G.R. No.147812. April 6, 2005 Tirona filed her answer on 27 September 1995.

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:
LEONARDO R. OCAMPO, Petitioners,
vs. 1. That the Assignor [one Edison A. Hindap, Sr.] is the General Overseer and Attorney-in-Fact of
LEONORA TIRONA, Respondents. 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].
The Case

2. That the Title of [Ocampo] was overlapped [sic] the Original Land Title of the Assignor.
This is a petition for review1 to annul the Decision2 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 aside the Decision3 dated 27 3. That [Tirona], hereby recognized by the Assignor as co-owner by possession and hereby
June 1996 of Branch 110 of the Regional Trial Court of Pasay City ("RTC") in Civil Case No. 96- cede, transfer and assign the said parcel of land in [Tironas] favor.
0209. The RTC affirmed the Decision4 dated 29 December 1995 of Branch 47 of the
Metropolitan Trial Court of Pasay City ("MTC") in Civil Case No. 754-95 ordering respondent
4. That [Tirona] hereby denied [sic] and discontinued [sic] all the obligations imposed by
Leonora Tirona ("Tirona") to vacate and surrender possession of the property under litigation to
[Ocampo], for the simple reason, the property in question is not owned by [Ocampo], but rather
petitioner Leonardo R. Ocampo ("Ocampo"). The MTC also ordered Tirona to pay Ocampo
owned by the Assignor, as proof of evidence herein Assignor issued a Certification for
rentals in arrears, attorneys fees, and costs of suit.
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
Antecedent Facts
Ocampo filed a motion to strike out the answer filed and a motion for judgment on 10 October
Ocampo alleged that he is the owner of a parcel of land ("subject land") described in Transfer 1995. Ocampo claimed that the answer was not verified; therefore, it was as if no answer was
Certificate of Title ("TCT") No. 134359, with an approximate area of 500 square meters, located filed.
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
On 12 October 1995, Tirona filed a motion with leave to amend defendants answer. 8 She
land are claimed to be already in Ocampos management even though the TCT is not yet in his
alleged that she filed her answer without the assistance of a lawyer due to fear that she might be
name. Tirona, on the other hand, is a lessee occupying a portion of the subject land. 5 The MTC
unable to file the required pleading on time. In her amended answer, Tirona maintained that
established the following facts:
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
According to [Ocampo], upon acquisition of ownership of the subject premises, a formal written first refusal in case of sale of the land, pursuant to Presidential Decree ("PD") Nos.
notice was given to [Tirona] which was received by the latter on 9 March 1995, copy of the said 1517,9 189310 and 1968.11The area where the subject land is located was certified as an area
formal written agreement marked as Annex "A" and likewise copy of the registry return receipt under priority development.12 Tirona asked for attorneys fees and moral and exemplary
showing that [Tirona] received Annex "A" was marked as Annex "A-1". In recognition of damages.
[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
In the spirit of substantial justice, the MTC granted Tironas motion to amend her answer on 20
Borja Bldg., 645 Sta. Cruz, Manila stating among others, that, in view of the fact that the subject
October 1995. On 15 November 1995, the MTC directed Ocampo and Tirona to submit their
premises was declared under area for priority development, [Tirona] is invoking her right of first
respective position papers and other evidence after the termination of the pre-trial conference.
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 The issue considered by the MTC for resolution was whether Ocampo may eject Tirona because
letter marked as Annex "B" of the Complaint. In reply to Annex "B", [Ocampo] sent a letter dated of non-payment of rent and because of the termination of Tironas right to possess and occupy
17 July 1995 addressed to the said Callejo Law Office, copy furnished [Tirona]. A copy of the the subject land.
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 The MTCs Ruling
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 The MTC ruled that Tirona does not have any reason to suspend payment of rents until after PD
rate of 1,200 a month and to vacate the premises, copy of the said letter dated 7 August 1995 No. 1517, in relation to PD Nos. 1893 and 1968, is implemented in her favor. Tironas non-
marked as Annex "D" of the Complaint and the signature at the bottom portion of Annex "D" payment of rents rendered her occupation of the subject land illegal. As owner of the subject
clearly shows that the same was received by [Tirona] on 8 August 1995. Despite receipt of said land, Ocampo is entitled to its use and enjoyment, as well as to recover its possession from any
letter, [Tirona] failed and refused and still fails and refuses to heed [Ocampos] demands. 6 person unlawfully withholding it.

On 11 September 1995, Ocampo filed a complaint docketed as Civil Case No. 754-95 for The dispositive part of the MTCs decision reads:
unlawful detainer and damages against Tirona before the MTC.
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
1,200 a month, with interest at a legal rate; 3. Ordering [Tirona] to pay the sum of 5,000 for
and as attorneys fees; and 4. Ordering [Tirona] to pay the cost of the suit. SO ORDERED. 13
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.
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.
Ocampo filed his memorandum on 21 March 1996.14 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 file an ejectment suit against Tirona.15
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]. SO ORDERED.16
In its petition before the appellate court, Tirona stated that the RTC erred in the following
grounds:
1. ORDERING THE EJECTMENT OF [TIRONA] IN VIOLATION OF SECTION 2 OF PD [NO.]
2016.17 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 BY EJECTING HER LESSEE,
[TIRONA].18
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 evict Tirona.19
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
bought is part of the property occupied by [Tirona]."20 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 INVOLVED IN THE PRESENT CASE.22
The Ruling of the Court
The petition has merit.
We agree with Ocampos observation that Tirona changes her theory of the case each time she
appeals.23 For this reason, we shall limit our ruling to the propriety of Ocampos unlawful detainer
case against Tirona.
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 are the fact of lease and expiration or violation of its terms.24 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 in the 1 March 1995 letter; 26 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
In Mirasol v. Magsuci, et al.,28 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 due to Ocampo in view of PD 1517; 29
(2) As of August 1995, Tirona has not paid her rent to Ocampo corresponding to April to August
1995;30 and
(3) In a letter dated 7 August 1995, Ocampo demanded from Tirona unpaid rent payments.31
In view of these facts, we hold that Tirona is estopped from denying her possession under a
lease32 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 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 cannot
be the subject of a collateral attack.33 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 and in a proper action. 34
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 interpleader.37 An action for interpleader is proper when the lessee does
not know the person to whom to pay rentals due to conflicting claims on the property. 38
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. However, Tirona eventually refused to pay rent to Ocampo,
thus violating the lease.

Finally, legal interest at the annual rate of 6% is due on the unpaid monthly rentals starting from
7 August 1995 when Ocampo made an extrajudicial demand on Tirona for payment of the
monthly rental.40 On finality of our decision, annual interest at 12%, in lieu of 6% annual interest,
is due on the amounts the MTC awarded until full payment.41

