filed a motion for reconsideration.
60
The Court of Appeals denied Lui Enterprises motion for
reconsideration in its resolution promulgated on August 13,
61
2010. Hence, this petition.
62
In this petition for review on certiorari, Lui Enterprises argued
that the Court of Appeals applied "the rules of procedure
63
strictly" and dismissed its appeal on technicalities. According to
Lui Enterprises, the Court of Appeals should have taken a liberal
stance and allowed its appeal despite the lack of subject index,
page references to the record, table of cases, textbooks and
statutes cited, and the statement of issues in its appellants
64
brief.
Lui Enterprises also claimed that the trial court should have set
aside the order of default since its failure to file a motion to
dismiss on time was due to excusable negligence.
65
For its allegedly meritorious defense, Lui Enterprises argued that
the pending nullification of deed of dation in payment case
barred the filing of the interpleader case.The nullification of deed
of dation in payment case and the interpleader case allegedly
involved the same issue of which corporation had the better right
to the rent. To avoid conflicting rulings on the same issue, Lui
Enterprises argued that the subsequently filed interpleader case
66
be dismissed.
No attorneys fees should have been awarded to Zuellig Pharma
as argued by Lui Enterprises. Zuellig Pharma filed the interpleader
case despite its knowledge of the nullification of deed of dation
in payment case filed in the Davao trial court where the same
issue of which corporation had the better right over the rental
payments was being litigated. Thus, Zuellig Pharma filed the
interpleader case in bad faith for which it was not entitled to
67
attorneys fees.
The Philippine Bank of Communications filed its comment on
68
the petition for review on certiorari. It argued that Lui Enterprises
failed to raise any error of law and prayed that we affirm in
toto the Court of Appeals decision.
Rule 62 Fulltext Page 3 of 22
For Zuellig Pharma, it manifested that it was adopting the
69
Philippine Bank of Communicationsarguments in its comment.
The issues for our resolution are:
I. Whether the Court of Appeals erred in dismissing Lui
Enterprises appeal for lack of subject index, page
references to the record, table of cases, textbooks and
statutes cited, and the statement of issues in Lui
Enterprisesappellants brief;
II. Whether the Regional Trial Court of Makati erred in
denying Lui Enterprisesmotion to set aside order of
default;
III. Whether the annulment of deed of dation in payment
pending in the Regional Trial Court of Davao barred the
subsequent filing of the interpleader case in the
Regional Trial Court of Makati; and
IV. Whether Zuellig Pharma was entitled to attorneys
fees.
Lui Enterprises petition for review on certiorari is without merit.
However, we delete the award of attorneys fees.
I In Mendoza v. United Coconut Planters Bank, Inc., this court
Lui Enterprises did not comply with the rules on the contents
of the appellants brief
Under Rule 50, Section 1, paragraph (f) of the 1997 Rules of Civil
Procedure, the Court of Appeals may, on its own motion or that
of the appellee, dismiss an appeal should the appellants brief
lack specific requirements under Rule 44, Section 13, paragraphs
(a), (c), (d), and (f):
Section 1. Grounds for dismissal of appeal. An appeal may be
dismissed by the Court of Appeals, on its own motion or on that
of the appellee, on the following grounds:
xxxx
(f) Absence of specific assignment of errors in the appellants
brief, or of page references to the record as required in Section
13, paragraphs (a), (c), (d), and (f) of Rule 44.
These requirements are the subject index of the matter in brief,
page references to the record, and a table of cases alphabetically
arranged and with textbooks and statutes cited:
Section 13. Contents of the appellants brief. The appellants
brief shall contain, in the order herein indicated, the following:
(a) A subject index of the matter in brief with a digest of the
arguments and page references, and a table of cases
alphabetically arranged, textbooks and statutes cited with
references to the pages where they are cited;
xxxx
(c) Under the heading "Statement of the Case," a clear and
concise statement of the nature of the action, a summary of the
proceedings, the appealed rulings and orders of the court, the
nature of the controversy, with page references to the record;
(d) Under the heading "Statement of Facts," a clear and concise
statement in a narrative form of the facts admitted by both
parties and of those in controversy, together with the substance
Prov Rem
of the proof relating thereto in sufficient detail to make it clearly
intelligible, with page references to the record;
xxxx
(f) Under the heading "Argument," the appellants arguments on
each assignment of error with page references to the record. The
authorities relied upon shall be cited by the page of the report at
which the case begins and the page of the report on which the
citation isfound;
xxxx
Lui Enterprises appellants brief lacked a subject index, page
references to the record, and table of cases, textbooks and
statutes cited. Under Rule 50, Section 1 of the 1997 Rules of Civil
Procedure, the Court of Appeals correctly dismissed Lui
Enterprises appeal.
70
Except for cases provided in the Constitution, appeal is a "purely
71
statutory right." The right to appeal "must be exercised in the
72
manner prescribed by law" and requires strict compliance with
73
the Rules of Court on appeals. Otherwise, the appeal shall be
dismissed, and its dismissal shall not be a deprivation of due
process of law.
74
sustained the Court of Appeals dismissal of Mendozas appeal.
Mendozas appellants brief lacked a subject index, assignment of
errors, and page references to the record. In De Liano v. Court of
75
Appeals, this court also sustained the dismissal of De Lianos
appeal. De Lianos appellants brief lacked a subject index, a table
of cases and authorities, and page references to the record.
There are exceptions to this rule. In Philippine Coconut Authority
76
v. Corona International, Inc., the Philippine Coconut Authoritys
appellants brief lacked a clear and concise statement of the
nature of the action, a summary of the proceedings, the nature of
the judgment, and page references to the record. However, this
court found that the Philippine Coconut Authority substantially
complied with the Rules. Its appellants brief "apprise[d] [the
Court of Appeals] of the essential facts and nature of the case as
well as the issues raised and the laws necessary [to dispose of the
77
case]." This court "[deviated] from a rigid enforcement of the
78
rules" and ordered the Court of Appeals to resolve the
Philippine Coconut Authoritys appeal.
79
In Go v. Chaves, Gos 17-page appellants brief lacked a subject
index. However, Go subsequently filed a subject index. This court
excused Gos procedural lapse since the appellants brief
"[consisted] only of 17 pages which [the Court of Appeals] may
easily peruse to apprise it of [the case] and of the relief
80
sought." This court ordered the Court of Appeals to resolve Gos
81
appeal "in the interest of justice."
In Philippine Coconut Authority and Go, the appellants
substantially complied with the rules on the contents of the
appellants brief. Thus, this court excused the
appellantsprocedural lapses.
In this case, Lui Enterprises did not substantially comply with the
rules on the contents of the appellants brief. It admitted that its
appellants brief lacked the required subject index, page
references to the record, and table of cases, textbooks, and
statutes cited. However, it did not even correct its admitted
82
"technical omissions" by filing an amended appellants brief
83
with the required contents. Thus, this case does not allow a
relaxation of the rules. The Court of Appeals did not err in
dismissing Lui Enterprises appeal.
Rule 62 Fulltext Page 4 of 22
Rules on appeal "are designed for the proper and prompt
84
disposition of cases before the Court ofAppeals." With respect
to the appellants brief, its required contents are designed "to
minimize the [Court ofAppeals] labor in [examining]the record
85
uponwhich the appeal is heard and determined."
86
The subject index serves as the briefs table of contents. Instead
87
of "[thumbing] through the [appellants brief]" every time the
Court of Appeals Justice encounters an argument or citation, the
Justice deciding the case only has to refer to the subject index for
88
the argument or citation he or she needs. This saves the Court
ofAppeals time in reviewing the appealed case. Efficiency allows
the justices of the appellate court to substantially attend to this
case as well as other cases.
Page references to the record guarantee that the facts stated in
89
the appellants brief are supported by the record. Astatement of
fact without a page reference to the record creates the
presumption that it is unsupported by the record and, thus, "may
90
be stricken or disregarded altogether."
As for the table of cases, textbooks, and statutes cited, this is
required so that the Court of Appeals can easily verify the
91
authorities cited "for accuracy and aptness."
Lui Enterprises appellants brief lacked a subject index, page
references to the record, and a table of cases, textbooks, and
statutes cited. These requirements "were designed to assist the
appellate court in the accomplishment of its tasks, and, overall, to
92
enhance the orderly administration of justice." This court will
not disregard rules on appeal "in the guise of liberal
93
construction." For this court to liberally construe the Rules, the
party must substantially comply with the Rules and correct its
94
procedural lapses. Lui Enterprises failed to remedy these errors.
All told, the Court of Appeals did not err in dismissing Lui
Enterprises appeal. It failed to comply with Rule 44, Section 13,
paragraphs (a), (c), (d), and (f) of the 1997 Rules of Civil Procedure
on the required contents of the appellants brief.
II
Lui Enterprises failed to show that its failure to answer the
complaint within the required period was due to excusable
negligence
When a defendant is served with summons and a copy of the
complaint, he or she is required to answer within 15 days from
95
the day he or she was served with summons. The defendant
may also move to dismiss the complaint "[w]ithin the time for but
96
before filing the answer."
Fifteen days is sufficient time for a defendant to answer with
good defenses against the plaintiffs allegations in the complaint.
Thus, a defendant who fails to answer within 15 days from service
of summons either presents no defenses against the plaintiffs
allegations in the complaint or was prevented from filing his or
her answer within the required period due to fraud, accident,
97
mistake or excusable negligence.
In either case, the court may declare the defendant in default on
98
plaintiffs motion and notice to defendant. The court shall then
try the case until judgment without defendants
99
participation and grant the plaintiff such relief as his or her
complaint may warrant.
100
A defendant declared in default loses his or her standing in
101
court. He or she is "deprived of the right to take part in the trial
102
and forfeits his [or her] rights as a party litigant," has no right
103
"to present evidence [supporting his or her] allegations," and
Prov Rem
has no right to "control the proceedings [or] cross-examine
104
witnesses." Moreover, he or she "has no right to expect that
105
[the court] would [act] upon [his or her pleadings]" or that he
106
or she "may [oppose]motions filed against him [or her]."
However, the defendant declared in default "does not [waive] all
107
of [his or her] rights." He or she still has the right to "receive
108
notice of subsequent proceedings." Also, the plaintiff must still
present evidence supporting his or her allegations "despite the
109
default of [the defendant]."
Default, therefore, is not meant to punish the defendant but to
enforce the prompt filing of the answer to the complaint. For a
defendant without good defenses, default saves him or her "the
embarrassment of openly appearing to defend the
110
indefensible." As this court explained in Gochangco v. The Court
of First Instance of Negros Occidental, Branch
IV:
111
It does make sense for a defendant without defenses, and who
accepts the correctness of the specific reliefprayed for in the
complaint, to forego the filing of the answer or any sort of
intervention in the action at all. For even if he did intervene, the
result would be the same: since he would be unable to establish
any good defense, having none in fact, judgment would
inevitably go against him. And this would be an acceptable result,
if not being in his power to alter or prevent it, provided that the
judgment did not go beyond or differ from the specific relief
112
stated in the complaint. x x x. (Emphasis in the original)
On the other hand, for a defendant with good defenses, "it would
be unnatural for him [or her] not to set x x x up [his or her
113
defenses] properly and timely." Thus, "it must be presumed
that some insuperable cause prevented him [or her] from
114
[answering the complaint]." In which case, his or her proper
remedy depends on when he or she discovered the default and
whether the default judgment was already rendered by the trial
court.
After notice of the declaration of default but before the court
renders the default judgment, the defendant may file, under oath,
a motion to set aside order of default. The defendant must
properly show that his or her failure to answer was due to fraud,
115 116 117
accident, mistake or excusable negligence. The defendant
must also have a meritorious defense. Rule 9, Section 3,
paragraph (b) of the1997 Rules of Civil Procedure provides:
Section 3. Default; declaration of. x x x x
(b) Relief from order of default. A party declared in default may
at any time after notice thereof and before judgment file a
motion under oath to set aside the order of default upon proper
showing that his failure to answer was due to fraud, accident,
mistake or excusable negligence and that he has a meritorious
defense. In such case, the order of default may be set aside on
such terms and conditions as the judge may impose in the
interest of justice.
If the defendant discovers his or her default after judgment but
prior to the judgment becoming final and executory, he or she
may file a motion for new trial under Rule 37, Section 1,
118
paragraph (a) of the 1997 Rules of Civil Procedure. If he or she
discovers his or her default after the judgment has become final
and executory, a petition for relief from judgment under Rule 38,
119
Section 1 of the 1997 Rules of Civil Procedure may be filed.
Appeal is also available to the defendant declared in default. He
or she may appeal the judgment for being contrary to the
evidence or to the law under Rule 41, Section 2 of the 1997 Rules
Rule 62 Fulltext Page 5 of 22
 120
of Civil Procedure. He or she may do so even if he or she did
121
not file a petition to set aside order of default.
A petition for certiorari may also be filed if the trial court declared
