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FULL TEXT

DIVISION
[ GR No. 205998, Apr 24, 2017 ]
WILLIAM ANGHIAN SIY v. ALVIN TOMLIN +
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the October 9, 2012 Decision[2] and February 19,2013
Resolution[3] of the Court of Appeals (CA) which respectively granted the respondent's Petition
for Certiorari and denied petitioner's Motion for Reconsideration[4] in CA-G.R. SP No. 124967.

Factual Antecedents

In July, 2011, petitioner William Anghian Siy filed before the Regional Trial Court of Quezon City
(RTC) a Complaint for Recovery of Possession with Prayer for Replevin[5] against Frankie Domanog
Ong (Ong), Chris Centeno (Centeno), John Co Chua (Chua), and herein respondent Alvin Tomlin.
The case was docketed as Civil Case No. Q-11-69644 and assigned to RTC Branch 224.

In his Complaint, petitioner alleged that he is the owner of a 2007 model Range Rover with Plate
Number ZMG 272 which he purchased from Alberto Lopez III (Lopez) on July 22, 2009; that in 2010,
he entrusted the said vehicle to Ong, a businessman who owned a second-hand car sales showroom
("Motortrend" in Katipunan, Quezon City), after the latter claimed that he had a prospective buyer
therefor; that Ong failed to remit the proceeds of the purported sale nor return the vehicle; that
petitioner later found out that the vehicle had been transferred to Chua; that in December, 2010,
petitioner filed a complaint before the Quezon City Police District's Anti-Carnapping Section; that Ong,
upon learning of the complaint, met with petitioner to arrange the return of the vehicle; that Ong still
failed to surrender the vehicle; that petitioner learned that the vehicle was being transferred to
respondent; and that the vehicle was later impounded and taken into custody by the PNP-Highway
Patrol Group (HPG) at Camp Crame, Quezon City after respondent attempted to process a PNP
clearance of the vehicle with a view to transferring ownership thereof. Petitioner thus prayed that a
writ of replevin be issued for the return of the vehicle to him, and that the defendants be ordered to
pay him P100,000.00 attorney's fees and the costs of suit.

After hearing the application, the trial court issued a July 29, 2011 Order [6] decreeing as follows:

WHEREFORE, in view of the foregoing, and with the ADMISSION of the plaintiff's Documentary
Exhibits in support of this Application, issue a Writ of Replevin in favor of the plaintiff subject to the
posting of the bond in the amount of EIGHT MILLION PESOS (Php8,000,000.00) to be executed in
favor of the defendants for the return of the said property if such return be adjudged, and for the
payment to the adverse parties of such sum as they may recover from the applicant in this action.

SO ORDERED.[7]
Petitioner posted the required P8 million bond[8] which was approved by the trial court.[9] A Writ of
Replevin[10] was then issued.

The subject vehicle was seized by the court-appointed special sheriff who then filed the
corresponding Sheriffs Return.[11]

On August 17, 2011, respondent filed an Omnibus Motion [12] seeking to quash the Writ of Replevin,
dismiss the Complaint, and turn over or return the vehicle to him. Respondent claimed that he is the
lawful and registered owner of the subject vehicle, having bought the same and caused registration
thereof in his name on March 7, 2011; that the Complaint in Civil Case No. Q-11-69644 should be
dismissed for failure to pay the correct amount of docket fees; that the Complaint is defective for
failing to allege the correct and material facts as to ownership, possession/detention by defendant,
warranty against distraint/levy/seizure, and actual value of the vehicle; and that the implementation of
the writ was attended by procedural irregularities.

Particularly, respondent argued that petitioner could not prove his ownership of the vehicle as the
only pieces of evidence he presented in this regard were a manager's check and cash voucher as
proof of payment, and the affidavit of Lopez attesting to the sale between him and petitioner which
are insufficient; that in fact, he is the registered owner of the vehicle, as shown by the Official Receipt
and Certificate of Registration[13] dated March 7, 2011 issued in his name by the Land Transportation
Office (LTO); that it has not been shown that he wrongfully detained the vehicle, as petitioner was
never in possession thereof, since the same was already detained and seized by the HPG at the
time; that petitioner failed to allege, as required under Section 2 of Rule 60 of the 1997 Rules of Civil
Procedure[14] (1997 Rules), that the vehicle has not been distrained or taken for a tax assessment or
a fine pursuant to law, or seized under a writ of execution or preliminary attachment, or otherwise
placed under custodia legis, or if so seized, that it is exempt from such seizure or custody; and that
petitioner failed to allege the actual market value (P4 million) of the vehicle, and instead, he
intentionally understated its value at only P2 million in order to avoid paying the correct docket fees.