WHEREFORE, we GRANT the instant petition for review. The Decision dated 27 June 1996 of
Branch 110 of the RTC in Civil Case No. 96-0209, which affirmed the Decision dated 29
December 1995 of Branch 47 of the MTC in Civil Case No. 754-95, is REINSTATED. The
Decision dated 29 November 2000 of the appellate court in CA-G.R. SP No. 41686, and its
Resolution dated 16 April 2001 denying the motion for reconsideration, are SET ASIDE. SO
ORDERED.
G.R. No. 127913 September 13, 2001
RIZAL COMMERCIAL BANKING CORPORATION, petitioner,
vs.
METRO CONTAINER CORPORATION, respondent.
KAPUNAN, J.:
Assailed in this petition for review on certiorari are the Decision, promulgated on 18 October
1996 and the Resolution, promulgated on 08 January 1997, of the Court of Appeals in CA-G.R.
SP No. 41294.
The facts of the case are as follows:
On 26 September 1990, Ley Construction Corporation (LEYCON) contracted a loan from Rizal
Commercial Banking Corporation (RCBC) in the amount of Thirty Million Pesos
(P30,000,000.00). The loan was secured by a real estate mortgage over a property, located in
Barrio Ugong, Valenzuela, Metro Manila (now Valenzuela City) and covered by TCT No. V-
17223. LEYCON failed to settle its obligations prompting RCBC to institute an extrajudicial
foreclosure proceedings against it.
After LEYCON's legal attempts to forestall the action of RBCB failed, the foreclosure took place
on 28 December 1992 with RCBC as the highest bidder.
LEYCON promptly filed an action for Nullification of Extrajudicial Foreclosure Sale and Damages
against RCBC. The case, docketed as Civil Case No. 4037-V-93, was raffled to the Regional
Trial Court (RTC) of Valenzuela, Branch 172. Meanwhile, RCBC consolidated its ownership over
the property due to LEYCON's failure to redeem it within the 12-month redemption period and
TCT No. V-332432 was issued if favor of the bank. By virtue thereof, RCBC demanded rental
payments from Metro Container Corporation (METROCAN) which was leasing the property from
LEYCON.
On 26 May 1994, LEYCON filed an action for Unlawful Detainer, docketed as Civil Case No.
6202, against METROCAN before the Metropolitan Trial Court (MeTC) of Valenzuela, Branch
82.
On 27 May 1994, METROCAN filed a complaint for Interpleader, docketed as Civil Case No.
4398-V-94 before the Regional Trial Court of Valenzuela, Metro Manila; Branch 75 against
LEYCON and RCBC to compel them to interplead and litigate their several claims among
themselves and to determine which among them shall rightfully receive the payment of monthly
rentals on the subject property .On 04 July 1995, during the pre-trial conference in Civil Case
No. 4398-V-94, the trial court ordered the dismissal of the case insofar as METROCAN and
LEYCON were concerned in view of an amicable settlement they entered by virtue of which
METROCAN paid back rentals to LEYCON.
On 31 October 1995, judgment was rendered in Civil Case No.6202, which among other things,
ordered METROCAN to pay LEYCON whatever rentals due on the subject premises. The MeTC
decision became final and executory.
On 01 February 1996, METROCAN moved for the dismissal of Civil Case No. 4398-V-94 for
having become moot and academic due to the amicable settlement it entered with LEYCON on
04 July 1995 and the decision in Civil Case No. 6202 on 31 October 1995. LEYCON, likewise,
moved for the dismissal of the case citing the same grounds cited by METROCAN.
On 12 March 1996, the two motions were dismissed for lack of merit. The motions for
reconsideration filed by METROCAN and LEYCON were also denied prompting METROCAN to
seek relief from the Court of Appeals via a petition for certiorari and prohibition with prayer for
the issuance of a temporary restraining order and a writ of preliminary injunction. LEYCON, as
private respondent, also sought for the nullification of the RTC orders.
In its Decision, promulgated on 18 October 1996, the Court of Appeals granted the petition and
set aside the 12 March 1996 and 24 June 1996 orders of the RTC. The appellate court also
ordered the dismissal of Civil Case No. 4398-V-94. RCBC's motion for reconsideration was
denied for lack of merit in the resolution of 08 January 1997.
Hence, the present recourse.
RCBC alleged, that:
(1) THE DECISION OF THE METROPOLITAN TRIAL COURT IN THE EJECTMENT CASE
BETWEEN METROCAN AND LEYCON DOES NOT AND CANNOT RENDER THE
INTERPLEADER ACTION MOOT AND ACADEMIC.
(2) WHILE A PARTY WHO INITIATES AN INTERPLEADER ACTION MAY NOT BE
COMPELLED TO LITIGATE IF HE IS NO LONGER INTERESTED TO PURSUE SUCH CAUSE
OF ACTION, SAID PARTY MAY NOT UNILATERALLY CAUSE THE DISMISSAL OF THE
CASE AFTER THE ANSWER HA VE BEEN FILED. FURTHER, THE DEFENDANTS IN AN
INTERPLEADER SUIT SHOULD BE GIVEN FULL OPPORTUNITY TO LITIGATE THEIR
RESPECTIVE CLAIMS.1
We sustain the Court of Appeals.
Section 1, Rule 63 of the Revised Rules of Court2 provides: Section 1. - Interpleader when
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.
In the case before us, it is undisputed that METROCAN filed the interpleader action (Civil Case
No. 4398-V-94) because it was unsure which between LEYCON and RCBC was entitled to
receive the payment of monthly rentals on the subject property. LEYCON was claiming payment
of the rentals as lessor of the property while RCBC was making a demand by virtue of the
consolidation of the title of the property in its name.
It is also undisputed that LEYCON, as lessor of the subject property filed an action for unlawful
detainer (Civil Case No. 6202) against its lessee METROCAN. The issue in Civil Case No. 6202
is limited to the question of physical or material possession of the premises. 3 The issue of
ownership is immaterial therein4 and the outcome of the case could not in any way affect
conflicting claims of ownership, in this case between RCBC and LEYCON. This was made clear
when the trial court, in denying RCBC's "Motion for Inclusion x x x as an Indispensable Party"
declared that "the final determination of the issue of physical possession over the subject
premises between the plaintiff and the defendant shall not in any way affect RCBC's claims of
ownership over the said premises, since RCBC is neither a co-lessor or co- lessee of the same,
hence he has no legal personality to join the parties herein with respect to the issue of physical
possession vis-a-vis the contract of lease between the parties."5 As aptly pointed by the MeTC,
the issue in Civil Case No. 6202 is limited to the defendant LEYCON's breach of the provisions
of the Contract of Lease Rentals.6

Hence, the reason for the interpleader action ceased when the MeTC rendered judgment in Civil
Case No. 6202 whereby the court directed METROCAN to pay LEYCON "whatever rentals due
on the subject premises x x x." While RCBC, not being a party to Civil Case No. 6202, could not
be bound by the judgment therein, METROCAN is bound by the MeTC decision. When the
decision in Civil Case No. 6202 became final and executory, METROCAN has no other
alternative left but to pay the rentals to LEYCON. Precisely because there was already a judicial
fiat to METROCAN, there was no more reason to continue with Civil Case No. 4398-V-94. Thus,
METROCAN moved for the dismissal of the interpleader action not because it is no longer
interested but because there is no more need for it to pursue such cause of action.

It should be remembered that an action of interpleader is afforded to protect a person not

against double liability but against double vexation in respect of one liability. 7 It requires, as an
indespensable requisite, 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." 8 The decision in Civil
Case No. 6202 resolved the conflicting claims insofar as payment of rentals was concerned.

Petitioner is correct in saying that it is not bound by the decision in Civil Case No. 6202. It is not
a party thereto. However, it could not compel METROCAN to pursue Civil Case No. 4398-V-94.
RCBC has other avenues to prove its claim. Is not bereft of other legal remedies. In fact, he
issue of ownership can very well be threshed out in Civil Case No. 4037-V-93, the case for
Nullification of Extrajudicial foreclosure Sale and Damages filed by LEYCON against RCBC.