the defendant in default with grave abuse of discretion.
122
The remedies of the motion to set aside order of default, motion
for new trial, and petition for relief from judgment are mutually
exclusive, not alternative or cumulative. This is to compel
defendants to remedy their default at the earliest possible
opportunity. Depending on when the default was discovered and
whether a default judgment was already rendered, a defendant
declared in default may avail of onlyone of the three remedies.
Thus, if a defendant discovers his or her default before the trial
court renders judgment, he or she shall file a motion to set aside
order of default. If this motion to set aside order of default is
denied, the defendant declared in default cannot await the
rendition of judgment, and he or she cannot file a motion for new
trial before the judgment becomes final and executory, or a
petition for relief from judgment after the judgment becomes
final and executory.
Also, the remedies against default become narrower and
narrower as the trial nears judgment. The defendant enjoys the
most liberality from this court with a motion to set aside order of
default, as he or she has no default judgment to contend with,
and he or she has the whole period before judgment to remedy
his or her default.
With a motion for new trial, the defendant must file the motion
123
within the period for taking an appeal or within 15 days from
notice of the default judgment. Although a default judgment has
already been rendered, the filing of the motion for new trial tolls
the reglementary period of appeal, and the default judgment
cannot be executed against the defendant.
A petition for relief from judgment is filed after the default
judgment has become final and executory. Thus, the filing of the
petition for relief from judgment does not stay the execution of
the default judgment unless a writ of preliminary injunction is
issued pending the petitions resolution.
124
Upon the grant of a motion to set aside order of default, motion
for new trial, or a petition for relief from judgment, the defendant
is given the chance to present his or her evidence against that of
plaintiffs. With an appeal, however, the defendant has no right to
present evidence on his or her behalf and can only appeal the
judgment for being contrary to plaintiffs evidence or the law.
Similar to an appeal, a petition for certiorari does not allow the
defendant to present evidence on his or her behalf. The
defendant can only argue that the trial court committed grave
abuse of discretion in declaring him or her in default.
Thus, should a defendant prefer to present evidence on his or her
behalf, he or she must file either a motion to set aside order of
default, motion for new trial, or a petition for relief from
judgment.
In this case, Lui Enterprises had discovered its default before the
Regional Trial Court of Makati rendered judgment. Thus, it timely
filed a motion to set aside order of default, raising the ground of
excusable negligence.
Excusable negligence is "one which ordinary diligence and
125
prudence could not have guarded against." The circumstances
should be properly alleged and proved. In this case, we find that
Lui Enterprises failure to answer within the required period is
inexcusable.
Prov Rem
Lui Enterprises counsel filed its motion to dismiss four days late.
It did not immediately take steps to remedy its default and took
one year from discovery of default to file a motion to set aside
order of default. In its motion to set aside order of default, Lui
Enterprises only "conveniently blamed its x x x counsel [for the
126
late filing of the answer]" without offering any excuse for the
late filing. This is not excusable negligence under Rule 9, Section
127
3, paragraph (b) of the 1997 Rules of Civil Procedure. Thus, the
Regional Trial Court of Makati did not err in refusing to set aside
the order of default.
Lui Enterprises argued that the Regional Trial Court of Makati
should have been liberal in setting aside its order of default. After
it had been declared in default, Lui Enterprises filed several
manifestations informing the Makati trial court of the earlier filed
nullification of deed of dation in payment case which barred the
filing of the interpleader case. Lui Enterprises president, Eli L. Lui,
and counsel even flew in from Davao to Makati to "formally
[manifest that] a [similar] action between [Lui Enterprises] and
128
[the Philippine Bank of Communications]" was already pending
in the Regional Trial Court of Davao. However, the trial court did
not recognize Lui Enterprisesstanding incourt.
The general rule is that courts should proceed with deciding
cases on the merits and set aside orders of default as default
129
judgments are "frowned upon." As much as possible, cases
should be decided with both parties "given every chance to fight
130
their case fairly and in the open, without resort to technicality."
However, the basic requirements of Rule 9, Section 3, paragraph
(b) of the 1997 Rules of Civil Procedure must first be complied
131
with. The defendants motion to set aside order of default must
satisfy three conditions. First is the time element. The defendant
must challenge the default order before judgment. Second, the
defendant must have been prevented from filing his answer due
to fraud, accident, mistake or excusable negligence. Third, he
must have a meritorious defense. As this court held in SSS v. Hon.
132
Chaves:
Procedural rules are not to be disregarded or dismissed simply
because their non-observance may have resulted in prejudice to a
partys substantive rights. Like all rules[,] they are to be followed,
except only when for the most persuasive of reasons they may be
relaxed to relieve a litigant of an injustice not commensurate with
the degree of his thoughtlessness in not complying with the
133
procedure prescribed. x x x.
As discussed, Lui Enterprises never explained why its counsel
failed to file the motion to dismiss on time. It just argued that
courts should be liberal in setting aside orders of default. Even
assuming that it had a meritorious defense and that its
representative and counsel had to fly in from Davao to Makati to
personally appear and manifest in court its meritorious defense,
Lui Enterprises must first show that its failure to answer was due
to fraud, accident, mistake or excusable negligence. This Lui
Enterprises did not do.
Lui Enterprises argued that Zuellig Pharma filed the interpleader
case to compel Lui Enterprises and the Philippine Bank of
Communications to litigate their claims. Thus, "[d]eclaring the
other claimant in default would ironically defeat the very purpose
134
of the suit." The RegionalTrial Court of Makati should not have
declared Lui Enterprises in default.
Under Rule 62, Section 1 of the 1997 Rules of Civil Procedure, a
person may file a special civil action for interpleader if conflicting
claims are made against him or her over a subject matter in which
he or she has no interest. The action is brought against the
claimants to compel them to litigate their conflicting claims
Rule 62 Fulltext Page 6 of 22
among themselves. Rule 62, Section 1 of the 1997 Rules of Civil
Procedure provides:
Section 1. When interpleader proper. Whenever conflicting
claims upon the same subject matter are or may be made against
a person who claims no interest whatever in the subject matter,
or an interest which in whole or in part is not disputed bythe
claimants, he may bring an action against the conflicting
claimants to compel them to interplead and litigate their several
claims among themselves.
An interpleader complaint may be filed by a lessee against those
who have conflicting claims over the rent due for the property
135
leased. This remedy is for the lessee to protect him or her from
136
"double vexation in respect of one liability." He or she may file
the interpleader case to extinguish his or her obligation to pay
rent, remove him or her from the adverse claimantsdispute, and
compel the parties with conflicting claims to litigate among
themselves.
In this case, Zuellig Pharma filed the interpleader case to
extinguish its obligation to pay rent. Its purpose in filing the
137
interpleader case "was not defeated" when the Makati trial
court declared Lui Enterprises in default.
At any rate, an adverse claimant in an interpleader case may be
declared in default. Under Rule 62, Section 5 of the 1997 Rules of
Civil Procedure, a claimant who fails to answer within the required
period may, on motion, be declared in default. The consequence
of the default is that the court may "render judgment barring [the
defaulted claimant] from any claim in respect to the subject
138
matter." The Rules would not have allowed claimants in
interpleader cases to be declared in default if it would "ironically
defeat the very purpose of the suit."
139
The Regional Trial Court of Makati declared Lui Enterprises in
default when it failed to answer the complaint within the required
period. Lui Enterprises filed a motion to set aside order of default
without an acceptable excuse why its counsel failed to answer the
complaint. It failed to prove the excusable negligence. Thus, the
Makati trial court did not err in refusing to set aside the order of
default.
III
The nullification of deed in dation in payment case did not
bar the filing of the interpleader case. Litis pendentia is not
present in this case.
Lui Enterprises allegedly filed for nullification of deed of dation in
payment with the Regional Trial Court of Davao. It sought to
nullify the deed of dation in payment through which the
Philippine Bank of Communications acquired title over the leased
property. Lui Enterprises argued that this pending nullification
case barred the Regional Trial Court of Makati from hearing the
interpleader case. Since the interpleader case was filed
subsequently to the nullification case, the interpleader case
should be dismissed.
Under Rule 16, Section 1, paragraph (e) of the 1997 Rules of Civil
Procedure, a motion to dismiss may be filed on the ground of litis
pendentia:
Section 1. Grounds. Within the time for but before filing the
answer to the complaint or pleading asserting a claim, a motion
to dismiss may be made on any of the following grounds:
xxxx
Prov Rem
(e)That there is another action pending between the same parties
for the same cause;
xxxx
140
Litis pendentia is Latin for "a pending suit." It exists when
"another action is pending between the same parties for the
141
same cause of actionx x x." The subsequent action is
142
"unnecessary and vexatious" and is instituted to "harass the
respondent [in the subsequent action]."
143
The requisites of litis pendentia are:
(1)Identity of parties or at least such as represent the
same interest in both actions;
(2)Identity of rights asserted and reliefs prayed for, the
reliefs being founded on the same facts; and
(3)The identity in the two cases should be such that the
judgment that may be rendered in one would,
regardless of which party is successful, amount to res
144
judicata in the other.
145
All of the requisites must be present. Absent one requisite,
146
there is no litis pendentia.
In this case, there is no litis pendentia since there is no identity of
parties in the nullification of deed of dation in payment case and
the interpleader case. Zuellig Pharma is not a party to the
nullification case filed in the Davao trial court.
There is also no identity of rights asserted and reliefs prayed for.
Lui Enterprises filed the first case to nullify the deed of dation in
payment it executed in favor of the Philippine Bank of
Communications. Zuellig Pharma subsequently filed the
interpleader case to consign in court the rental payments and
extinguish its obligation as lessee. The interpleader case was
necessary and was not instituted to harass either Lui Enterprises
or the Philippine Bank of Communications.
Thus, the pending nullification case did not bar the filing of the
interpleader case.
Lui Enterprises cited Progressive Development Corporation, Inc. v.
147
Court of Appeals as authority to set aside the subsequently filed
interpleader case. In this cited case, petitioner Progressive
Development Corporation, Inc. entered into a lease contract with
Westin Seafood Market, Inc. The latter failed to pay rent. Thus,
Progressive Development Corporation, Inc. repossessed the
leased premises, inventoried the movable properties inside the
leased premises, and scheduled the public sale of the inventoried
properties as they agreed upon in their lease contract.
Westin Seafood Market, Inc. filed for forcible entry with damages
against Progressive Development Corporation, Inc. It
subsequently filed an action for damages against Progressive
Development Corporation for its "forcible takeover of the leased
148
premises."
This court ordered the subsequently filed action for damages
dismissed as the pending forcible entry with damages case
barred the subsequently filed damages case.
Progressive Development Corporation, Inc. does not apply in this
case. The action for forcible entry with damages and the
subsequent action for damages were filed by the same plaintiff
against the same defendant. There is identity of parties in both
cases.
Rule 62 Fulltext Page 7 of 22
In this case, the nullification of deed of dation in payment case
was filed by Lui Enterprises against the Philippine Bank of
Communications. The interpleader case was filed by Zuellig
Pharma against Lui Enterprises and the Philippine Bank of
Communications. A different plaintiff filed the interpleader case
against Lui Enterprises and the Philippine Bank of
Communications. Thus, there is no identity of parties, and the first
requisite of litis pendentia is absent.
As discussed, Lui Enterprises filed the nullification of deed of
dation in payment to recover ownership of the leased premises.
Zuellig Pharma filed the interpleader case to extinguish its
obligation to pay rent.There is no identity of reliefs prayed for,
and the second requisite of litis pendentia is absent.
Since two requisites of litis pendentia are absent, the nullification
of deed of dation in payment case did not bar the filing of the
interpleader case.
Lui Enterprises alleged that the Regional Trial Court of Davao
issued a writ of preliminary injunction against the Regional Trial
Court of Makati. The Regional Trial Court of Davao allegedly
enjoined the Regional Trial Court of Makati from taking
cognizance of the interpleader case. Lui Enterprises argued that
the Regional Trial Court of Makati "should have respected the
149
orders issued by the Regional Trial Court of Davao." Lui
Enterprises cited Compania General de Tabacos de Filipinas v.
150
Court of Appeals where this court allegedly held:
x x x [T]he issuance of the said writ by the RTC ofAgoo, La Union
not only seeks to enjoin Branch 9 of the RTC of Manila from
proceeding with the foreclosure case but also has the effect of
pre-empting the latters orders. x x x.
151
Compania General de Tabacos de Filipinas is not an authority for
the claim that a court can issue a writ of preliminary injunction
against a co- equal court.1wphi1 The cited sentence was taken
out of context. In Compania General de Tabacos de Filipinas, this
court held that the Regional Trial Court ofAgoo had no power to