As for the alleged procedural defects, respondent claimed that the sheriff implemented the writ
against the HPG, which is not a party to the case; that the Complaint must be dismissed for failure to
pay the correct docket tees based on the actual value of the vehicle; and that the trial court acted with
undue haste in granting the writ of replevin.

Finally, respondent argued that he is the true owner of the subject vehicle as he was able to register
the transfer in his favor and obtain a certificate of registration in his name; and that as between
petitioner's documentary evidence and his official registration documents, the latter should prevail.

Petitioner filed his Opposition/Comment[15] to the omnibus motion.

Ruling of the Regional Trial Court

On November 21, 2011, the trial court issued an Order[16] denying respondent's Omnibus Motion for
lack of merit. It held that respondent's remedy is not to move to quash the writ of replevin, but to post
a counterbond within the reglementary period allowed under the 1997 Rules; that for failure to post
said counterbond, respondent's prayer for the return of the vehicle to him is premature; that the
issues of ownership and insufficiency of the allegations in the complaint are best determined during
trial; and that an allegation of undervaluation of the vehicle cannot divest the court of jurisdiction.

Respondent moved for reconsideration, but he was rebuffed just the same.

Ruling of the Court of Appeals

Respondent filed a Petition for Certiorari[17] before the CA docketed as CA G.R. SP No. 124967
claiming as he did in his Omnibus Motion that the trial court should have dismissed Civil Case No. Q-
11-69644 on account of failure to pay the correct docket fees, defective complaint, procedural
irregularities in the service of the writ of replevin, the fact that he is the registered owner of the subject
vehicle, and for the reason that the trial court irregularly took cognizance of the case during the period
for inventory of its cases. Respondent sought injunctive relief as well.
On October 9, 2012, the CA rendered the assailed Decision granting the Petition. It held that the trial
court did not acquire jurisdiction over the instant case for failure of petitioner to pay the correct docket
fees, since petitioner misdeclared the value of the subject vehicle at only P2 million in his Complaint,
when the market value thereof was around P4.5 million to P5 million; that this misdeclaration was
undertaken with the clear intention to defraud the government; and that petitioner failed to comply
with the requirements under Section 2, Rule 60 of the 1997 Rules, in that he gave a grossly
inadequate value for the subject vehicle in the Complaint and failed to allege therein that the vehicle
has not been distrained or taken for a tax assessment or a fine pursuant to law, or seized under a writ
of execution or preliminary attachment, or otherwise placed under custodia legis.

The CA added that it was improper for the sheriff to serve a copy of the writ of replevin upon the
respondent on the day following the seizure of the subject vehicle, and not prior to the taking thereof;
that the trial court is deemed to have acted without or in excess of its jurisdiction when it seized and
detained the vehicle on the basis of an improperly served writ; and that respondent was correct in
moving to quash the writ, as the proper remedy in case of an improperly served writ of replevin is to
file a motion to quash the same or a motion to vacate the order of seizure, and not to file a
counterbond as the trial court declared.

The CA thus decreed:

WHEREFORE, premises considered, the instant Petition for Certiorari is hereby GRANTED with the
following effects:

[T]he Order dated 21 November 2011 rendered by the Regional Trial Court of Quezon City,
1)
Branch 224 is REVERSED and SET ASIDE;
[T]he Order dated 13 March 2012 similarly rendered by the Regional Trial Court of Quezon City,
2)
Branch 224 is REVERSED and SET ASIDE;
Civil Case No. Q-11-69644 pending before the Regional Trial Court of Quezon City, Branch 224
3)
is hereby DISMISSED for want of jurisdiction;
The subject Range Rover with plate number ZMG 272 should be RETURNED to the Philippine
4)
National Police-Highway Patrol Group for its proper disposition and finally;
Prayer for the Issuance of Temporary Restraining Order and/or Preliminary Injunction is DENIED
5)
for being moot and academic.