WHEREFORE, the petition for review is DENIED and the Decision of the Court of Appeals,
promulgated on 18 October 1996, as well as its Resolution promulgated on 08 January 1997,
are AFFIRMED. SO ORDERED.
G.R. No. 73794 September 19, 1988
ETERNAL GARDENS MEMORIAL PARKS CORPORATION, petitioner,
vs.
FIRST SPECIAL CASES DIVISION INTERMEDIATE APPELLATE COURT and NORTH
PHILIPPINE UNION MISSION OF THE SEVENTH-DAY ADVENTISTS, respondents.
PARAS, J.:
This is a special civil action for certiorari, prohibition and mandamus seeking to set aside the two
resolutions of public respondent First Special Cases Division of the then Intermediate Appellate
Court in AC-G.R. No. 04869 entitled "North Philippine Union Mission of the Seventh Day
Adventists versus Hon. Antonia Corpus-Macandog, Presiding Judge, Branch CXX, Regional
Trial Court, Caloocan City and Eternal Gardens Memorial Park Corporation, (a) dated
September 5, 1985 (Rollo, pp. 21-25) reconsidering its Decision 1 of February 27, 1985 (Rollo,
pp. 38-48) and ordering petitioner to deposit whatever amounts due from it under the Land
Development Agreement, and (b) dated February 13, 1986 (Rollo, p. 27) denying for lack of
merit petitioner's motion for reconsideration.
However, earlier on November 21, 1982, private respondent presented a motion for the placing
on judicial deposit the amounts due and unpaid from petitioner. Acting on such motion, the trial
court 3 denied judicial deposit in its order dated February 13, 1984, the decretal portion of which
reads:
PREMISES CONSIDERED, all or the full amount the plaintiff, Eternal Gardens Memorial Parks
Corporation have already paid the North Philippine Union Mission Corporation of the Seventh
Day Adventist is hereby ordered to deposit the same to this Court within thirty (30) days from
receipt of this order considering that real or true owner of the subject properties in question, due
hearing of this court has yet to be undergone in order to decide as to who is the true owner
which is a prejudicial question. Hence the motion dated November 21, 1983 of the NPUM for the
Eternal Gardens Corporation to deposit the balance due and unpaid is hereby ordered denied
and the opposition thereto dated December 19, 1983 is hereby ordered granted.
The contract between the Eternal Gardens Corporation and the North Philippine Union Mission
dated October 16, 1976 is ordered and declared ineffective as of today, February 13, 1984
because the subject matter of the sale is not existing between the contracting parties until after
the question of ownership is resolved by this court. The court will order the revival of the contract
if the North Philippine Union Mission will win.

Petitioner Eternal Gardens Memorial Parks Corporation and private respondent North Philippine
If not, the declared winner among the intervenors will be the party to enter into a contract of sale
Union Mission Corporation of the Seventh Day Adventists (MISSION for short) are corporations
with the plaintiff as aforementioned. (Rollo, p. 66).
duly organized and existing under and by virtue of the laws of the Republic of the Philippines.