issue a writ of preliminary injunction against the Regional Trial
152
Court of Manila. Acourt cannot enjoin the proceedings of a co-
equal court.
Thus, when this court said that the Regional Trial Court of Agoos
writ of preliminary injunction "not only seeks to enjoin x x x [the
Regional Trial Court of Manila] from proceeding with the
foreclosure case but also has the effect of pre-empting the
153
latters orders," this court followed with "[t]his we cannot
154
countenance."
At any rate, the Regional Trial Court of Davaos order datedApril
18, 2005 was not a writ of preliminary injunction. It was a mere
order directing the Philippine Bank of Communications to inform
Zuellig Pharma to pay rent to Lui Enterprises while the status quo
order between Lui Enterprises and the Philippine Bank of
Communications was subsisting. The Regional Trial Court of
Davao did not enjoin the proceedings before the Regional Trial
Court of Makati.The order datedApril 18, 2005 provides:
As such, [the Philippine Bank of Communications] [is] hereby
directed to forthwith inform Zuellig Pharma Corp., of the April 1,
2004 status quo order and the succeeding September 14, 2004
Order, and consequently, for the said lessee to remit all rentals
due from February 23, 2003 and onwards to plaintiff Lui
Enterprises, Inc., in the meanwhile that the status quo order is
155
subsisting.
Thus, the Regional Trial Court of Davao did not enjoin the
Regional Trial Court of Makati fromhearing the interpleader case.
Prov Rem
All told, the trial court did not err in proceeding with the
interpleader case. The nullification of deed of dation in payment
case pending with the Regional Trial Court of Davao did not bar
the filing of the interpleader case with the RegionalTrial Court of
Makati.
IV
The Court of Appeals erred in awarding attorneys fees
In its ordinary sense, attorneys fees "represent the reasonable
compensation [a client pays his or her lawyer] [for legal service
156
rendered]." In its extraordinary sense, attorneys fees "[are]
awarded x x x as indemnity for damages [the losing party pays
157
the prevailingparty]."
The award of attorneys fees is the exception rather than the
158
rule. It is not awarded to the prevailing party "as a matter of
159
course." Under Article 2208 of the Civil Code, attorneys fees
cannot be recovered in the absence of stipulation, except under
specific circumstances:
(1)When exemplary damages are awarded;
(2)When the defendants act or omission has compelled
the plaintiff to litigate with third persons or to incur
expenses to protect his interest;
(3)In criminal cases of malicious prosecution against the
plaintiff;
(4)In case of a clearly unfounded civil action or
proceeding against the plaintiff;
(5)Where the defendant acted in gross and evident bad
faith in refusing to satisfy the plaintiffs plainly valid, just
and demandable claim;
(6)In actions for legal support;
(7)In actions for the recovery of wages of household
helpers, laborers and skilled workers;
(8)In actions for indemnity under workmens
compensation and employers liability laws;
(9)In a separate civil action to recover civil liability arising
froma crime;
(10)When at least double judicial costs are awarded;
(11)In any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation
should be recovered.
160
Even if a party is "compelled to litigate with third persons or to
161
incur expenses to protect his [or her] rights," attorney's fees will
not be awarded if no bad faith "could be reflected in a party's
persistence in a case."
162
To award attorney's fees, the court must have "factual, legal, [and]
163
equitable justification." The court must state the award's basis
164
in its decision. These rules are based on the policy that "no
165
premium should be placed.on the right to litigate."
In this case, the Court of Appeals awarded attorney's fees as
"[Zuellig Pharma] was compelled to litigate with third persons or
166
to incur expenses to protect [its] interest[s]." This is not a
compelling reason to award attorney's fees. That Zuellig Pharma
Rule 62 Fulltext Page 8 of 22
had to file an interpleader case to consign its rental payments did
not mean that Lui Enterprises was in bad faith in insisting that
rental payments be paid to it. Thus, the Court. of Appeals erred in
awarding attorney's fees to Zuellig Pharma.
All told, the Court of Appeals' award of P50,000.00 as attorney's
fees must be deleted.
WHEREFORE, in view of the foregoing, the petition for review on
certiorari is DENIED. The Court of Appeals' decision and
resolution in CA- G.R. CV No. 88023 are AFFIRMED with
MODIFICATION. The award of PS0,000.00 attorney's fees to
Zuellig Pharma Corporation is DELETED.
SO ORDERED.
EN BANC
G.R. No. L-26443 March 25, 1969
MAKATI DEVELOPMENT CORPORATION, plaintiff-appellant,
vs.
PEDRO C. TANJUATCO and CONCRETE AGGREGATES,
INC., defendants-appellees.
Salvador J. Lorayes for plaintiff-appellant.
P. C. Tanjuatco and F. Garcia for defendants-appellees.
CONCEPCION, C.J.:
Appeal by plaintiff Makati Development Corporation from an
order of dismissal of the Court of First Instance of Rizal (Pasig),
predicated upon lack of jurisdiction.
On February 21, 1963, said plaintiff and defendant Pedro C.
Tanjuatco entered into a contract whereby the latter bound
himself to construct a reinforced concrete covered water
reservoir, office and pump house and water main at Forbes Park,
Makati, Rizal, furnishing, inter alia, the materials necessary
therefor. Before making the final payment of the consideration
agreed upon, plaintiff inquired from the suppliers of materials,
who had called its attention to unpaid bills therefor of Tanjuatco,
whether the latter had settled his accounts with them. In response
to this inquiry, Concrete Aggregates, Inc. hereinafter referred
to as the Supplier made a claim in the sum of P5,198.75,
representing the cost of transit-mixed concrete allegedly
delivered to Tanjuatco. With his consent, plaintiff withheld said
amount from the final payment made to him and, in view of his
subsequent failure to settle the issue thereon with the Supplier,
on September 16, 1955, plaintiff instituted the present action, in
the Court of First Instance of Rizal, against Tanjuatco and the
Supplier, to compel them "to interplead their conflicting claims."
On October 4, 1965, Tanjuatco moved to dismiss the case, upon
the ground that the court had no jurisdiction over the subject-
matter of the litigation, the amount involved therein being less
1
than P10,000.00. Finding this motion "to be well-taken", the
lower court granted the same, over plaintiffs opposition thereto,
and, accordingly, issued an order, dated November 16, 1965,
dismissing the case, without costs. Hence, this appeal, in which
plaintiff maintains that the subject-matter of this litigation is not
the aforementioned sum of P5,198.75, but the right to compel
the defendants "to litigate among themselves" in order to protect
the plaintiff "against a double vexation in respect to one liability."
Prov Rem
We find no merit in this contention. There is no question in this
case that plaintiff may compel the defendants to interplead
among themselves, concerning the aforementioned sum of
P5,198.75. The only issue is who among the defendants is entitled
to collect the same. This is the object of the action, which is not
within the jurisdiction of the lower court. As a matter of fact, on
May 25, 1966 the Supplier sued Tanjuatco, in Civil Case No.
149173 of the Municipal Court of Manila, for the recovery of said
amount of P5,198.75, and the decision therein will settle the
question as to who has a right to the sum withheld by plaintiff
herein.lawphi1.et
The latter relies upon Rule 63 of the present Rules of Court,
prescribing the procedure in cases of interpleading, and section
19 of Rule 5 of said Rules of Court, which, unlike section 19 of
Rule 4 of the Old Rules, omits the Rules on Interpleading among
those made applicable to inferior courts. This fact does not
warrant, however, the conclusion drawn therefrom by plaintiff
herein. To begin with, the jurisdiction of our courts over the
subject-matter of justiciable controversies is governed by Rep.
2
Act No. 296, as amended, pursuant to which municipal courts
shall have exclusive original jurisdiction in all civil cases "in which
the demand, exclusive of interest, or the value of the property in
controversy", amounts to not more than "ten thousand pesos."
Secondly, "the power to define, prescribe, and apportion the
3
jurisdiction of the various courts" belongs to Congress and is
beyond the rule-making power of the Supreme Court, which is
limited to matters concerning pleading, practice, and procedure
4
in all courts, and the admission to the practice of law. Thirdly,
the failure of said section 19 of Rule 5 of the present Rules of
Court to make its Rule 63, on interpleading, applicable to inferior
courts, merely implies that the same are not bound to follow Rule
63 in dealing with cases of interpleading, but may apply thereto
the general rules on procedure applicable to ordinary civil action
in said courts.
WHEREFORE, the order appealed from is hereby affirmed, with
the costs of this instance against plaintiff Makati Development
Corporation. It is so ordered.
EN BANC
G.R. No. L-25138 August 28, 1969
JOSE A. BELTRAN, ET AL., plaintiffs-appellants,
vs.
PEOPLE'S HOMESITE & HOUSING
CORPORATION, defendants-appellees.
Beltran, Cendaa, Camu, Pelias and Manuel for plaintiffs-
appellants.
Government Corporate Counsel Tomas P. Matic Jr. and Assistant
Government Corporate Counsel Romualdo Valera for defendants-
appellees.
TEEHANKEE, J.:
Appeal on purely questions of law from an order of dismissal of
the complaint for interpleader, on the ground that it does not
state a cause of action, as certified to this Court by the Court of
Appeals. We affirm the dismissal on the ground that where the
defendants sought to be interpleaded as conflicting claimants
Rule 62 Fulltext Page 9 of 22
have no conflicting claims against plaintiff, as correctly found by
the trial court, the special civil action of interpleader will not lie.
This interpleader suit was filed on August 21, 1962, by plaintiffs in
their own behalf and in behalf of all residents of Project 4 in
Quezon City, praying that the two defendant-government
corporations be compelled to litigate and interplead between
themselves their alleged conflicting claims involving said Project
4.
Plaintiffs' principal allegations in their complaint were as follows:
Since they first occupied in 1953 their respective housing units at
Project 4, under lease from the People's Homesite & Housing
Corporation (PHHC) and paying monthly rentals therefor, they
were assured by competent authority that after five years of
continuous occupancy, they would be entitled to purchase said
units. On February 21, 1961, the PHHC announced to the tenants
that the management, administration and ownership of Project 4
would be transferred by the PHHC to the Government Service
Insurance System (GSIS) in payment of PHHC debts to the GSIS.
In the same announcement, the PHHC also asked the tenants to
signify their conformity to buy the housing units at the selling
price indicated on the back thereof, agreeing to credit the
tenants, as down payment on the selling price, thirty (30%)
percent of what had been paid by them as rentals. The tenants
accepted the PHHC offer, and on March 27, 1961, the PHHC
announced in another circular that all payments made by the
tenants after March 31, 1961 would be considered as
amortizations or installment payments. The PHHC furthermore
instructed the Project Housing Manager in a memorandum of
May 16, 1961 to accept as installments on the selling price the
payments made after March 31, 1961 by tenants who were up-to-
date in their accounts as of said date. In September, 1961,
pursuant to the PHHC-GSIS arrangement, collections from
tenants on rentals and/or installment payments were delivered by
the PHHC to the GSIS. On December 27, 1961, the agreement of
turnover of administration and ownership of PHHC properties,
including Project 4 was executed by PHHC in favor of GSIS,
pursuant to the release of mortgage and amicable settlement of
the extrajudicial foreclosure proceedings instituted in May, 1960
by GSIS against PHHC. Subsequently, however, PHHC through its
new Chairman-General Manager, Esmeraldo Eco, refused to
recognize all agreements and undertakings previously entered
into with GSIS, while GSIS insisted on its legal rights to enforce
the said agreements and was upheld in its contention by both the
Government Corporate Counsel and the Secretary of Justice.
Plaintiffs thus claimed that these conflicting claims between the
defendants-corporations caused them great inconvenience and
incalculable moral and material damage, as they did not know to
whom they should pay the monthly amortizations or payments.
They further alleged that as the majority of them were GSIS policy
holders, they preferred to have the implementation of the
outright sale in their favor effected by the GSIS, since the GSIS
was "legally entitled to the management, administration and
1
ownership of the PHHC properties in question."
Upon urgent ex parte motion of plaintiffs, the trial Court issued
on August 23, 1962 its Order designating the People's First
Savings Bank at Quezon City "to receive in trust the payments
from the plaintiffs on their monthly amortizations on PHHC lots
2
and to be released only upon proper authority of the Court."
On August 29, 1962, the two defendant corporations represented
by the Government Corporate Counsel filed a Motion to Dismiss
the complaint for failure to state a cause of action as well as to lift
the Court's order designating the People's First Savings Bank as
trustee to receive the tenants' payments on the PHHC lots.
The trial Court heard the motion on September 1, 1962 in the
presence of all the parties, and thereafter issued its Order of
September 6, 1962, dismissing the Complaint, ruling that: "During
Prov Rem
the hearing of the said motion and opposition thereto, the counsel
for the defendants ratified the allegations in his motion and made
of record that the defendant Government Service Insurance System
has no objection that payments on the monthly amortizations from
the residents of Project 4 be made directly to the defendant
People's Homesite and Housing Corporation. From what appears in
said motion and the statement made in open court by the counsel
for defendants that there is no dispute as to whom the residents of
Project 4 should make their monthly amortizations payments, there
is, therefore, no cause of action for interpleading and that the order
of August 23, 1962 is not warranted by the circumstances
surrounding the case. In so far as payments are concerned,
defendant GSIS has expressed its conformity that they be made
directly to defendant PHHC. Counsel for defendants went further
to say that whatever dispute, if any, may exist between the two
corporations over the lots and buildings in Project 4, payments
made to the PHHC will not and cannot in any way affect or
prejudice the rights of the residents thereof as they will be
3
credited by either of the two defendants."
Plaintiffs subsequently filed their motion for reconsideration and
the trial court, "with a view to thresh out the matter once and for
all," called the Managers of the two defendants-corporations and
the counsels for the parties to appear before it for a conference
on October 24, 1962. "During the conference," the trial court
related in its Order of November 20, 1962, denying plaintiffs'
Motion for Reconsideration, "Manager Diaz of the GSIS made of
record that he has no objection that payments be made to the
PHHC. On the other hand, Manager Eco of the PHHCmade of
record that at present there is a standing arrangement between
the GSIS and the PHHC that as long as there is showing that the
PHHC has remitted 100% of the total purchase price of a given
lot to the GSIS, the latter corporation shall authorize the issuance
of title to the corresponding lot. It was also brought out in said
conference that there is a new arrangement being negotiated
between the two corporations that only 50% of the purchase
price be remitted to the GSIS by the PHHC, instead of the
100%. At any rate the two Managers have assured counsel for the
plaintiffs that upon payment of the whole purchase price of a given
4
lot, the title corresponding to said lot will be issued."
On appeal, plaintiffs claim that the trial Court erred in dismissing
their suit, contending the allegations in their complaint "raise
questions of fact that can be established only by answer and trial
on the merits and not by a motion to dismiss heard by mere oral
manifestations in open court," and that they "do not know who,
as between the GSIS and the PHHC, is the right and lawful party
to receive their monthly amortizations as would eventually entitle
5
them to a clear title to their dwelling units."
Plaintiffs entirely miss the vital element of an action of
interpleader. Rule 63, section 1 of the Revised Rules of Court
(formerly Rule 14) requires as an indispensable element that
"conflicting claims upon the same subject matter are or may be
made" against the plaintiff-in-interpleader "who claims no
interest whatever in the subject matter or an interest which in
whole or in part is not disputed by the claimants." While the two
defendant corporations may have conflicting claims between
themselves with regard to the management, administration and
ownership of Project 4, such conflicting claims are not against the
plaintiffs nor do they involve or affect the plaintiffs. No allegation
is made in their complaint that any corporation other than the
PHHC which was the only entity privy to their lease-purchase
agreement, ever made on them any claim or demand for
payment of the rentals or amortization payments. The questions
of fact raised in their complaint concerning the enforceability, and
recognition or non-enforceability and non-recognition of the
turnover agreement of December 27, 1961 between the two
defendant corporations are irrelevant to their action of
interpleader, for these conflicting claims, loosely so-called, are
between the two corporations and not against plaintiffs. Both
Rule 62 Fulltext Page 10 of 22
defendant corporations were in conformityand had no dispute, as
pointed out by the trial court that the monthly payments and
amortizations should be made directly to the PHHC alone.
The record rejects plaintiffs' claim that the trial courts order was
based on "mere oral manifestations in court." The Reply to
Opposition of September 11, 1962 filed by the Government
Corporate Counsel expressly "reiterates his manifestation in open
court that no possible injustice or prejudice would result in
plaintiffs by continuing to make payments of such rentals or
amortizations to defendant PHHC because any such payments
will be recognized as long as they are proper, legal and in due
course by anybody who might take over the property. Specifically,
any such payments will be recognized by the GSIS in the event
that whatever conflict there might be (and this is only on the
hypothetical assumption that such conflict exists) between the
PHHC and the GSIS should finally be resolved in favor of the
6
GSIS". The assurances and undertakings to the same affect given
by the Managers of the defendants-corporations at the
conference held by the trial Court are expressly embodied in the
Court's Order of November 20, 1962 quoted above. The GSIS'
undertaking to recognize and respect the previous commitments
of PHHC towards its tenants is expressly set forth in Par. III,
section M of the turnover agreement, Annex "F" of plaintiffs'
complaint, wherein it is provided that "GSIS shall recognize and
respect all awards, contracts of sale, lease agreements and
transfer of rights to lots and housing units made and approved
by PHHC, subsisting as of the signing of this agreement, and
PHHC commitment to sell its housing projects 4, 6 and 8-A at the
selling prices less rental credits fixed by PHHC and as finally
approved by the OEC. PHHC, however, shall be liable and
answerable for any and all claims and consequences arising from
double or multiple awards or in the case of awards of non-
7
existing houses and/or lots."
In fine, the record shows clearly that there were no conflicting
claims by defendant corporations as against plaintiff-tenants,
which they may properly be compelled in an interpleader suit to
interplead and litigate among themselves. Both defendant
corporations were agreed that PHHC should continue receiving
the tenants' payments, and that such payments would be duly
recognized even if the GSIS should eventually take over Project 4
by virtue of their turnover agreement of December 27, 1961. As
held by this Court in an early case, the action of interpleader is a
remedy whereby a person who has property in his possession or
has an obligation to render wholly or partially, without claiming
any right in both, comes to court and asks that the defendants
who have made upon him conflicting claims upon the same
property or who consider themselves entitled to demand
compliance with the obligation be required to litigate among
themselves in order to determine who is entitled to the property
or payment of the obligation. "The remedy is afforded not to
protect a person against a double liability but to protect him
8
against a double vexation in respect of one liability." Thus, in
another case, where the occupants of two different parcels of
land adjoining each other belonging to two separate plaintiffs,
but on which the occupants had constructed a building
encroaching upon both parcels of land, faced two ejectment suits
from the plaintiffs, each plaintiff claiming the right of possession
and recovery over his respective portion of the lands encroached
upon, this Court held that the occupants could not properly file
an interpleader suit, against the plaintiffs, to litigate their alleged
conflicting claims; for evidently, the two plaintiff did not have any
conflicting claims upon the same subject matter against the
occupants, but were enforcing separate and distinct claims on
9 Ocampo alleged that he is the owner of a parcel of land
their respective properties.
Plaintiffs' other contention in their appeal is that notwithstanding
that the issue as to which of the defendants is authorized to
receive the tenants' payments was resolved in favor of the PHHC,
they had raised other issues that were not resolved and would
Prov Rem
require rendition of judgment after trial on the merits, such as
"the issue of the right of ownership over the houses and lots in
Project 4 (and) the issue of the status of the commitment
agreements and undertakings made by the previous PHHC
Administration, particularly those of the then PHHC General
10
Manager Bernardo Torres." This contention is without merit, for
no conflicting claims have been made with regard to such issues
upon plaintiffs by defendant corporations, who both bound
themselves to recognize and respect the rights of plaintiffs-
tenants. The resolution of such issues affecting the defendant
corporations exclusively may not properly be sought through the
special civil action of interpleader. Should there be a breach of
the PHHC undertakings towards plaintiffs, plaintiffs' recourse
would be an ordinary action of specific performance or other
appropriate suit against either the PHHC or GSIS or both, as the
circumstances warrant.
We find no error, therefore, in the trial court's order of dismissal
of the complaint for interpleader and the lifting, as a
consequence, of its other order designating the People's First
Savings Bank as trustee to receive the tenants' payments on the
PHHC lots.
ACCORDINGLY, the trial Court's order of dismissal is hereby
affirmed. Without costs.1wph1.t
[G.R. No.147812. April 6, 2005]
LEONARDO R. OCAMPO, petitioner, vs. LEONORA
TIRONA, respondent.
DECISION
CARPIO, J.:
The Case
[1] [2]
This is a petition for review to annul the Decision dated
29 November 2000 of the Court of Appeals (appellate court) in
CA-G.R. SP No. 41686, and its Resolution dated 16 April 2001
denying the motion for reconsideration. The appellate court set
[3]
aside the Decision dated 27 June 1996 of Branch 110 of the
Regional Trial Court of Pasay City (RTC) in Civil Case No. 96-0209.
[4]
The RTC affirmed the Decision dated 29 December 1995 of
Branch 47 of the Metropolitan Trial Court of Pasay City (MTC) in
Civil Case No. 754-95 ordering respondent Leonora Tirona
(Tirona) to vacate and surrender possession of the property under
litigation to petitioner Leonardo R. Ocampo (Ocampo). The MTC
also ordered Tirona to pay Ocampo rentals in arrears, attorneys
fees, and costs of suit.
Antecedent Facts
(subject land) described in Transfer Certificate of Title (TCT) No.
134359, with an approximate area of 500 square meters, located
at Alvarez Street, Pasay City. Ocampo bought the subject land
from Rosauro Breton, heir of the subject lands registered owner
Alipio Breton Cruz. Possession and administration of the subject
land are claimed to be already in Ocampos management even
Rule 62 Fulltext Page 11 of 22
though the TCT is not yet in his name. Tirona, on the other hand,
[5]
is a lessee occupying a portion of the subject land. The MTC
established the following facts:
According to [Ocampo], upon acquisition of ownership of the
subject premises, a formal written notice was given to [Tirona]
which was received by the latter on 9 March 1995, copy of the
said formal written agreement marked as Annex A and likewise
copy of the registry return receipt showing that [Tirona] received
Annex A was marked as Annex A-1. In recognition of [Ocampos]
right of ownership over the subject premises, [Tirona] paid some
monthly rentals due, however, on July 5, 1995, [Ocampo] received
a letter from Callejo Law Office of Room 513 Borja Bldg., 645 Sta.
Cruz, Manila stating among others, that, in view of the fact that
the subject premises was declared under area for priority
development, [Tirona] is invoking her right of first refusal and in
connection thereto [Tirona] will temporarily stop paying her
monthly rentals until and unless the National Housing Authority
have processed the pertinent papers as regards the amount due
to [Ocampo] by reason of the implementation of the above law, a
copy of the said letter marked as Annex B of the Complaint. In
reply to Annex B, [Ocampo] sent a letter dated 17 July 1995
addressed to the said Callejo Law Office, copy furnished [Tirona].
A copy of the said reply of [Ocampo] marked as Annex C of the
Complaint, a copy of the Registry Return Receipt showing that
[Tirona] received said Annex C on 20 July 1995 marked as Annex
C-1 of the Complaint, while as the original copy which was sent to
Callejo Law Office was also received by said office. On 7 August
1995, [Ocampo] wrote a letter to [Tirona] demanding upon
[Tirona] to pay the rentals in arrears for the months of April, May,
June, July and August at the rate of P1,200 a month and to vacate
the premises, copy of the said letter dated 7 August 1995 marked
as Annex D of the Complaint and the signature at the bottom
portion of Annex D clearly shows that the same was received by
[Tirona] on 8 August 1995. Despite receipt of said letter, [Tirona]
failed and refused and still fails and refuses to heed [Ocampos]
demands.
[6]
On 11 September 1995, Ocampo filed a complaint docketed
as Civil Case No. 754-95 for unlawful detainer and damages
against Tirona before the MTC.
Tirona filed her answer on 27 September 1995. Tirona
asserted that Doa Lourdes Rodriguez Yaneza actually owns the
subject land. The allegations in the answer state thus:
1. That the Assignor [one Edison A. Hindap, Sr.] is the
General Overseer and Attorney-in-Fact of DOA
LOURDES RODRIGUEZ YANEZA, Heir/Owner of
TITULO DE PROPRIEDAD DE TERENOS of 1891,
Royal Degree 01-4 Protocol, the real owner of a
parcel of land allegedly claimed by [Ocampo].
2. That the Title of [Ocampo] was overlapped [sic] the
Original Land Title of the Assignor.
3. That [Tirona], hereby recognized by the Assignor as
co-owner by possession and hereby cede, transfer
and assign the said parcel of land in [Tironas] favor.
4. That [Tirona] hereby denied [sic] and discontinued
[sic] all the obligations imposed by [Ocampo], for
the simple reason, the property in question is not
owned by [Ocampo], but rather owned by the
Assignor, as proof of evidence herein Assignor
issued a Certification for Occupancy and
Assignment in favor of [Tirona] herein attached
with [sic], and the other evidence shall be
presented upon the proper hearing on the merits
of this case.
[7]
Ocampo filed a motion to strike out the answer filed and a
motion for judgment on 10 October 1995. Ocampo claimed that
Prov Rem
the answer was not verified; therefore, it was as if no answer was
filed.
On 12 October 1995, Tirona filed a motion with leave to
[8]
amend defendants answer. She alleged that she filed her
answer without the assistance of a lawyer due to fear that she
might be unable to file the required pleading on time. In her
amended answer, Tirona maintained that Ocampo is not the
owner of the subject land. She stated that the certificate of title to
the subject land is not even registered under Ocampos name.
Tirona also alleged that she has a right of first refusal in case of
sale of the land, pursuant to Presidential Decree (PD) Nos.
[9] [10] [11]
1517, 1893 and 1968. The area where the subject land is
located was certified as an area under priority
[12]
development. Tirona asked for attorneys fees and moral and
exemplary damages.
In the spirit of substantial justice, the MTC granted Tironas
motion to amend her answer on 20 October 1995. On 15
November 1995, the MTC directed Ocampo and Tirona to submit
their respective position papers and other evidence after the
termination of the pre-trial conference.
The issue considered by the MTC for resolution was whether
Ocampo may eject Tirona because of non-payment of rent and
because of the termination of Tironas right to possess and
occupy the subject land.
The MTCs Ruling
The MTC ruled that Tirona does not have any reason to
suspend payment of rents until after PD No. 1517, in relation to
PD Nos. 1893 and 1968, is implemented in her favor. Tironas non-
payment of rents rendered her occupation of the subject land
illegal. As owner of the subject land, Ocampo is entitled to its use
and enjoyment, as well as to recover its possession from any
person unlawfully withholding it.