Another order dated October 26, 1984 was issued amending the February 13, 1984 order and
They executed a Land Development Agreement (Rollo, pp. 179-182) on October 6, 1976
setting aside the order for private respondent's deposit of the amounts it had previously received
whereby the former undertook to introduce and construct at its own expense and responsibility
from petitioner, thus:
necessary improvements on the property owned by private respondent into a memorial park to
be subdivided into and sold as memorial plot lots, at a stipulated area and price per lot. Out of
the proceeds from the sale, private respondent is entitled to receive 40% of the net gross WHEREFORE IN VIEW OF ALL THE FOREGOING CONSIDERATIONS the order of February
collection from the project to be remitted monthly by petitioner to private respondent through a 13, 1984, is hereby ordered amended, reconsidered and modified by this same Court as follows:
designated depositary trustee bank. On the same date private respondent executed in
petitioner's favor a Deed of Absolute Sale with Mortgage (Rollo, pp. 183-186) on the lots with
(a) The order directing the NORTH PHILIPPINE UNION MISSION CORPORATION OF
titles involved in the land development project. The deed was supplemented by a Sale of Real
SEVENTH-DAY ADVENTISTS to deposit the amounts it received under the implementation of
Property with Mortgage and Special Conditions dated October 28, 1978 (Rollo, pp. 189-194 The
the LAND DEVELOPMENT AGREEMENT which is not questioned by the plaintiff, Eternal
amounts totalling about P984,110.82 paid by petitioner were to be considered as part of the 40%
Gardens, is hereby ordered set aside for the reason that the titles to ownership, the North
due private respondent under the Land Development Agreement. All went well until Maysilo
Philippine Union Mission Corporation of Seventh Day Adventists on the lots subject matter of the
Estate asserted its claim of ownership over the parcel of land in question. Confronted with such
aforesaid agreement is not established invalid, and the alleged titles of intervenors are not
conflicting claims, petitioner as plaintiff filed a complaint for interpleader (Rollo, pp. 169-179)
proven yet by competent evidence;
against private respondent MISSION and Maysilo Estate, docketed as Special Court Case No.
C-9556 of the then CFI of Rizal, Branch XII, Caloocan, alleging among others, that in view of the
conflicting claims of ownership of the defendants (herein private respondent and Maysilo Estate) (b) The motion to require Eternal Gardens to deposit the balance under the Land Development
over the properties subject matter of the contracts, over which plaintiff corporation (herein Agreement is likewise hereby ordered denied considering the fact the aforesaid plaintiff had not
petitioner) has no claim of ownership except as a purchaser thereof, and to protect the interests denied its obligations under the aforesaid contract; and
of plaintiff corporation which has no interest in the subject matter of the dispute and is willing to
pay whoever is entitled or declared to be the owners of said properties, the defendants should
be required to interplead and litigate their several claims between themselves (Rollo, p. 177). (c) The trial or hearing is hereby ordered as scheduled to proceed on November 29, 1984 and
on December 6, 1984 at 8:30 in the morning per order of this Court dated October 4, 1984 in
order to determine the alleged claims of ownership by the intervenors and all claims and
An order was issued by the presiding judge 2 requiring defendants to interplead on October 22, allegations of each party to the instant" case will be considered and decided carefully by this
1981. MISSION filed a motion to dismiss dated November 10, 1981 for lack of cause of action court on just and meritorious grounds. (Rollo, p. 39)
but also presented an answer dated November 12, 1981. The motion to dismiss was denied in
an Order dated January 12, 1982. The heirs of Maysilo Estate filed their own answer dated
November 11, 1981 and an amended answer dated October 20, 1983 thru the estate's special Said Orders were assailed twice in the Intermediate Appellate Court (Court of Appeals) and in
the Supreme Court as follows:
receiver. The heirs of Pedro Banon filed an "Answer in Intervention with Special and Affirmative
Defenses" dated October 24, 1983, while Lilia B. Sevilla and husband Jose Seelin filed their
"Answer in Cross-claim" dated October 31, 1983 (Rollo, p. 30). The heirs of Sofia O'Farrel y
Patino, et al. filed their Answer in Intervention dated November 10, 1983.
In G.R. No. 73569 it appeared that on January 11, 1985, MISSION filed a motion to dismiss the
Interpleader and the claims of the Maysilo Estate and the Intervenors and to order the Eternal
Gardens to comply with its Land Management with MISSION.
On January 28, 1985, the trial court passed a resolution, the dispositive portion of which reads:
WHEREFORE, premises considered, this Court, after a lengthy, careful judicious study and
perusal of all the stand of each and everyone of all the parties participating in this case, hereby
orders the dismissal of the interpleader, and the interventions filed by the intervenors, heirs of
Pedro Banon, heirs of O'Farrel, heirs of Rivera, heirs of Maria del Concepcion Vidal,
consolidated with the Maysilo Estate as represented by receiver Arturo Salientes the heirs of
Vicente Singson Encarnacion, and Lilia Sevilla Seeling
This Court likewise orders the plaintiff, Eternal Gardens Memorial Parks Corporation to comply
with the Land Development Agreement dated October 6, 1978, it entered into with the North
Philippine Union Mission Corporation of the Seventh-Day Adventists. (Rollo. p. 68)
The heirs of the Maysilo Estate moved for reconsideration of the aforementioned order of
dismissal, the hearing of which was requested to be set on February, 28, 1985. However, the
trial judge, on February 14, 1985 issued the following orders:
Considering Motions for Reconsideration filed, the Court resolves that the same be GRANTED
and instead of a hearing of the said motions on February 20, 1985, at 8:30 a.m., a hearing on
the merits shall be held. (Rollo, p. 68)
In spite of the February 14, 1985 order, MISSION filed on March 6, 1985 a motion for Writ of
Execution of the resolution of January 28, 1985. This was denied on June 25, 1985. The said
court further set the case for pre-trial and trial on July 18, 1985.
It was elevated on certiorari and mandamus to the Intermediate Appellate Court (Court of
Appeals), docketed as AC-G.R. Sp No. 06696 "North Philippine Union Mission of the Seventh
Day Adventists, vs. Hon. Antonia Corpus-Macandog Presiding Judge, Branch CXX, Regional
Trial Court, Caloocan City, Eternal Gardens Memorial Parks Corporation, and Heirs of Vicente
Singson Encarnacion It was raffled to the Second Special Division. MISSION assailed the
February 14, 1985 and June 25, 1985 orders as violative of due process and attended by grave
abuse of discretion amounting to lack of jurisdiction. The petition was however dismissed in the
decision of said Appellate Court, promulgated on December 4, 1985, the dispositive portion of
which reads:
WHEREFORE, for want of merit the petition for certiorari and mandamus under consideration
cannot be given due course and is accordingly, DISMISSED, without any pronouncement, as to
costs. The restraining order embodied in Our Resolution of July 31, 1985, is hereby lifted. (Rollo,
G.R. No. 73569 p. 232)
The private respondent challenged the above decision in the Supreme Court in G.R. No. 73569.
In its resolution dated June 11, 1986, the Supreme Court denied the petition for review on
certiorari for lack of merit, as follows:
G.R. No. 73569 (North Philippine Union Mission Corporation of the Seventh Day Adventists vs.
Intermediate Appellate Court, et al.) considering the allegations, issues, and arguments adduced
in the petition for review on certiorari, the Court Resolved to DENY the same for lack of merit.
(Ibid p. 263)
Said resolution has become final and executory on July 16, 1986. (Ibid p. 269)
Earlier in 1983, the heirs of the late spouses Vicente Singson Encarnacion and Lucila Conde
filed Civil Case No. C-11836 for quieting of title with Branch CXXII, Regional Trial Court,
Caloocan City, where petitioner and private respondent were named as defendants.
Said case is still pending in the lower Court.
In the case at bar, G.R. No. 73794, MISSION, herein private respondent filed a petition for
certiorari with the then Intermediate Appellate Court docketed as AC-G.R. No. 04869 praying
that the aforementioned Orders of February 13, 1984 and October 26, 1984 of the Regional Trial
Court be set aside and that an order be issued to deposit in court or in a depositor trustee bank
of any and all payments, plus interest thereon, due the private respondent MISSION under the
Land Development Agreement, said amounts deposited to be paid to whomever may be found
later to be entitled thereto, with costs. (Rollo, G.R. No. 73794 p. 38)
The Intermediate Appelate Court, acting through its First Special Cases Division 4 dismissed the
petition in its decision on February 27, 1985 (Rollo, pp. 38-48). In its Resolution 5 promulgated
on September 5, 1985, the Court however, reversed its decision, thus:
WHEREFORE, the Court reconsiders its decision of February 27, 1986, and sets aside the
questioned portions of the respondent Court's orders of February 13 and October 26, 1984. The
private respondent is hereby ordered to deposit whatever amounts are due from it under the
Land Development Agreement of October 6, 1976 with a reputable bank to be designated by the
respondent court to be the depository trustee of the said amounts to be paid to whoever shall be
found entitled thereto. No costs. (Rollo, p. 25)
Eternal Gardens moved for a reconsideration of the above decision but it was denied for lack of
merit in a resolution promulgated on February 13, 1986, which states:
The private respondent Eternal Gardens Memorial Park Corporation's Motion for
Reconsideration of the Court's resolution promulgated September 5, 1985 requiring it "to deposit
whatever amounts are due from it under the Land Development Agreement of October 6, 1976
...," which was strongly opposed by the petitioner North Philippine Union Mission of the Seventh
Day Adventists, is hereby denied for lack of merit, reiterating as it does, the very same issues
and arguments that were passed upon and considered by the Court in the very same resolution
sought to be reconsidered. (Rollo, p. 27)
Hence, this petition. On July 8,1987, the Third Division of this Court issued the following
resolution:
... the court RESOLVED to give due course to this petition and require the parties to file
memoranda.
In the meantime, to avoid possible wastage of funds, the Court RESOLVED to require the
private respondent 6 to DEPOSIT its accruing installments within ten (10) days from notice with a
reputable commercial bank in a savings deposit account, in the name of the Supreme Court of
the Philippines, with the details to be reported or manifested to this Court within ten (10) days