The dispositive part of the MTCs decision reads:
WHEREFORE, judgment is hereby rendered in favor of [Ocampo]
and against [Tirona]:
1. Ordering [Tirona] and all other persons claiming
possession under her to vacate and surrender
possession to [Ocampo] the premises known as,
parcel of land located at 2132 Alvarez St., Pasay
City, covered by Transfer Certificate of Title No.
134359 of the Register of Deeds of Pasay City;
2. Ordering [Tirona] to pay the rentals in arrears
covering the period from April 1995 until such time
[Tirona] shall have finally vacated the subject
premises at the rate of P1,200 a month, with
interest at a legal rate;
3. Ordering [Tirona] to pay the sum of P5,000 for and
as attorneys fees; and
4. Ordering [Tirona] to pay the cost of the suit.
[13]
SO ORDERED.
Ocampo filed a motion for execution pending appeal on 24
January 1996, while Tirona filed a notice of appeal on 25 January
1996. The MTC directed its clerk of court to transmit the records
of the case, as well as the motion for execution pending appeal,
through an order issued on 29 January 1996. The RTC issued an
order on 26 February 1996 ordering both parties to file their
respective memoranda.
Rule 62 Fulltext Page 12 of 22
 On 4 March 1996, Maria Lourdes Breton-Mendiola, who
claimed to be the owner of the subject land, filed a motion with
leave to file intervention before the RTC.
The RTCs Ruling
In an order dated 11 March 1996, the RTC issued a writ of
execution pending appeal for the enforcement of the MTCs
decision. The RTC stated that although Tirona perfected her
appeal on time, the record showed that she failed to pay the
required supersedeas bond as well as deposit the current rentals
as mandated by Section 8, Rule 70 of the 1964 Rules of Court. In
a separate order issued on the same date, the RTC denied Maria
Lourdes Breton-Mendiolas motion with leave to file intervention.
The RTC stated that granting the motion to intervene would
violate the 1964 Rules of Court and jurisprudence.
[14]
Ocampo filed his memorandum on 21 March 1996. He
emphasized that Tironas assertion of a preferential right of first
refusal is a recognition of the sale by Rosauro Breton of the
subject land to him. Moreover, Tirona is not qualified to claim this
preferential right because she is no longer a legitimate tenant.
The payment of Tironas monthly rent was already in arrears at the
time Ocampo filed the complaint against Tirona.
On 25 March 1996, Tirona filed a manifestation which stated
that she paid both the supersedeas bond and rent on the subject
land. The RTC considered Tironas manifestation as a motion for
reconsideration of its previous order issuing a writ of execution
pending appeal. In its order dated 15 April 1996, the RTC recalled
its 11 March 1996 order and cancelled the writ of execution.
Tirona filed her memorandum also on 25 March 1996. For
the first time, Tirona disclosed that Alipio Breton is the registered
owner of the subject land and that he is her landlord since 1962.
When Alipio Breton died in 1975, his children, Rosauro Breton
and Maria Lourdes Breton-Mendiola, inherited the subject land.
Tirona claims she has never stopped paying her rent to Maria
Lourdes Breton-Mendiola. Tirona also stated that Rosauro Breton
could not transfer ownership to the subject land to Ocampo. On
14 July 1978, Rosauro Breton executed a deed of conveyance and
waiver in favor of his sister, Maria Lourdes Breton-Mendiola.
Rosauro Breton executed another deed of conveyance and waiver
in favor of Maria Lourdes Breton-Mendiola on 9 March 1995.
Thus, Tirona claims, Ocampo cannot legally acquire title from
Rosauro Breton in view of the waivers. Maria Lourdes Breton-
Mendiola is Tironas lessor, and is the only person who can validly
[15]
file an ejectment suit against Tirona.
After quoting the findings of the MTC, the RTC held thus:
This Court after a careful review of the complete record of this
case particularly the evidences, applicable laws and jurisprudence
relied upon by the [MTC] in finding for [Ocampo] and declaring
that [Tirona] can be lawfully ejected from the subject premises,
concurs with the findings thereof. There is therefore nothing in
the record which would warrant the Court to disturb the findings
of fact and law and the conclusions reached by the [MTC].
This Court finds the decision of the lower court fully justified in
granting the reliefs to [Ocampo].
WHEREFORE, judgment is hereby rendered AFFIRMING IN
TOTO the decision of the [MTC] with costs against [Tirona].
[16]
SO ORDERED.
In its petition before the appellate court, Tirona stated that
the RTC erred in the following grounds:
Prov Rem
1. ORDERING THE EJECTMENT OF [TIRONA] IN
[17]
VIOLATION OF SECTION 2 OF PD [NO.] 2016.
2. NOT RULING THAT [TIRONA] HAS A BETTER RIGHT
OF POSSESSION OVER THE PROPERTY IN
QUESTION.
3. RULING THAT THE SUCCESSOR-IN-INTEREST OF AN
UNDIVIDED IDEAL ONE-HALF PORTION,
[OCAMPO] MAY DEPRIVE THE OTHER CO-OWNER
OF THE ADMINISTRATION OF ONE-HALF PORTION
[18]
BY EJECTING HER LESSEE, [TIRONA].
The appellate court stated that the principal issue for its
resolution is whether Ocampo, being the buyer of the subject
land which is not yet partitioned among the heirs, can validly
[19]
evict Tirona.
The Appellate Courts Ruling
The appellate court considered partition of the estate of
Alipio Breton as a prerequisite to Ocampos action. The appellate
court ruled that [u]ntil the partition of the estate is ordered by the
Regional Trial Court of Pasay City in the pending partition
proceedings and the share of each co-heir is determined by
metes and bounds, [Ocampo] cannot rightfully claim that what he
[20]
bought is part of the property occupied by [Tirona]. The
dispositive part of the appellate courts decision reads thus:
WHEREFORE, the decision of the respondent court is hereby SET
ASIDE and judgment is hereby rendered dismissing the complaint
of the private respondent in the court below.
SO ORDERED.
[21]
Hence, the instant petition.
The Issues
Ocampo assigned three errors to the appellate court.
Ocampo stated that the appellate court erred in:
1. ENTERTAINING AND NOT DISMISSING THE
PETITION FOR REVIEW (with prayer for its issuance
of Writ of Preliminary Injunction and immediate
issuance of TRO), THE SAME HAVING BEEN FILED
BEYOND THE REGLAMENTARY PERIOD.
2. CONSIDERING AND RESOLVING AN ISSUE RAISED
IN THE PETITION FOR REVIEW FOR THE FIRST TIME
ON APPEAL.
3. DECLARING THAT LEONARDO R. OCAMPO HAS NO
RIGHT TO EJECT LEONORA TIRONA, NOR
DEMAND PAYMENT OF RENTALS FROM HER FOR
THE USE AND OCCUPANCY OF THE LOT
[22]
INVOLVED IN THE PRESENT CASE.
The Ruling of the Court
The petition has merit.
We agree with Ocampos observation that Tirona changes
[23]
her theory of the case each time she appeals. For this reason,
we shall limit our ruling to the propriety of Ocampos unlawful
detainer case against Tirona.
Rule 62 Fulltext Page 13 of 22
 Moreover, we have assessed the evidence on record and
found that the appellate court did not contradict the findings of
facts of the MTC and RTC. Thus, we see no reason to deviate from
their findings of facts.
Unlawful Detainer
Elements to be Proved
Unlawful detainer cases are summary in nature. The
elements to be proved and resolved in unlawful detainer cases
[24]
are the fact of lease and expiration or violation of its terms. To
support their conclusion that there was an existing lease, the MTC
and RTC found that:
(1) Ocampo informed Tirona through a letter dated 1 March 1995
that he bought the subject land, upon which Tironas house
stands, from the previous owner and lessor Rosauro
Breton;
[25]
(2) Tironas continued occupancy of the subject land signifies
Tironas acceptance of Ocampos conditions of lease stated
[26]
in the 1 March 1995 letter; and
(3) In asserting her right to possess the subject land, Tirona
admitted that Ocampo is her lessor. In the 5 July 1995 letter,
Tirona was referred to as the hereinmentioned tenant of
yours.
[27]
[28]
In Mirasol v. Magsuci, et al., we ruled that the sale of a
leased property places the vendee into the shoes of the original
lessor to whom the lessee bound himself to pay. The vendee
acquires the right to evict the lessee from the premises and to
recover the unpaid rentals after the vendee had notified the
lessee that he had bought the leased property and that the
rentals on it should be paid to him, and the lessee refused to
comply with the demand.
The following facts support the conclusion that there was a
violation of the lease agreement:
(1) Tirona, through Callejo Law Office, sent a letter dated 5 July
1995 which stated that Tirona will temporarily stop paying
her monthly obligation until the National Housing Authority
has processed the pertinent papers regarding the amount
[29]
due to Ocampo in view of PD 1517;
(2) As of August 1995, Tirona has not paid her rent to Ocampo
[30]
corresponding to April to August 1995; and
(3) In a letter dated 7 August 1995, Ocampo demanded from
[31]
Tirona unpaid rent payments.
In view of these facts, we hold that Tirona is estopped from
[32]
denying her possession under a lease and that there was a
violation of the lease agreement. Thus, the MTC and RTC correctly
ruled against Tirona.
Ownership as an Issue
When Tirona filed her answer before the MTC, she raised
the issue of ownership and ascribed ownership of the subject lot
to one Doa Lourdes Rodriguez Yaneza. Tirona later changed her
strategy and filed an amended answer that ascribed ownership of
the subject lot to Maria Lourdes Breton-Mendiola. Tirona justified
the amendment by stating that she did not ask for the assistance
of a lawyer for fear of not being able to file her answer on time.
This excuse is flimsy considering that Tirona first communicated
to Ocampo through Callejo Law Office. However, the MTC still
allowed Tirona to amend her answer. Tirona stated that there was
no violation of the lease agreement because she paid her rent to
the real owner, Maria Lourdes Breton-Mendiola.
Contrary to Tironas position, the issue of ownership is not
essential to an action for unlawful detainer. The fact of the lease
Prov Rem
and the expiration of its term are the only elements of the action.
The defense of ownership does not change the summary nature
of the action. The affected party should raise the issue of
ownership in an appropriate action, because a certificate of title
[33]
cannot be the subject of a collateral attack. Although a
wrongful possessor may at times be upheld by the courts, this is
merely temporary and solely for the maintenance of public order.
The question of ownership is to be settled in the proper court
[34]
and in a proper action.
In actions for forcible entry and [unlawful] detainer, the main
issue is possession de facto, independently of any claim of
ownership or possession de jure that either party may set forth in
his pleadings, and an appeal does not operate to change the
nature of the original action. On appeal, in an ejectment case, it is
within the discretion of the court to look into the evidence
supporting the assigned errors relating to the alleged ownership
of appellant insofar as said evidence would indicate or determine
the nature of appellants possession of the controverted premises.
Said court should not however resolve the issue raised by such
assigned errors. The resolution of said issues would effect an
adjudication on ownership which is not sanctioned in the
summary action for unlawful detainer.
[35]
Unlawful detainer being a summary proceeding, it was error
for the appellate court to include the issue of ownership. Had the
appellate court limited its ruling to the elements to be proved in
a case of unlawful detainer, Ocampo need not even prove his
ownership. When the appellate court ruled that the case of
unlawful detainer had to wait for the results of the partition
proceedings, it effectively put ownership as the main issue in the
case. The issue of ownership opens a virtual Pandoras Box for
Tirona and her supposed intervenor, Maria Lourdes Breton-
Mendiola.
[36]
Interpleader
The good faith of Tirona is put in question in her preference
for Maria Lourdes Breton-Mendiola. As a stakeholder, Tirona
should have used reasonable diligence in hailing the contending
claimants to court. Tirona need not have awaited actual
institution of a suit by Ocampo against her before filing a bill of
[37]
interpleader. An action for interpleader is proper when the
lessee does not know the person to whom to pay rentals due to
[38]
conflicting claims on the property.
The action of interpleader is a remedy whereby a person who has
property whether personal or real, in his possession, or an
obligation to render wholly or partially, without claiming any right
in both, or claims an interest which in whole or in part is not
disputed by the conflicting claimants, comes to court and asks
that the persons who claim the said property or who consider
themselves entitled to demand compliance with the obligation,
be required to litigate among themselves, in order to determine
finally who is entitled to one or the other thing. The remedy is
afforded not to protect a person against a double liability but to
protect him against a double vexation in respect of one liability.
When the court orders that the claimants litigate among
themselves, there arises in reality a new action and the former are
styled interpleaders, and in such a case the pleading which
initiates the action is called a complaint of interpleader and not a
cross-complaint.
[39]
Ocampo has the right to eject Tirona from the subject land.
All the elements required for an unlawful detainer case to prosper
are present. Ocampo notified Tirona that he purchased the
subject land from Tironas lessor. Tironas continued occupation of
the subject land amounted to acquiescence to Ocampos terms.
Rule 62 Fulltext Page 14 of 22
However, Tirona eventually refused to pay rent to Ocampo, thus From September 1, 1991 to February 29,
violating the lease. 1992 P5,500.00/P11,000.00
From March 1, 1992 to February 28,
Finally, legal interest at the annual rate of 6% is due on the
1993 P6,050.00/P12,100.00
unpaid monthly rentals starting from 7 August 1995 when
From March 1, 1993 to February 28,
Ocampo made an extrajudicial demand on Tirona for payment of
[40] 1994 P6,655.00/P13,310.00
the monthly rental. On finality of our decision, annual interest
From March 1, 1994 to February 28,
at 12%, in lieu of 6% annual interest, is due on the amounts the
[41] 1995 P7,320.50/P14,641.00
MTC awarded until full payment.
From March 1, 1995 to February 28,
WHEREFORE, we GRANT the instant petition for review. The 1996 P8,052.55/P16,105.10
Decision dated 27 June 1996 of Branch 110 of the RTC in Civil From March 1, 1996 to February 29,
Case No. 96-0209, which affirmed the Decision dated 29 1997 P8,857.81/P17,715.61
December 1995 of Branch 47 of the MTC in Civil Case No. 754-95, From March 1, 1997 to February 28,
is REINSTATED. The Decision dated 29 November 2000 of the 1998 P9,743.59/P19,487.17
appellate court in CA-G.R. SP No. 41686, and its Resolution dated From March 1, 1998 to February 28,
16 April 2001 denying the motion for reconsideration, are SET 1999 P10,717.95/P21,435.89
ASIDE. From March 1, 1999 to February 28,
[4]
2000 P11,789.75/P23,579.48
SO ORDERED.
For Rooms 22 and 24:

Effective July 1, 1992 P10,000.00 with an

[5]
THIRD DIVISION increment of 10% every two years.

For Rooms 33 and 34:

SUBHASH C. PASRICHA and G.R. No. 136409
JOSEPHINE A. PASRICHA, Effective April 1, 1992 P5,000.00 with an
[6]
Petitioners, Present: increment of 10% every two years.

YNARES- For Rooms 36, 37 and 38:

SANTIAGO, J.,
- versus - Chairperson, Effective when tenants vacate said
QUISUMBING,* premises P10,000.00 with an increment of 10%
[7]
AUSTRIA- every two years.
MARTINEZ,
CHICO-NAZARIO, Petitioners were, likewise, required to pay for the cost of electric
[8]
DON LUIS DISON REALTY, INC., and consumption, water bills and the use of telephone cables.
Respondent. NACHURA, JJ.
. The lease of Rooms 36, 37 and 38 did not materialize leaving only
Rooms 22, 24, 32, 33, 34 and 35 as subjects of the lease
[9]
Promulgated: contracts. While the contracts were in effect, petitioners dealt
with Francis Pacheco (Pacheco), then General Manager of private
March 14, 2008 respondent. Thereafter, Pacheco was replaced by Roswinda
[10]
Bautista (Ms. Bautista). Petitioners religiously paid the monthly
x---------------------------------------------------------------------------- rentals until May 1992.[11] After that, however, despite repeated
--------x demands, petitioners continuously refused to pay the stipulated
rent.Consequently, respondent was constrained to refer the
matter to its lawyer who, in turn, made a final demand on
DECISION petitioners for the payment of the accrued rentals amounting
[12]
to P916,585.58. Because petitioners still refused to comply, a
NACHURA, J.: complaint for ejectment was filed by private respondent through
its representative, Ms. Bautista, before the Metropolitan Trial
[13]
This is a petition for review on certiorari under Rule 45 of Court (MeTC) of Manila. The case was raffled to Branch XIX and
[1]
the Rules of Court seeking the reversal of the Decision of the was docketed as Civil Case No. 143058-CV.
Court of Appeals (CA) dated May 26, 1998 and its
[2]
Resolution dated December 10, 1998 in CA-G.R. SP No. 37739 Petitioners admitted their failure to pay the stipulated rent for the
dismissing the petition filed by petitioners Josephine and leased premises starting July until November 1992, but claimed
Subhash Pasricha. that such refusal was justified because of the internal squabble in
respondent company as to the person authorized to receive
[14]
The facts of the case, as culled from the records, are as payment. To further justify their non-payment of rent,
follows: petitioners alleged that they were prevented from using the units
Respondent Don Luis Dison Realty, Inc. and petitioners (rooms) subject matter of the lease contract, except Room
[3]
executed two Contracts of Lease whereby the former, as lessor, 35. Petitioners eventually paid their monthly rent for December
agreed to lease to the latter Units 22, 24, 32, 33, 34, 35, 36, 37 1992 in the amount of P30,000.00, and claimed that respondent
and 38 of the San Luis Building, located at 1006 M.Y. Orosa cor. waived its right to collect the rents for the months of July to
T.M. Kalaw Streets, Ermita, Manila. Petitioners, in turn, agreed to November 1992 since petitioners were prevented from using
[15]
pay monthly rentals, as follows: Rooms 22, 24, 32, 33, and 34. However, they again withheld
payment of rents starting January 1993 because of respondents
[16]
For Rooms 32/35: refusal to turn over Rooms 36, 37 and 38. To show good faith
and willingness to pay the rents, petitioners alleged that they
From March 1, 1991 to August 31, prepared the check vouchers for their monthly rentals from
[17]
1991 P5,000.00/P10,000.00 January 1993 to January 1994. Petitioners further averred in