from the time the deposit/deposits are made, such deposits not to be withdrawn without authority
from this Court. (Rollo, p. 162)
Petitioner's Memorandum With Prayer for the Deferment of Time to Make Deposit (Rollo, p. 218-
236) was filed on July 14, 1987. Its prayer was granted for a period of ten (10) days for the
purpose, in the resolution of July 29, 1987 (Rollo, p. 238). Private respondent filed its Opposition
to Deferment of Time to Make Deposit (Rollo, pp. 239-253) on July 24, 1987 to which petitioner
filed its Reply to Opposition on August 4, 1987 (Rollo, pp. 256-267). Both were noted by the
Court in its resolution dated September 7, 1987 (Rollo, p. 270). On August 25, 1987, private
respondent filed its Rejoinder to Petitioner's Reply to Opposition (Rollo, pp. 271-292).
Petitioner filed its Supplemental Memorandum with Reply to Opposition (To Deferment of time to
Make Deposit) on August 31, 1987 (Rollo, pp. 294-313) and a Sur-rejoinder on September 1,
1987 (Rollo, pp. 304-315).
The main issues in this case are:
I. Whether or not respondent Court of Appeals abused its discretion amounting to
lack of jurisdiction in reconsidering its resolution of February 27, 1985 and in
requiring instead in the resolution of September 5, 1985, that petitioner Eternal
Gardens deposit whatever amounts are due from it under the Land Development
Agreement with a reputable bank to be designated by the respondent court.
II. Whether or not the dismissal of AC-G.R. SP No. 06696 (North Philippine Union
Mission of the Seventh Day Adventists vs. Hon. Macandog, et al.) by the Second
Special Cases Division of the IAC which was affirmed by the Supreme Court in
G.R. No. 73569 constitutes a basis for the dismissal of the case at bar on the
ground of res adjudicata.
I. There is no question that courts have inherent power to amend their judgments, to make them
conformable to the law applicable provided that said judgments have not yet attained finality
(Villanueva v. Court of First Instance of Oriental Mindoro, Pinamalayan Branch II, 119 SCRA 288
[1982]). In fact, motions for reconsideration are allowed to convince the courts that their rulings
are erroneous and improper Siy v. Court of Appeals, 138 SCRA 543-544 [1985]; Guerra
Enterprises Co., Inc. v. CFI of Lanao del Sur (32 SCRA 317 [1970]) and in so doing, said courts
are given sufficient opportunity to correct their errors.
In the case at bar, a careful analysis of the records will show that petitioner admitted among
others in its complaint in Interpleader that it is still obligated to pay certain amounts to private
respondent; that it claims no interest in such amounts due and is willing to pay whoever is
declared entitled to said amounts. Such admissions in the complaint were reaffirmed in open
court before the Court of Appeals as stated in the latter court's resolution dated September 5,
1985 in A.C. G.R. No. 04869 which states:
The private respondent (MEMORIAL) then reaffirms before the Court its original position that it is
a disinterested party with respect to the property now the subject of the interpleader case ...
In the light of the willingness, expressly made before the court, affirming the complaint filed
below, that the private respondent (MEMORIAL) will pay whatever is due on the Land
Development Agreement to the rightful owner/owners, there is no reason why the amount due
on subject agreement has not been placed in the custody of the Court. (Rollo, p. 227).
Under the circumstances, there appears to be no plausible reason for petitioner's objections to
the deposit of the amounts in litigation after having asked for the assistance of the lower court by
filing a complaint for interpleader where the deposit of aforesaid amounts is not only required by
the nature of the action but is a contractual obligation of the petitioner under the Land
Development Program (Rollo, p. 252).
As correctly observed by the Court of Appeals, the essence of an interpleader, aside from the
disavowal of interest in the property in litigation on the part of the petitioner, is the deposit of the
property or funds in controversy with the court. it is a rule founded on justice and equity: "that the
plaintiff may not continue to benefit from the property or funds in litigation during the pendency of
the suit at the expense of whoever will ultimately be decided as entitled thereto." (Rollo, p. 24).
The case at bar was elevated to the Court of Appeals on certiorari with prohibitory and
mandatory injunction. Said appellate court found that more than twenty million pesos are
involved; so that on interest alone for savings or time deposit would be considerable, now
accruing in favor of the Eternal Gardens. Finding that such is violative of the very essence of the
complaint for interpleader as it clearly runs against the interest of justice in this case, the Court
of Appeals cannot be faulted for finding that the lower court committed a grave abuse of
discretion which requires correction by the requirement that a deposit of said amounts should be
made to a bank approved by the Court. (Rollo, p.-25)
Petitioner would now compound the issue by its obvious turn-about, presently claiming in its
memorandum that there is a novation of contract so that the amounts due under the Land
Development Agreement were allegedly extinguished, and the requirement to make a deposit of
said amounts in a depositary bank should be held in abeyance until after the conflicting claims of
ownership now on trial before Branch CXXII RTC-Caloocan City, has finally been resolved.
All these notwithstanding, the need for the deposit in question has been established, riot only in
the lower courts and in the Court of Appeals but also in the Supreme Court where such deposit
was required in "the resolution of July 8, 1987 to avoid wastage of funds.
II.The claim that this case should be barred by res judicata is even more untenable.
The requisite of res judicata are: (1) the presence of a final former judgment; (2) the former
judgment was rendered by a court having jurisdiction over the subject matter and the parties; (3)
the former judgment is a judgment on the merits; and (4) there is between the first and the
second action identity of parties, of subject matter, and of causes of action Arguson v. Miclat 135
SCRA 678 [1985]; Carandang v. Venturanza, 133 SCRA 344 [1984]).
There is no argument against the rule that parties should not be permitted to litigate the same
issue more than once and when a right or fact has been judicially tried and determined by a
court of competent jurisdiction, so long as it remains unreversed, it should be conclusive upon
the parties and those in privity with them in law or estate (Sy Kao v. Court of Appeals, 132 SCRA
302 [1984]).
But a careful review of the records shows that there is no judgment on the merits in G.R. No.
73569 and in the case at bar, G.R. No. 73794; both of which deal on mere incidents arising
therefrom.
In G.R. No 73569, the issue raised is the propriety of the grant of the motion for reconsideration
without a hearing thereon and the denial of the motion for execution, while in the case at bar,
what is assailed is the propriety of the order of respondent appellant court that petitioner Eternal
Gardens should deposit whatever amounts are due from it under the Land Development
Agreement with a reputable bank to be designated by the Court. In fact, there is a pending trial
on the merits in the trial court which the petitioner insists is a prejudicial question which should
first be resolved. Moreover, while there may be Identity of parties and of subject matter, the Land
Development Contract, there is no Identity of issues as clearly shown by the petitions filed.
PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit; (b) this case
(together with all the claims of the intervenors on the merits) is REMANDED to the lower court
for further proceedings; and (c) the resolution of the Third Division of this Court of July 8, 1987
requiring the deposit by the petitioner (see footnote No. 6) of the amounts contested in a
depositary bank STANDS (the Motion for Reconsideration thereof being hereby DENIED for
reasons already discussed) until after the decision on the merits shall have become final and
executory. SO ORDERED.
G.R. No. 134241 August 11, 2003
DAVID REYES (Substituted by Victoria R. Fabella), petitioner,
vs.
JOSE LIM, CHUY CHENG KENG and HARRISON LUMBER, INC., respondents.
CARPIO, J.:
The Case
This is a petition for review on certiorari of the Decision1 dated 12 May 1998 of the Court of
Appeals in CA-G.R. SP No. 46224. The Court of Appeals dismissed the petition for certiorari
assailing the Orders dated 6 March 1997, 3 July 1997 and 3 October 1997 of the Regional Trial
Court of Paranaque, Branch 2602 ("trial court") in Civil Case No. 95-032.
The Facts
On 23 March 1995, petitioner David Reyes ("Reyes") filed before the trial court a complaint for
annulment of contract and damages against respondents Jose Lim ("Lim"), Chuy Cheng Keng
("Keng") and Harrison Lumber, Inc. ("Harrison Lumber").
The complaint3 alleged that on 7 November 1994, Reyes as seller and Lim as buyer entered into
a contract to sell ("Contract to Sell") a parcel of land ("Property") located along F.B. Harrison
Street, Pasay City. Harrison Lumber occupied the Property as lessee with a monthly rental of
P35,000. The Contract to Sell provided for the following terms and conditions:
1. The total consideration for the purchase of the aforedescribed parcel of land together with the
perimeter walls found therein is TWENTY EIGHT MILLION (P28,000,000.00) PESOS payable
as follows:
(a) TEN MILLION (P10,000,000.00) PESOS upon signing of this Contract to Sell;
(b) The balance of EIGHTEEN MILLION (P18,000,000.00) PESOS shall be paid on or before
March 8, 1995 at 9:30 A.M. at a bank to be designated by the Buyer but upon the complete
vacation of all the tenants or occupants of the property and execution of the Deed of Absolute
Sale. However, if the tenants or occupants have vacated the premises earlier than March 8,
1995, the VENDOR shall give the VENDEE at least one week advance notice for the payment of
the balance and execution of the Deed of Absolute Sale.
2. That in the event, the tenants or occupants of the premises subject of this sale shall not
vacate the premises on March 8, 1995 as stated above, the VENDEE shall withhold the payment
of the balance of P18,000,000.00 and the VENDOR agrees to pay a penalty of Four percent
(4%) per month to the herein VENDEE based on the amount of the downpayment of TEN
MILLION (P10,000,000.00) PESOS until the complete vacation of the premises by the tenants
therein.4
The complaint claimed that Reyes had informed Harrison Lumber to vacate the Property before
the end of January 1995. Reyes also informed Keng5 and Harrison Lumber that if they failed to
vacate by 8 March 1995, he would hold them liable for the penalty of P400,000 a month as
provided in the Contract to Sell. The complaint further alleged that Lim connived with Harrison
Lumber not to vacate the Property until the P400,000 monthly penalty would have accumulated