Prov Rem Rule 62 Fulltext Page 15 of 22

 [18]
their Amended Answer that the complaint for ejectment was
prematurely filed, as the controversy was not referred to
the barangay for conciliation.
For failure of the parties to reach an amicable settlement, the pre-
trial conference was terminated. Thereafter, they submitted their
respective position papers.
On November 24, 1994, the MeTC rendered a Decision dismissing
[19]
the complaint for ejectment. It considered petitioners non-
payment of rentals as unjustified. The court held that mere
willingness to pay the rent did not amount to payment of the
obligation; petitioners should have deposited their payment in
the name of respondent company. On the matter of possession
of the subject premises, the court did not give credence to
petitioners claim that private respondent failed to turn over
possession of the premises. The court, however, dismissed the
complaint because of Ms. Bautistas alleged lack of authority to
sue on behalf of the corporation.
Deciding the case on appeal, the Regional Trial Court (RTC)
of Manila, Branch 1, in Civil Case No. 94-72515, reversed and set
aside the MeTC Decision in this wise:
WHEREFORE, the appealed decision is hereby
reversed and set aside and another one is
rendered ordering defendants-appellees and
all persons claiming rights under them, as
follows:
(1) to vacate the leased premised
(sic) and restore possession
thereof to plaintiff-appellant;
(2) to pay plaintiff-appellant the
sum of P967,915.80 representing
the accrued rents in arrears as of
November 1993, and the rents
on the leased premises for the
succeeding months in the
amounts stated in paragraph 5 of
the complaint until fully paid;
and
(3) to pay an additional sum
equivalent to 25% of the rent
accounts as and for attorneys
fees plus the costs of this suit.
SO ORDERED.
[20]
The court adopted the MeTCs finding on petitioners unjustified
refusal to pay the rent, which is a valid ground for ejectment. It,
however, faulted the MeTC in dismissing the case on the ground
of lack of capacity to sue. Instead, it upheld Ms. Bautistas
authority to represent respondent notwithstanding the absence
of a board resolution to that effect, since her authority was
implied from her power as a general manager/treasurer of the
company.
[21]
Aggrieved, petitioners elevated the matter to the Court of
[22]
Appeals in a petition for review on certiorari. On March 18,
[23]
1998, petitioners filed an Omnibus Motion to cite Ms. Bautista
for contempt; to strike down the MeTC and RTC Decisions as
legal nullities; and to conduct hearings and ocular inspections or
delegate the reception of evidence. Without resolving the
[24]
aforesaid motion, on May 26, 1998, the CA affirmed the RTC
Decision but deleted the award of attorneys fees.
[25]
Prov Rem
Petitioners moved for the reconsideration of the
[26]
aforesaid decision. Thereafter, they filed several motions asking
the Honorable Justice Ruben T. Reyes to inhibit from further
proceeding with the case allegedly because of his close
[27]
association with Ms. Bautistas uncle-in-law.
[28]
In a Resolution dated December 10, 1998, the CA denied the
motions for lack of merit. The appellate court considered said
motions as repetitive of their previous arguments, irrelevant and
[29]
obviously dilatory. As to the motion for inhibition of the
Honorable Justice Reyes, the same was denied, as the appellate
court justice stressed that the decision and the resolution were
[30]
not affected by extraneous matters. Lastly, the appellate court
granted respondents motion for execution and directed the RTC
to issue a new writ of execution of its decision, with the exception
[31]
of the award of attorneys fees which the CA deleted.
Petitioners now come before this Court in this petition for review
on certiorari raising the following issues:
I.
Whether this ejectment suit should be
dismissed and whether petitioners are entitled
to damages for the unauthorized and malicious
filing by Rosario (sic) Bautista of this ejectment
case, it being clear that [Roswinda] whether as
general manager or by virtue of her
subsequent designation by the Board of
Directors as the corporations attorney-in-fact
had no legal capacity to institute the
ejectment suit, independently of whether
Director Pacanas Order setting aside the SEC
revocation Order is a mere scrap of paper.
II.
Whether the RTCs and the Honorable Court of
Appeals failure and refusal to resolve the most
fundamental factual issues in the instant
ejectment case render said decisions void on
their face by reason of the complete
abdication by the RTC and the Honorable
Justice Ruben Reyes of their constitutional
duty not only to clearly and distinctly state the
facts and the law on which a decision is
based but also to resolve the decisive factual
issues in any given case.
III.
Whether the (1) failure and refusal of
Honorable Justice Ruben Reyes to inhibit
himself, despite his admission by reason of his
silence of petitioners accusation that the said
Justice enjoyed a $7,000.00 scholarship grant
courtesy of the uncle-in-law of respondent
corporations purported general manager and
(2), worse, his act of ruling against the
petitioners and in favor of the respondent
corporation constitute an unconstitutional
deprivation of petitioners property without due
[32]
process of law.
In addition to Ms. Bautistas lack of capacity to sue, petitioners
insist that respondent company has no standing to sue as a
juridical person in view of the suspension and eventual revocation
[33]
of its certificate of registration. They likewise question the
factual findings of the court on the bases of their ejectment from
the subject premises. Specifically, they fault the appellate court
for not finding that: 1) their non-payment of rentals was justified;
Rule 62 Fulltext Page 16 of 22
2) they were deprived of possession of all the units subject of the
lease contract except Room 35; and 3) respondent violated the
terms of the contract by its continued refusal to turn over
possession of Rooms 36, 37 and 38. Petitioners further prayed
that a Temporary Restraining Order (TRO) be issued enjoining the
CA from enforcing its Resolution directing the issuance of a Writ
[34]
of Execution. Thus, in a Resolution dated January 18, 1999, this
Court directed the parties to maintain the status quo effective
immediately until further orders.
The petition lacks merit.
We uphold the capacity of respondent company to institute the
ejectment case. Although the Securities and Exchange
Commission (SEC) suspended and eventually revoked
respondents certificate of registration on February 16, 1995,
records show that it instituted the action for ejectment
on December 15, 1993. Accordingly, when the case was
[35]
commenced, its registration was not yet revoked. Besides, as
correctly held by the appellate court, the SEC later set aside its
earlier orders of suspension and revocation of respondents
[36]
certificate, rendering the issue moot and academic.
We likewise affirm Ms. Bautistas capacity to sue on behalf of the
company despite lack of proof of authority to so represent it. A
corporation has no powers except those expressly conferred on it
by the Corporation Code and those that are implied from or are
incidental to its existence. In turn, a corporation exercises said
powers through its board of directors and/or its duly authorized
officers and agents. Physical acts, like the signing of documents,
can be performed only by natural persons duly authorized for the
purpose by corporate by-laws or by a specific act of the board of
[37]
directors. Thus, any person suing on behalf of the corporation
should present proof of such authority. Although Ms. Bautista
initially failed to show that she had the capacity to sign the
verification and institute the ejectment case on behalf of the
company, when confronted with such question, she immediately
[38]
presented the Secretarys Certificate confirming her authority to
represent the company.
There is ample jurisprudence holding that subsequent
and substantial compliance may call for the relaxation of the rules
[39]
of procedure in the interest of justice. In Novelty Phils., Inc. v.
[40]
Court of Appeals, the Court faulted the appellate court for
dismissing a petition solely on petitioners failure to timely submit
proof of authority to sue on behalf of the corporation. In Pfizer,
[41]
Inc. v. Galan, we upheld the sufficiency of a petition verified by
an employment specialist despite the total absence of a board
resolution authorizing her to act for and on behalf of the
corporation. Lastly, in China Banking Corporation v. Mondragon
[42]
International Philippines, Inc, we relaxed the rules of procedure
because the corporation ratified the managers status as an
authorized signatory. In all of the above cases, we brushed aside
technicalities in the interest of justice. This is not to say that we
disregard the requirement of prior authority to act in the name of
a corporation. The relaxation of the rules applies only to highly
meritorious cases, and when there is substantial compliance.
While it is true that rules of procedure are intended to promote
rather than frustrate the ends of justice, and while the swift
unclogging of court dockets is a laudable objective, we should
not insist on strict adherence to the rules at the expense of
[43]
substantial justice. Technical and procedural rules are intended
to help secure, not suppress, the cause of justice; and a deviation
from the rigid enforcement of the rules may be allowed to attain
that prime objective, for, after all, the dispensation of justice is
[44]
the core reason for the existence of courts.
As to the denial of the motion to inhibit Justice Reyes, we find the
same to be in order. First, the motion to inhibit came after the
appellate court rendered the assailed decision, that is, after
Justice Reyes had already rendered his opinion on the merits of
the case. It is settled that a motion to inhibit shall be denied if
Prov Rem
filed after a member of the court had already given an opinion on
the merits of the case, the rationale being that a litigant cannot
be permitted to speculate on the action of the court x x x (only
to) raise an objection of this sort after the decision has been
[45]
rendered. Second, it is settled that mere suspicion that a judge
is partial to one of the parties is not enough; there should be
evidence to substantiate the suspicion. Bias and prejudice cannot
be presumed, especially when weighed against a judges sacred
pledge under his oath of office to administer justice without
regard for any person and to do right equally to the poor and the
rich. There must be a showing of bias and prejudice stemming
from an extrajudicial source, resulting in an opinion on the merits
based on something other than what the judge learned from his
[46]
participation in the case. We would like to reiterate, at this
point, the policy of the Court not to tolerate acts of litigants who,
for just about any conceivable reason, seek to disqualify a judge
(or justice) for their own purpose, under a plea of bias, hostility,
[47]
prejudice or prejudgment.
We now come to the more substantive issue of whether or not
the petitioners may be validly ejected from the leased premises.
Unlawful detainer cases are summary in nature. In such cases, the
elements to be proved and resolved are the fact of lease and the
[48]
expiration or violation of its terms. Specifically, the essential
requisites of unlawful detainer are: 1) the fact of lease by virtue of
a contract, express or implied; 2) the expiration or termination of
the possessors right to hold possession; 3) withholding by the
lessee of possession of the land or building after the expiration or
termination of the right to possess; 4) letter of demand upon
lessee to pay the rental or comply with the terms of the lease and
vacate the premises; and 5) the filing of the action within one
year from the date of the last demand received by the
[49]
defendant.
It is undisputed that petitioners and respondent entered into two
separate contracts of lease involving nine (9) rooms of
the San Luis Building. Records, likewise, show that respondent
repeatedly demanded that petitioners vacate the premises, but
the latter refused to heed the demand; thus, they remained in
possession of the premises. The only contentious issue is whether
there was indeed a violation of the terms of the contract: on the
part of petitioners, whether they failed to pay the stipulated rent
without justifiable cause; while on the part of respondent,
whether it prevented petitioners from occupying the leased
premises except Room 35.
This issue involves questions of fact, the resolution of which
requires the evaluation of the evidence presented. The MeTC, the
RTC and the CA all found that petitioners failed to perform their
obligation to pay the stipulated rent. It is settled doctrine that in a
civil case, the conclusions of fact of the trial court, especially when
affirmed by the Court of Appeals, are final and conclusive, and
[50]
cannot be reviewed on appeal by the Supreme Court. Albeit
the rule admits of exceptions, not one of them obtains in this
[51]
case.
To settle this issue once and for all, we deem it proper to assess
the array of factual findings supporting the courts conclusion.
The evidence of petitioners non-payment of the
stipulated rent is overwhelming. Petitioners, however, claim that
such non-payment is justified by the following: 1) the refusal of
respondent to allow petitioners to use the leased properties,
except room 35; 2) respondents refusal to turn over Rooms 36, 37
and 38; and 3) respondents refusal to accept payment tendered
by petitioners.
Petitioners justifications are belied by the evidence on record. As
correctly held by the CA, petitioners communications to
respondent prior to the filing of the complaint never mentioned
[52]
their alleged inability to use the rooms. What they pointed out
Rule 62 Fulltext Page 17 of 22
in their letters is that they did not know to whom payment should
[53]
be made, whether to Ms. Bautista or to Pacheco. In their July
26 and October 30, 1993 letters, petitioners only questioned the
method of computing their electric billings without, however,
raising a complaint about their failure to use the
[54]
rooms. Although petitioners stated in their December 30,
1993 letter that respondent failed to fulfill its part of the
[55]
contract, nowhere did they specifically refer to their inability to
use the leased rooms. Besides, at that time, they were already in
default on their rentals for more than a year.
If it were true that they were allowed to use only one of
the nine (9) rooms subject of the contract of lease, and
considering that the rooms were intended for a business purpose,
we cannot understand why they did not specifically assert their
right. If we believe petitioners contention that they had been
prevented from using the rooms for more than a year before the
complaint for ejectment was filed, they should have demanded
specific performance from the lessor and commenced an action
in court. With the execution of the contract, petitioners were
already in a position to exercise their right to the use and
enjoyment of the property according to the terms of the lease
[56]
contract. As borne out by the records, the fact is that
respondent turned over to petitioners the keys to the leased
premises and petitioners, in fact, renovated the rooms. Thus, they
were placed in possession of the premises and they had the right
to the use and enjoyment of the same. They, likewise, had the
right to resist any act of intrusion into their peaceful possession
of the property, even as against the lessor itself. Yet, they did not
lift a finger to protect their right if, indeed, there was a violation
of the contract by the lessor.
What was, instead, clearly established by the evidence
was petitioners non-payment of rentals because ostensibly they
did not know to whom payment should be made.However, this
did not justify their failure to pay, because if such were the case,
they were not without any remedy. They should have availed of
the provisions of the Civil Code of the Philippines on the
consignation of payment and of the Rules of Court on
interpleader.
Article 1256 of the Civil Code provides:
Article 1256. If the creditor to whom tender of
payment has been made refuses without just cause to
accept it, the debtor shall be released from responsibility
by the consignation of the thing or sum due.
Consignation alone shall produce the same
effect in the following cases:
xxxx
(4) When two or more persons claim the same
right to collect;
x x x x.
Consignation shall be made by depositing the things due at the
disposal of a judicial authority, before whom the tender of
payment shall be proved in a proper case, and the announcement
[57]
of the consignation in other cases.
In the instant case, consignation alone would have
produced the effect of payment of the rentals. The rationale for
consignation is to avoid the performance of an obligation
becoming more onerous to the debtor by reason of causes not
[58]
imputable to him. Petitioners claim that they made a written
tender of payment and actually prepared vouchers for their
monthly rentals. But that was insufficient to constitute a valid
tender of payment. Even assuming that it was valid tender, still, it
would not constitute payment for want of consignation of the
Prov Rem
amount. Well-settled is the rule that tender of payment must be
accompanied by consignation in order that the effects of
[59]
payment may be produced.
Moreover, Section 1, Rule 62 of the Rules of Court provides:
Section 1. When interpleader proper. Whenever
conflicting claims upon the same subject matter are or
may be made against a person who claims no interest
whatever in the subject matter, or an interest which in
whole or in part is not disputed by the claimants, he may
bring an action against the conflicting claimants to
compel them to interplead and litigate their several
claims among themselves.
Otherwise stated, an action for interpleader is proper when the
lessee does not know to whom payment of rentals should be
made due to conflicting claims on the property (or on the right to
[60]
collect). The remedy is afforded not to protect a person against
double liability but to protect him against double vexation in
[61]
respect of one liability.
Notably, instead of availing of the above remedies,
petitioners opted to refrain from making payments.
Neither can petitioners validly invoke the non-delivery of Rooms
36, 37 and 38 as a justification for non-payment of
rentals. Although the two contracts embraced the lease of nine
(9) rooms, the terms of the contracts - with their particular
reference to specific rooms and the monthly rental for each -
easily raise the inference that the parties intended the lease of
each room separate from that of the others. There is nothing in
the contract which would lead to the conclusion that the lease of
one or more rooms was to be made dependent upon the lease of
all the nine (9) rooms. Accordingly, the use of each room by the
lessee gave rise to the corresponding obligation to pay the
monthly rental for the same. Notably, respondent demanded
payment of rentals only for the rooms actually delivered to, and
used by, petitioners.
It may also be mentioned that the contract specifically provides
that the lease of Rooms 36, 37 and 38 was to take effect only
when the tenants thereof would vacate the premises.Absent a
clear showing that the previous tenants had vacated the
premises, respondent had no obligation to deliver possession of
the subject rooms to petitioners. Thus, petitioners cannot use the
non-delivery of Rooms 36, 37 and 38 as an excuse for their failure
to pay the rentals due on the other rooms they occupied.
In light of the foregoing disquisition, respondent has every right
to exercise his right to eject the erring lessees. The parties
contracts of lease contain identical provisions, to wit:
In case of default by the LESSEE in the payment of rental
th
on the fifth (5 ) day of each month, the amount owing
shall as penalty bear interest at the rate of FOUR percent
(4%) per month, to be paid, without prejudice to the
right of the LESSOR to terminate his contract, enter the
premises, and/or eject the LESSEE as hereinafter set
[62]
forth;
[63]
Moreover, Article 1673 of the Civil Code gives the lessor the
right to judicially eject the lessees in case of non-payment of the
monthly rentals. A contract of lease is a consensual, bilateral,
onerous and commutative contract by which the owner
temporarily grants the use of his property to another, who
[64]
undertakes to pay the rent therefor. For failure to pay the rent,
petitioners have no right to remain in the leased premises.
WHEREFORE, premises considered, the petition is DENIED and
the Status Quo Order dated January 18, 1999 is
Rule 62 Fulltext Page 18 of 22
hereby LIFTED. The Decision of the Court of Appeals dated May
26, 1998 and its Resolution dated December 10, 1998 in CA-G.R.
SP No. 37739 are AFFIRMED.
SO ORDERED.
EN BANC
G.R. No. L-23851 March 26, 1976
WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff-
appellant,
vs.
LEE E. WON alias RAMON LEE and BIENVENIDO A.
TAN, defendants-appellees.
Leonardo Abola for appellant.
Alfonso V. Agcaoli & Ramon A. Barcelona for appellee Lee E. Won.
Bienvenido A. Tan in his own behalf.
CASTRO, C.J.:
This is an appeal from the order of the Court of First Instance of
Rizal, in civil case 7656, dismissing the plaintiff-appellant's
complaint of interpleader upon the grounds of failure to state a
cause of action and res judicata.
In its amended and supplemental complaint of October 23, 1963,
the Wack Wack Golf & Country Club, Inc., a non-stock, civic and
athletic corporation duly organized under the laws of the
Philippines, with principal office in Mandaluyong, Rizal
(hereinafter referred to as the Corporation), alleged, for its first
cause of action, that the defendant Lee E. Won claims ownership
of its membership fee certificate 201, by virtue of the decision
rendered in civil case 26044 of the CFI of Manila, entitled "Lee E.
Won alias Ramon Lee vs. Wack Wack Golf & Country Club, Inc."
and also by virtue of membership fee certificate 201-serial no.
1478 issued on October 17, 1963 by Ponciano B. Jacinto, deputy
clerk of court of the said CFI of Manila, for and in behalf of the
president and the secretary of the Corporation and of the
People's Bank & Trust Company as transfer agent of the said
Corporation, pursuant to the order of September 23, 1963 in the
said case; that the defendant Bienvenido A. Tan, on the other
hand, claims to be lawful owner of its aforesaid membership fee
certificate 201 by virtue of membership fee certificate 201-serial
no. 1199 issued to him on July 24, 1950 pursuant to an
assignment made in his favor by "Swan, Culbertson and Fritz," the
original owner and holder of membership fee certificate 201; that
under its articles of incorporation and by-laws the Corporation is
authorized to issue a maximum of 400 membership fee
certificates to persons duly elected or admitted to proprietary
membership, all of which have been issued as early as December
1939; that it claims no interest whatsoever in the said
membership fee certificate 201; that it has no means of
determining who of the two defendants is the lawful owner
thereof; that it is without power to issue two separate certificates
for the same membership fee certificate 201, or to issue another
membership fee certificate to the defendant Lee, without
violating its articles of incorporation and by-laws; and that the
membership fee certificate 201-serial no. 1199 held by the
defendant Tan and the membership fee certificate 201-serial No.
1478 issued to the defendant Lee proceed from the same
membership fee certificate 201, originally issued in the name of
"Swan, Culbertson and Fritz".
Prov Rem
For its second cause of action. it alleged that the membership fee
certificate 201-serial no. 1478 issued by the deputy clerk of court
of court of the CFI of Manila in behalf of the Corporation is null
and void because issued in violation of its by-laws, which require
the surrender and cancellation of the outstanding membership
fee certificate 201 before issuance may be made to the transferee
of a new certificate duly signed by its president and secretary,
aside from the fact that the decision of the CFI of Manila in civil
case 26044 is not binding upon the defendant Tan, holder of
membership fee certificate 201-serial no. 1199; that Tan is made a
party because of his refusal to join it in this action or bring a
separate action to protect his rights despite the fact that he has a
legal and beneficial interest in the subject matter of this litigation;
and that he is made a part so that complete relief may be
accorded herein.
The Corporation prayed that (a) an order be issued requiring Lee
and Tan to interplead and litigate their conflicting claims; and (b)
judgment. be rendered, after hearing, declaring who of the two is
the lawful owner of membership fee certificate 201, and ordering
the surrender and cancellation of membership fee certificate 201-
serial no. 1478 issued in the name of Lee.
In separate motions the defendants moved to dismiss the
complaint upon the grounds of res judicata, failure of the
complaint to state a cause of action, and bar by
1
prescription. These motions were duly opposed by the
Corporation. Finding the grounds of bar by prior judgment and
failure to state a cause of action well taken, the trial court
dismissed the complaint, with costs against the Corporation.
In this appeal, the Corporation contends that the court a
quo erred (1) in finding that the allegations in its amended and
supplemental complaint do not constitute a valid ground for an
action of interpleader, and in holding that "the principal motive
for the present action is to reopen the Manila Case and
collaterally attack the decision of the said Court"; (2) in finding
that the decision in civil case 26044 of the CFI of Manila
constitutes res judicata and bars its present action; and (3) in
dismissing its action instead of compelling the appellees to
interplead and litigate between themselves their respective
claims.
The Corporations position may be stated elsewise as follows: The
trial court erred in dismissing the complaint, instead of
compelling the appellees to interplead because there actually are
conflicting claims between the latter with respect to the
ownership of membership fee certificate 201, and, as there is not
Identity of parties, of subject-matter, and of cause of action,
between civil case 26044 of the CFI of Manila and the present
action, the complaint should not have been dismissed upon the
ground of res judicata.
On the other hand, the appellees argue that the trial court
properly dismissed the complaint, because, having the effect of
reopening civil case 26044, the present action is barred by res
judicata.
Although res judicata or bar by a prior judgment was the principal
ground availed of by the appellees in moving for the dismissal of
the complaint and upon which the trial court actually dismissed
the complaint, the determinative issue, as can be gleaned from
the pleadings of the parties, relates to the propriety and
timeliness of the remedy of interpleader.
The action of interpleader, under section 120 of the Code of Civil
2
Procedure, is a remedy whereby a person who has personal
property in his possession, or an obligation to render wholly or
partially, without claiming any right to either, comes to court and
asks that the persons who claim the said personal property or
Rule 62 Fulltext Page 19 of 22
who consider themselves entitled to demand compliance with the
obligation, be required to litigate among themselves in order to
determine finally who is entitled to tone or the one thing. The
remedy is afforded to protect a person not against double
liability but against double vexation in respect of one
3 4
liability. The procedure under the Rules of Court is the same as
5
that under the Code of Civil Procedure, except that under the
former the remedy of interpleader is available regardless of the
nature of the subject-matter of the controversy, whereas under
the latter an interpleader suit is proper only if the subject-matter
of the controversy is personal property or relates to the
performance of an obligation.
There is no question that the subject matter of the present
controversy, i.e., the membership fee certificate 201, is proper for
an interpleader suit. What is here disputed is the propriety and
timeliness of the remedy in the light of the facts and
circumstances obtaining.
6
A stakeholder should use reasonable diligence to hale the
7
contending claimants to court. He need not await actual
institution of independent suits against him before filing a bill of
8
interpleader. He should file an action of interpleader within a
reasonable time after a dispute has arisen without waiting to be
9
sued by either of the contending claimants. Otherwise, he may
10 11
be barred by laches or undue delay. But where he acts with
reasonable diligence in view of the environmental circumstances,
12
the remedy is not barred.
Has the Corporation in this case acted with diligence, in view of
all the circumstances, such that it may properly invoke the
remedy of interpleader? We do not think so. It was aware of the
conflicting claims of the appellees with respect to the
membership fee certificate 201 long before it filed the present
interpleader suit. It had been recognizing Tan as the lawful owner
thereof. It was sued by Lee who also claimed the same
membership fee certificate. Yet it did not interplead Tan. It
preferred to proceed with the litigation (civil case 26044) and to
defend itself therein. As a matter of fact, final judgment was
rendered against it and said judgment has already been executed.
It is not therefore too late for it to invoke the remedy of
interpleader.
It has been held that a stakeholder's action of interpleader is too
late when filed after judgment has been rendered against him in
13
favor of one of the contending claimants, especially where he
had notice of the conflicting claims prior to the rendition of the
judgment and neglected the opportunity to implead the adverse
claimants in the suit where judgment was entered. This must be
so, because once judgment is obtained against him by one
14 15
claimant he becomes liable to the latter. In once case, it was
declared:
The record here discloses that long before the
rendition of the judgment in favor of relators
against the Hanover Fire Insurance Company
the latter had notice of the adverse claim of
South to the proceeds of the policy. No reason
is shown why the Insurance Company did not
implead South in the former suit and have the
conflicting claims there determined. The
Insurance Company elected not to do so and
that suit proceeded to a final judgment in favor
of relators. The Company thereby became
independently liable to relators. It was then too
late for such company to invoke the remedy of
interpleader
The Corporation has not shown any justifiable reason why it did
not file an application for interpleader in civil case 26044 to
compel the appellees herein to litigate between themselves their
Prov Rem
conflicting claims of ownership. It was only after adverse final
judgment was rendered against it that the remedy of interpleader
was invoked by it. By then it was too late, because to he entitled
to this remedy the applicant must be able to show that lie has not
been made independently liable to any of the claimants. And
since the Corporation is already liable to Lee under a final
judgment, the present interpleader suit is clearly improper and
unavailing.
It is the general rule that before a person will
be deemed to be in a position to ask for an
order of intrepleader, he must be prepared to
show, among other prerequisites, that he has
not become independently liable to any of the
claimants. 25 Tex. Jur. p. 52, Sec. 3; 30 Am. Jur.
p. 218, Section 8.
It is also the general rule that a bill of
interpleader comes too late when it is filed
after judgment has been rendered in favor of
one of the claimants of the fund, this being
especially true when the holder of the funds
had notice of the conflicting claims prior to the
rendition of the judgment and had an
opportunity to implead the adverse claimants
in the suit in which the judgment was
rendered. United Procedures Pipe Line Co. v.
Britton, Tex. Civ. App. 264 S.W. 176; Nash v.
McCullum, Tex. Civ. 74 S.W. 2d 1046; 30 Am.
Jur. p. 223, Sec. 11; 25 Tex. Jur. p. 56, Sec. 5; 108
16
A.L.R., note 5, p. 275.
Indeed, if a stakeholder defends a suit filed by one of the adverse
claimants and allows said suit to proceed to final judgment
against him, he cannot later on have that part of the litigation
repeated in an interpleader suit. In the case at hand, the
Corporation allowed civil case 26044 to proceed to final
judgment. And it offered no satisfactory explanation for its failure
to implead Tan in the same litigation. In this factual situation, it is
clear that this interpleader suit cannot prosper because it was
filed much too late.
If a stakeholder defends a suit by one claimant
and allows it to proceed so far as a judgment
against him without filing a bill of interpleader,
it then becomes too late for him to do
so. Union Bank v. Kerr, 2 Md. Ch. 460; Home Life
Ins. Co. v. Gaulk, 86 Md. 385, 390, 38 A.
901; Gonia v. O'Brien, 223 Mass. 177, 111 N.E.
787. It is one o the main offices of a bill of
interpleader to restrain a separate proceeding
at law by claimant so as to avoid the resulting
partial judgment; and if the stakeholder
acquiesces in one claimant's trying out his
claim and establishing it at law, he cannot then
have that part of the litigation repeated in an
interpleader suit. 4 Pomeroy's Eq. Juris. No. 162;
Mitfor's Eq. Pleading (Tyler's Ed.) 147 and 236;
Langdell's Summary of Eq. Pleading, No.
162' De Zouche v. Garrizon, 140 Pa. 430, 21
17
A/450.
It is the general rule that a bill of interpleader
comes too late when application therefore is
delayed until after judgment has been
rendered in favor of one of the claimants of the
fund, and that this is especially true where the
holder of the fund had notice of the conflicting
claims prior to the rendition of such judgment
and an opportunity to implead the adverse
claimants in the suit in which such judgment
Rule 62 Fulltext Page 20 of 22
 was rendered. (See notes and cases cited 36
Am. Dec. 703, Am. St. Rep. 598, also 5
Pomeroy's Eq. Juris. Sec. 41.)
The evidence in the opinion of the majority
shows beyond dispute that the appellant
permitted the Parker county suit to proceed to
judgment in favor of Britton with full notice of
the adverse claims of the defendants in the
present suit other than the assignees of the
judgment (the bank and Mrs. Pabb) and no
excuse is shown why he did not implead them
18
in the suit.
To now permit the Corporation to bring Lee to court after the
latter's successful establishment of his rights in civil case 26044 to
the membership fee certificate 201, is to increase instead of to
diminish the number of suits, which is one of the purposes of an
action of interpleader, with the possibility that the latter would
lose the benefits of the favorable judgment. This cannot be done
because having elected to take its chances of success in said civil
case 26044, with full knowledge of all the fact, the Corporation
must submit to the consequences of defeat.
The act providing for the proceeding has
nothing to say touching the right of one, after
contesting a claim of one of the claimants to
final judgment unsuccessfully, to involve the
successful litigant in litigation anew by bringing
an interpleader action. The question seems to
be one of first impression here, but, in other
jurisdictions, from which the substance of the
act was apparently taken, the rule prevails that
the action cannot be resorted to after an
unsuccessful trial against one of the claimants.
It is well settled, both by reasons and authority,
that one who asks the interposition of a court
of equity to compel others, claiming property
in his hands, to interplead, must do so before
putting them to the test of trials at
law. Yarborough v. Thompson, 3 Smedes & M.
291 (41 Am. Dec. 626); Gornish v. Tanner, 1 You.
& Jer. 333; Haseltine v. Brickery, 16 Grat. (Va.)
116. The remedy by interpleader is afforded to
protect the party from the annoyance and
hazard of two or more actions touching the
same property or demand; but one who, with
knowledge of all the facts, neglects to avail
himself of the relief, or elects to take the
chances for success in the actions at law, ought
to submit to the consequences of defeat. To
permit an unsuccessful defendant to compel
the successful plaintiffs to interplead, is to
increase instead of to diminish the number of
suits; to put upon the shoulders of others the
burden which he asks may be taken from his
own. ....'
It is urged, however, that the American Surety
Company of New York was not in position to
file an interpleader until it had tested the claim
of relatrix to final judgment, and that, failing to
meet with success, it promptly filed the
interpleader. The reason why, it urges, it was
not in such position until then is that had it
succeeded before this court in sustaining its
construction of the bond and the law
governing the bond, it would not have been
called upon to file an interpleader, since there
would have been sufficient funds in its hands to
Prov Rem
have satisfied all lawful claimants. It may be
observed, however, that the surety company
was acquainted with all of the facts, and hence
that it simply took its chances of meeting with
success by its own construction of the bond
and the law. Having failed to sustain it, it
cannot now force relatrix into litigation anew
with others, involving most likely a repetition of
what has been decided, or force her to accept a
pro rata part of a fund, which is far from
19
benefits of the judgment.
Besides, a successful litigant cannot later be impleaded by his
defeated adversary in an interpleader suit and compelled to
prove his claim anew against other adverse claimants, as that
would in effect be a collateral attack upon the judgment.
The jurisprudence of this state and the
common law states is well-settled that a
claimant who has been put to test of a trial by a
surety, and has establish his claim, may not be
impleaded later by the surety in an interpleader
suit, and compelled to prove his claim again
with other adverse claimants. American Surety
Company of New York v. Brim, 175 La. 959, 144
So. 727; American Surety Company of New York
v. Brim (In Re Lyong Lumber Company), 176 La.
867, 147 So. 18; Dugas v. N.Y. Casualty Co., 181
La. 322, 159 So. 572; 15 Ruling Case Law, 228;
33 Corpus Juris, 477; 4 Pomeroy's
Jurisprudence, 1023; Royal Neighbors of
America v. Lowary (D.C.) 46 F2d 565; Brackett v.
Graves, 30 App. Div. 162, 51 N.Y.S. 895; De
Zouche v. Garrison, 140 Pa. 430, 21 A. 450,
451; Manufacturer's Finance Co. v. W.I. Jones Co.
141 Ga., 519, 81 S.E. 1033; Hancock Mutual Life
Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383.
There can be no doubt that relator's claim has
been finally and definitely established, because
that matter was passed upon by three courts in
definitive judgments. The only remaining item
is the value of the use of the land during the
time that relator occupied it. The case was
remanded solely and only for the purpose of
determining the amount of that credit. In all
20
other aspects the judgment is final.
It is generally held by the cases it is the office
of interpleader to protect a party, not against
double liability, but against double vexation on
account of one liability. Gonia v. O'Brien, 223
Mass. 177, 111 N.E. 787. And so it is said that it
is too late for the remedy of interpleader if the
party seeking this relef has contested the claim
of one of the parties and suffered judgment to
be taken.
In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264
S.W. 576. 578, it was said: 'It is the general rule
that a bill of interpleader comes too late when
application therefor is delayed until after
judgment has been rendered in favor of one of
the claimants of the fund, and this is especially
true where the holder of the fund had notice of
the conflicting claims prior to the rendition of
such judgment and an opportunity to implead
the adverse claimants in the suit in which such
judgment was rendered. See notes and cases
cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also
5 Pomeroy's Equity Jurisprudence No. 41.'
Rule 62 Fulltext Page 21 of 22
 The principle thus stated has been recognized
in many cases in other jurisdictions, among
which may be cited American Surety Co. v.
O'Brien, 223 Mass. 177, 111 N.E. 787; Phillips v.
Taylor, 148 Md. 157, 129 A. 18; Moore v. Hill, 59
Ga. 760, 761; Yearborough v. Thompson, 3
Smedes & M. (11 Miss.) 291, 41 Am. Dec. 626.
See, also, 33 C.J. p. 447, No. 30; Nash v.
McCullum, (Tex. Civ. App.) 74 S.W. 2d 1042,
1047.

It would seem that this rule should logically

follow since, after the recovery of judgment,
the interpleading of the judgment creditor is in
21
effect a collateral attack upon the judgment.

In fine, the instant interpleader suit cannot prosper because the

Corporation had already been made independently liable in civil
case 26044 and, therefore, its present application for interpleader
would in effect be a collateral attack upon the final judgment in
the said civil case; the appellee Lee had already established his
rights to membership fee certificate 201 in the aforesaid civil case
and, therefore, this interpleader suit would compel him to
establish his rights anew, and thereby increase instead of
diminish litigations, which is one of the purposes of an
interpleader suit, with the possiblity that the benefits of the final
judgment in the said civil case might eventually be taken away
from him; and because the Corporation allowed itself to be sued
to final judgment in the said case, its action of interpleader was
filed inexcusably late, for which reason it is barred by laches or
unreasonable delay.

ACCORDINGLY, the order of May 28, 1964, dismissing the

complaint, is affirmed, at appellant's cost.

Prov Rem Rule 62 Fulltext Page 22 of 22