and equaled the unpaid purchase price of P18,000,000.
On 3 May 1995, Keng and Harrison Lumber filed their Answer6 denying they connived with Lim
to defraud Reyes. Keng and Harrison Lumber alleged that Reyes approved their request for an
extension of time to vacate the Property due to their difficulty in finding a new location for their
business. Harrison Lumber claimed that as of March 1995, it had already started transferring
some of its merchandise to its new business location in Malabon.7
On 31 May 1995, Lim filed his Answer8 stating that he was ready and willing to pay the balance
of the purchase price on or before 8 March 1995. Lim requested a meeting with Reyes through
the latters daughter on the signing of the Deed of Absolute Sale and the payment of the balance
but Reyes kept postponing their meeting. On 9 March 1995, Reyes offered to return the P10
million down payment to Lim because Reyes was having problems in removing the lessee from
the Property. Lim rejected Reyes offer and proceeded to verify the status of Reyes title to the
Property. Lim learned that Reyes had already sold the Property to Line One Foods Corporation
("Line One") on 1 March 1995 for P16,782,840. After the registration of the Deed of Absolute
Sale, the Register of Deeds issued to Line One TCT No. 134767 covering the Property. Lim
denied conniving with Keng and Harrison Lumber to defraud Reyes.
On 2 November 1995, Reyes filed a Motion for Leave to File Amended Complaint due to
supervening facts. These included the filing by Lim of a complaint for estafa against Reyes as
well as an action for specific performance and nullification of sale and title plus damages before
another trial court.9 The trial court granted the motion in an Order dated 23 November 1995.
In his Amended Answer dated 18 January 1996,10 Lim prayed for the cancellation of the Contract
to Sell and for the issuance of a writ of preliminary attachment against Reyes. The trial court
denied the prayer for a writ of preliminary attachment in an Order dated 7 October 1996.
On 6 March 1997, Lim requested in open court that Reyes be ordered to deposit the P10 million
down payment with the cashier of the Regional Trial Court of Paraaque. The trial court granted
this motion.
On 25 March 1997, Reyes filed a Motion to Set Aside the Order dated 6 March 1997 on the
ground the Order practically granted the reliefs Lim prayed for in his Amended Answer. 11 The
trial court denied Reyes motion in an Order12 dated 3 July 1997. Citing Article 1385 of the Civil
Code, the trial court ruled that an action for rescission could prosper only if the party demanding
rescission can return whatever he may be obliged to restore should the court grant the
rescission.
The trial court denied Reyes Motion for Reconsideration in its Order13 dated 3 October 1997. In
the same order, the trial court directed Reyes to deposit the P10 million down payment with the
Clerk of Court on or before 30 October 1997.
On 8 December 1997, Reyes14 filed a Petition for Certiorari15 with the Court of Appeals. Reyes
prayed that the Orders of the trial court dated 6 March 1997, 3 July 1997 and 3 October 1997 be
set aside for having been issued with grave abuse of discretion amounting to lack of jurisdiction.
On 12 May 1998, the Court of Appeals dismissed the petition for lack of merit.
Hence, this petition for review.
The Ruling of the Court of Appeals
The Court of Appeals ruled the trial court could validly issue the assailed orders in the exercise
of its equity jurisdiction. The court may grant equitable reliefs to breathe life and force to
substantive law such as Article 138516of the Civil Code since the provisional remedies under the
Rules of Court do not apply to this case.
The Court of Appeals held the assailed orders merely directed Reyes to deposit the P10 million
to the custody of the trial court to protect the interest of Lim who paid the amount to Reyes as
down payment. This did not mean the money would be returned automatically to Lim.
The Issues
Reyes raises the following issues:
1. Whether the Court of Appeals erred in holding the trial court could issue the questioned
Orders dated March 6, 1997, July 3, 1997 and October 3, 1997, requiring petitioner David Reyes
to deposit the amount of Ten Million Pesos (P10,000,000.00) during the pendency of the action,
when deposit is not among the provisional remedies enumerated in Rule 57 to 61 of the 1997
Rules on Civil Procedure.
2. Whether the Court of Appeals erred in finding the trial court could issue the questioned Orders
on grounds of equity when there is an applicable law on the matter, that is, Rules 57 to 61 of the
1997 Rules on Civil Procedure.17
The Courts Ruling
Reyes contentions are without merit.
Reyes points out that deposit is not among the provisional remedies enumerated in the 1997
Rules of Civil Procedure. Reyes stresses the enumeration in the Rules is exclusive. Not one of
the provisional remedies in Rules 57 to 6118 applies to this case. Reyes argues that a court
cannot apply equity and require deposit if the law already prescribes the specific provisional
remedies which do not include deposit. Reyes invokes the principle that equity is "applied only in
the absence of, and never against, statutory law or x x x judicial rules of procedure." 19 Reyes
adds the fact that the provisional remedies do not include deposit is a matter of dura lex sed
lex.20
The instant case, however, is precisely one where there is a hiatus in the law and in the Rules of
Court. If left alone, the hiatus will result in unjust enrichment to Reyes at the expense of Lim. The
hiatus may also imperil restitution, which is a precondition to the rescission of the Contract to
Sell that Reyes himself seeks. This is not a case of equity overruling a positive provision of law
or judicial rule for there is none that governs this particular case. This is a case of silence or
insufficiency of the law and the Rules of Court. In this case, Article 9 of the Civil Code expressly
mandates the courts to make a ruling despite the "silence, obscurity or insufficiency of the
laws."21 This calls for the application of equity,22 which "fills the open spaces in the law."23
Thus, the trial court in the exercise of its equity jurisdiction may validly order the deposit of the
P10 million down payment in court. The purpose of the exercise of equity jurisdiction in this case
is to prevent unjust enrichment and to ensure restitution. Equity jurisdiction aims to do complete
justice in cases where a court of law is unable to adapt its judgments to the special
circumstances of a case because of the inflexibility of its statutory or legal jurisdiction. 24Equity is
the principle by which substantial justice may be attained in cases where the prescribed or
customary forms of ordinary law are inadequate.25
Reyes is seeking rescission of the Contract to Sell. In his amended answer, Lim is also seeking
cancellation of the Contract to Sell. The trial court then ordered Reyes to deposit in court the
P10 million down payment that Lim made under the Contract to Sell. Reyes admits receipt of the
P10 million down payment but opposes the order to deposit the amount in court. Reyes
contends that prior to a judgment annulling the Contract to Sell, he has the "right to use, possess
and enjoy"26 the P10 million as its "owner"27 unless the court orders its preliminary attachment.28
To subscribe to Reyes contention will unjustly enrich Reyes at the expense of Lim. Reyes sold
to Line One the Property even before the balance of P18 million under the Contract to Sell with
Lim became due on 8 March 1995. On 1 March 1995, Reyes signed a Deed of Absolute
Sale29 in favor of Line One. On 3 March 1995, the Register of Deeds issued TCT No.
13476730 in the name of Line One.31 Reyes cannot claim ownership of the P10 million down
payment because Reyes had already sold to another buyer the Property for which Lim made the
down payment. In fact, in his Comment32 dated 20 March 1996, Reyes reiterated his offer to
return to Lim the P10 million down payment.
On balance, it is unreasonable and unjust for Reyes to object to the deposit of the P10 million
down payment. The application of equity always involves a balancing of the equities in a
particular case, a matter addressed to the sound discretion of the court. Here, we find the
equities weigh heavily in favor of Lim, who paid the P10 million down payment in good faith only
to discover later that Reyes had subsequently sold the Property to another buyer.
In Eternal Gardens Memorial Parks Corp. v. IAC,33 this Court held the plaintiff could not
continue to benefit from the property or funds in litigation during the pendency of the suit at the
expense of whomever the court might ultimately adjudge as the lawful owner. The Court
declared:
In the case at bar, a careful analysis of the records will show that petitioner admitted among
others in its complaint in Interpleader that it is still obligated to pay certain amounts to private
respondent; that it claims no interest in such amounts due and is willing to pay whoever is
declared entitled to said amounts. x x x
Under the circumstances, there appears to be no plausible reason for petitioners objections to
the deposit of the amounts in litigation after having asked for the assistance of the lower court by
filing a complaint for interpleader where the deposit of aforesaid amounts is not only required by
the nature of the action but is a contractual obligation of the petitioner under the Land
Development Program (Rollo, p. 252).
There is also no plausible or justifiable reason for Reyes to object to the deposit of the P10
million down payment in court. The Contract to Sell can no longer be enforced because Reyes
himself subsequently sold the Property to Line One. Both Reyes and Lim are now seeking
rescission of the Contract to Sell. Under Article 1385 of the Civil Code, rescission creates the
obligation to return the things that are the object of the contract. Rescission is possible only
when the person demanding rescission can return whatever he may be obliged to restore. A
court of equity will not rescind a contract unless there is restitution, that is, the parties are
restored to the status quo ante.34
Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot refuse to deposit the
P10 million down payment in court.35 Such deposit will ensure restitution of the P10 million to its
rightful owner. Lim, on the other hand, has nothing to refund, as he has not received anything
under the Contract to Sell.36
In Government of the Philippine Islands v. Wagner and Cleland Wagner,37 the Court ruled
the refund of amounts received under a contract is a precondition to the rescission of the
contract. The Court declared: The Government, having asked for rescission, must restore to the
defendants whatever it has received under the contract. It will only be just if, as a condition to
rescission, the Government be required to refund to the defendants an amount equal to the
purchase price, plus the sums expended by them in improving the land. (Civil Code, art. 1295.)

The principle that no person may unjustly enrich himself at the expense of another is embodied
in Article 2238 of the Civil Code. This principle applies not only to substantive rights but also to
procedural remedies. One condition for invoking this principle is that the aggrieved party has no
other action based on contract, quasi-contract, crime, quasi-delict or any other provision of
law.39 Courts can extend this condition to the hiatus in the Rules of Court where the aggrieved
party, during the pendency of the case, has no other recourse based on the provisional
remedies of the Rules of Court.

Thus, a court may not permit a seller to retain, pendente lite, money paid by a buyer if the seller
himself seeks rescission of the sale because he has subsequently sold the same property to
another buyer.40 By seeking rescission, a seller necessarily offers to return what he has received
from the buyer. Such a seller may not take back his offer if the court deems it equitable, to
prevent unjust enrichment and ensure restitution, to put the money in judicial deposit.

There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or
when a person retains money or property of another against the fundamental principles of
justice, equity and good conscience.41 In this case, it was just, equitable and proper for the trial
court to order the deposit of the P10 million down payment to prevent unjust enrichment by
Reyes at the expense of Lim.42

WHEREFORE, we AFFIRM the Decision of the Court of Appeals. SO ORDERED.

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.
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".
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 prescription. 1 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 Procedure, 2 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 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 liability. 3 The procedure under the Rules of
Court 4 is the same as that under the Code of Civil Procedure, 5 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.
A stakeholder 6 should use reasonable diligence to hale the contending claimants to court. 7 He
need not await actual institution of independent suits against him before filing a bill of
interpleader. 8 He should file an action of interpleader within a reasonable time after a dispute
has arisen without waiting to be sued by either of the contending claimants. 9 Otherwise, he may
be barred by laches 10 or undue delay. 11 But where he acts with reasonable diligence in view of
the environmental circumstances, the remedy is not barred. 12
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 favor of one of the contending claimants, 13 especially where
he had notice of the conflicting claims prior to the rendition of the judgment and neglected the
opportunity to implead the adverse claimants in the suit where judgment was entered. This must
be so, because once judgment is obtained against him by one claimant he becomes liable to the
latter. 14 In once case, 15 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 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 A.L.R., note 5, p. 275. 16
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 A/450. 17
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 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 in the suit. 18
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 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 benefits of the judgment. 19
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.
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.

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 other aspects the
judgment is final. 20

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.'

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 effect a collateral attack upon the judgment. 21

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
G.R. No. 70145 November 13, 1986
MARCELO A. MESINA, petitioner,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT, HON. ARSENIO M. GONONG, in
his capacity as Judge of Regional Trial Court Manila (Branch VIII), JOSE GO, and
ALBERT UY, respondents.
PARAS, J.:
This is an appeal by certiorari from the decision of the then Intermediate Appellate Court (IAC for
short), now the Court of Appeals (CA) in AC-G.R. S.P. 04710, dated Jan. 22, 1985, which
dismissed the petition for certiorari and prohibition filed by Marcelo A. Mesina against the trial
court in Civil Case No. 84-22515. Said case (an Interpleader) was filed by Associated Bank
against Jose Go and Marcelo A. Mesina regarding their conflicting claims over Associated Bank
Cashier's Check No. 011302 for P800,000.00, dated December 29, 1983.
Briefly, the facts and statement of the case are as follows:
Respondent Jose Go, on December 29, 1983, purchased from Associated Bank Cashier's
Check No. 011302 for P800,000.00. Unfortunately, Jose Go left said check on the top of the
desk of the bank manager when he left the bank. The bank manager entrusted the check for
safekeeping to a bank official, a certain Albert Uy, who had then a visitor in the person of
Alexander Lim. Uy had to answer a phone call on a nearby telephone after which he proceeded
to the men's room. When he returned to his desk, his visitor Lim was already gone. When Jose
Go inquired for his cashier's check from Albert Uy, the check was not in his folder and nowhere
to be found. The latter advised Jose Go to go to the bank to accomplish a "STOP PAYMENT"
order, which suggestion Jose Go immediately followed. He also executed an affidavit of loss.
Albert Uy went to the police to report the loss of the check, pointing to the person of Alexander
Lim as the one who could shed light on it.
The records of the police show that Associated Bank received the lost check for clearing on
December 31, 1983, coming from Prudential Bank, Escolta Branch. The check was immediately
dishonored by Associated Bank by sending it back to Prudential Bank, with the words "Payment
Stopped" stamped on it. However, the same was again returned to Associated Bank on January
4, 1984 and for the second time it was dishonored. Several days later, respondent Associated
Bank received a letter, dated January 9, 1984, from a certain Atty. Lorenzo Navarro demanding
payment on the cashier's check in question, which was being held by his client. He however
refused to reveal the name of his client and threatened to sue, if payment is not made.
Respondent bank, in its letter, dated January 20, 1984, replied saying the check belonged to
Jose Go who lost it in the bank and is laying claim to it.
On February 1, 1984, police sent a letter to the Manager of the Prudential Bank, Escolta Branch,
requesting assistance in Identifying the person who tried to encash the check but said bank
refused saying that it had to protect its client's interest and the Identity could only be revealed
with the client's conformity. Unsure of what to do on the matter, respondent Associated Bank on
February 2, 1984 filed an action for Interpleader naming as respondent, Jose Go and one John
Doe, Atty. Navarro's then unnamed client. On even date, respondent bank received summons
and copy of the complaint for damages of a certain Marcelo A. Mesina from the Regional Trial
Court (RTC) of Caloocan City filed on January 23, 1984 bearing the number C-11139.
Respondent bank moved to amend its complaint, having been notified for the first time of the
name of Atty. Navarro's client and substituted Marcelo A. Mesina for John Doe. Simultaneously,
respondent bank, thru representative Albert Uy, informed Cpl. Gimao of the Western Police
District that the lost check of Jose Go is in the possession of Marcelo Mesina, herein petitioner.
When Cpl. Gimao went to Marcelo Mesina to ask how he came to possess the check, he said it
was paid to him by Alexander Lim in a "certain transaction" but refused to elucidate further. An
information for theft (Annex J) was instituted against Alexander Lim and the corresponding
warrant for his arrest was issued (Annex 6-A) which up to the date of the filing of this instant
petition remains unserved because of Alexander Lim's successful evation thereof.
Meanwhile, Jose Go filed his answer on February 24, 1984 in the Interpleader Case and moved
to participate as intervenor in the complain for damages. Albert Uy filed a motion of intervention
and answer in the complaint for Interpleader. On the Scheduled date of pretrial conference inthe
interpleader case, it was disclosed that the "John Doe" impleaded as one of the defendants is
actually petitioner Marcelo A. Mesina. Petitioner instead of filing his answer to the complaint in
the interpleader filed on May 17, 1984 an Omnibus Motion to Dismiss Ex Abudante
Cautela alleging lack of jurisdiction in view of the absence of an order to litigate, failure to state a
cause of action and lack of personality to sue. Respondent bank in the other civil case (CC-
11139) for damages moved to dismiss suit in view of the existence already of the Interpleader
case.
The trial court in the interpleader case issued an order dated July 13, 1984, denying the motion
to dismiss of petitioner Mesina and ruling that respondent bank's complaint sufficiently pleaded a
cause of action for itnerpleader. Petitioner filed his motion for reconsideration which was denied
by the trial court on September 26, 1984. Upon motion for respondent Jose Go dated October
31, 1984, respondent judge issued an order on November 6, 1984, declaring petitioner in default
since his period to answer has already expirecd and set the ex-parte presentation of respondent
bank's evidence on November 7, 1984.
Petitioner Mesina filed a petition for certioari with preliminary injunction with IAC to set aside 1)
order of respondent court denying his omnibus Motion to Dismiss 2) order of 3) the order of
default against him.
On January 22, 1985, IAC rendered its decision dimissing the petition for certiorari. Petitioner
Mesina filed his Motion for Reconsideration which was also denied by the same court in its
resolution dated February 18, 1985.
Meanwhile, on same date (February 18, 1985), the trial court in Civil Case #84-22515
(Interpleader) rendered a decisio, the dispositive portion reading as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered ordering plaintiff Associate
Bank to replace Cashier's Check No. 011302 in favor of Jose Go or its cas equivalent with legal
rate of itnerest from date of complaint, and with costs of suit against the latter. SO ORDERED.
On March 29, 1985, the trial court in Civil Case No. C-11139, for damages, issued an order, the
pertinent portion of which states: The records of this case show that on August 20, 1984
proceedings in this case was (were) ordered suspended because the main issue in Civil Case
No. 84-22515 and in this instant case are the same which is: who between Marcelo Mesina and
Jose Go is entitled to payment of Associated Bank's Cashier's Check No. CC-011302? Said
issue having been resolved already in Civil casde No. 84-22515, really this instant case has
become moot and academic.
WHEREFORE, in view of the foregoing, the motion sholud be as it is hereby granted and this
case is ordered dismissed. In view of the foregoing ruling no more action should be taken on the
"Motion For Reconsideration (of the order admitting the Intervention)" dated June 21, 1984 as
well as the Motion For Reconsideration dated September 10, 1984. SO ORDERED.
Petitioner now comes to Us, alleging that: 1. IAC erred in ruling that a cashier's check can be
countermanded even in the hands of a holder in due course. 2. IAC erred in countenancing the
filing and maintenance of an interpleader suit by a party who had earlier been sued on the same
claim. 3. IAC erred in upholding the trial court's order declaring petitioner as in default when
there was no proper order for him to plead in the interpleader complaint. 4. IAC went beyond the
scope of its certiorari jurisdiction by making findings of facts in advance of trial.
Petitioner now interposes the following prayer: 1. Reverse the decision of the IAC, dated
January 22, 1985 and set aside the February 18, 1985 resolution denying the Motion for
Reconsideration. 2. Annul the orders of respondent Judge of RTC Manila giving due course to
the interpleader suit and declaring petitioner in default.
Petitioner's allegations hold no water. Theories and examples advanced by petitioner on causes
and effects of a cashier's check such as 1) it cannot be countermanded in the hands of a holder
in due course and 2) a cashier's check is a bill of exchange drawn by the bank against itself-are
general principles which cannot be aptly applied to the case at bar, without considering other
things. Petitioner failed to substantiate his claim that he is a holder in due course and for
consideration or value as shown by the established facts of the case. Admittedly, petitioner
became the holder of the cashier's check as endorsed by Alexander Lim who stole the check.
He refused to say how and why it was passed to him. He had therefore notice of the defect of his
title over the check from the start. The holder of a cashier's check who is not a holder in due
course cannot enforce such check against the issuing bank which dishonors the same. If a
payee of a cashier's check obtained it from the issuing bank by fraud, or if there is some other
reason why the payee is not entitled to collect the check, the respondent bank would, of course,
have the right to refuse payment of the check when presented by the payee, since respondent
bank was aware of the facts surrounding the loss of the check in question. Moreover, there is no
similarity in the cases cited by petitioner since respondent bank did not issue the cashier's check
in payment of its obligation. Jose Go bought it from respondent bank for purposes of transferring
his funds from respondent bank to another bank near his establishment realizing that carrying
money in this form is safer than if it were in cash. The check was Jose Go's property when it was
misplaced or stolen, hence he stopped its payment. At the outset, respondent bank knew it was
Jose Go's check and no one else since Go had not paid or indorsed it to anyone. The bank was
therefore liable to nobody on the check but Jose Go. The bank had no intention to issue it to
petitioner but only to buyer Jose Go. When payment on it was therefore stopped, respondent
bank was not the one who did it but Jose Go, the owner of the check. Respondent bank could
not be drawer and drawee for clearly, Jose Go owns the money it represents and he is therefore
the drawer and the drawee in the same manner as if he has a current account and he issued a
check against it; and from the moment said cashier's check was lost and/or stolen no one
outside of Jose Go can be termed a holder in due course because Jose Go had not indorsed it
in due course. The check in question suffers from the infirmity of not having been properly
negotiated and for value by respondent Jose Go who as already been said is the real owner of
said instrument.
entitled Associated Bank vs. Jose Go and John Doe, but later on changed to Marcelo A. Mesina
for John Doe when his name became known to respondent bank.
In his third assignment of error, petitioner assails the then respondent IAC in upholding the trial
court's order declaring petitioner in default when there was no proper order for him to plead in
the interpleader case. Again, such contention is untenable. The trial court issued an order,
compelling petitioner and respondent Jose Go to file their Answers setting forth their respective
claims. Subsequently, a Pre-Trial Conference was set with notice to parties to submit position
papers. Petitioner argues in his memorandum that this order requiring petitioner to file his
answer was issued without jurisdiction alleging that since he is presumably a holder in due
course and for value, how can he be compelled to litigate against Jose Go who is not even a
party to the check? Such argument is trite and ridiculous if we have to consider that neither his
name or Jose Go's name appears on the check. Following such line of argument, petitioner is
not a party to the check either and therefore has no valid claim to the Check. Furthermore, the
Order of the trial court requiring the parties to file their answers is to all intents and purposes an
order to interplead, substantially and essentially and therefore in compliance with the provisions
of Rule 63 of the Rules of Court. What else is the purpose of a law suit but to litigate?
The records of the case show that respondent bank had to resort to details in support of its
action for Interpleader. Before it resorted to Interpleader, respondent bank took an precautionary
and necessary measures to bring out the truth. On the other hand, petitioner concealed the
circumstances known to him and now that private respondent bank brought these circumstances
out in court (which eventually rendered its decision in the light of these facts), petitioner charges
it with "gratuitous excursions into these non-issues." Respondent IAC cannot rule on whether
respondent RTC committed an abuse of discretion or not, without being apprised of the facts
and reasons why respondent Associated Bank instituted the Interpleader case. Both parties
were given an opportunity to present their sides. Petitioner chose to withhold substantial facts.
Respondents were not forbidden to present their side-this is the purpose of the Comment of
respondent to the petition. IAC decided the question by considering both the facts submitted by
petitioner and those given by respondents. IAC did not act therefore beyond the scope of the
remedy sought in the petition.
WHEREFORE, finding that the instant petition is merely dilatory, the same is hereby denied and
the assailed orders of the respondent court are hereby AFFIRMED in toto. SO ORDERED.

In his second assignment of error, petitioner stubbornly insists that there is no showing of
conflicting claims and interpleader is out of the question. There is enough evidence to establish
the contrary. Considering the aforementioned facts and circumstances, respondent bank merely
took the necessary precaution not to make a mistake as to whom to pay and therefore
interpleader was its proper remedy. It has been shown that the interpleader suit was filed by
respondent bank because petitioner and Jose Go were both laying their claims on the check,
petitioner asking payment thereon and Jose Go as the purchaser or owner. The allegation of
petitioner that respondent bank had effectively relieved itself of its primary liability under the
check by simply filing a complaint for interpleader is belied by the willingness of respondent bank
to issue a certificate of time deposit in the amount of P800,000 representing the cashier's check
in question in the name of the Clerk of Court of Manila to be awarded to whoever wig be found
by the court as validly entitled to it. Said validity will depend on the strength of the parties'
respective rights and titles thereto. Bank filed the interpleader suit not because petitioner sued it
but because petitioner is laying claim to the same check that Go is claiming. On the very day
that the bank instituted the case in interpleader, it was not aware of any suit for damages filed by
petitioner against it as supported by the fact that the interpleader case was first