SO ORDERED.[18]
Petitioner moved to reconsider, but in its assailed February 19, 2013 Resolution, the CA remained
unconvinced. Hence, the present Petition.

In a November 10, 2014 Resolution,[19] this Court resolved to give due course to the Petition.

Issues

Petitioner pleads the following assignment of errors:

WHETHER X X X THE TRIAL COURT HAS ACQUIRED JURISDICTION OVER THE SUBJECT
MATTER OF THE COMPLAINT FOR RECOVERY OF POSSESSION WITH PRAYER FOR
REPLEVIN.
II.

WHETHER X X X THE PETITIONER FAILED TO ALLEGE ALL THE MATERIAL FACTS IN THE
COMPLAINT FOR REPLEVIN AND AFFIDAVIT OF MERIT UNDER SECTIONS 2 & 4, RULE 60 OF
THE REVISED RULES OF COURT.

III.

WHETHER X X X THE SHERIFF PROPERLY IMPLEMENTED THE WRIT OF REPLEVIN BY


SERVING THE SAME TO ANY PERSON WHO IS IN POSSESSION OF THE PROPERTY
SUBJECT THEREOF.[20]
Petitioner's Arguments

Praying that the assailed CA dispositions be reversed and set aside and that, instead, Civil Case No.
Q-11-69644 be reinstated, petitioner argues that the trial court acquired jurisdiction over the replevin
case considering the payment of docket fees based on a valuation of the subject vehicle arrived at in
good faith by petitioner, who in estimating the vehicle's value took into consideration various factors
such as depreciation, actual condition, year model, and other circumstances; that the payment of an
inadequate docket fee is not a ground for dismissal of a case, and the trial court may simply allow the
plaintiff to complete the payment of the correct docket fees within a reasonable time;[21] and that his
eventual submission to the trial court's valuation of P4 million and his willingness to pay the bond and
corresponding docket fee proves his good faith and sincerity.

On the issue relating to his supposed defective complaint on account of insufficient allegations made
therein, petitioner contends that there is nothing in the 1997 Rules which requires him to copy the
requirements in Section 2 of Rule 60 and incorporate them to the letter in his complaint, as the rule
merely requires an applicant in replevin to show the circumstances in his complaint or affidavit of
merit, which he claims he did.

Finally, petitioner insists that the writ of replevin was properly served upon respondent. He did not
address the issue relating to the sheriff's service of summons, the writ of replevin, and the
corresponding order of the trial court on the day following the seizure and detention of the subject
vehicle, arguing rather sweepingly that it is sufficient for the sheriff to have served respondent with a
copy of the writ of replevin, together with the complaint, affidavit, and bond. He conceded that
respondent was in constructive possession of the vehicle, as he was the registered owner thereof.

In his Reply,[22] petitioner retorts that the Petition is grounded on questions of law; that even though
respondent was able to register the vehicle in his name, he is nonetheless a buyer and possessor in
bad faith, and thus, the transfer of ownership over the subject vehicle in his favor is illegal; that a
criminal case for estafa relative to the vehicle is pending against Ong, Chua, and Centeno; that
Lopez's purported sale to Chua was anomalous; and that respondent should have filed a
counterbond.

Respondent's Arguments

In his Comment,[23] respondent essentially counters that the Petition should be dismissed as it raises
issues of fact; that a liberal application of the rule requiring the payment of correct docket fees cannot
apply to petitioner's case since he intentionally defrauded the court in misdeclaring the value of the
subject vehicle; that while they need not be stated verbatim, the enumeration of required allegations
under Section 2 of Rule 60 must still be specifically included in a complaint for replevin or in the
accompanying affidavit of merit; that petitioner failed to show that he is the owner of the vehicle or
that he is entitled to its possession, and that the vehicle is wrongfully detained by him, and that it has
not been distrained, seized or placed under custodia legis; and that he is a buyer in good faith and for
value.

Our Ruling

The Petition must be denied.

"In a complaint for replevin, the claimant must convincingly show that he is either the owner or clearly
entitled to the possession of the object sought to be recovered, and that the defendant, who is in
actual or legal possession thereof, wrongfully detains the same."[24] "Rule 60 x x x allows a plaintiff, in
an action for the recovery of possession of personal property, to apply for a writ of replevin if it can be
shown that he is 'the owner of the property claimed ... or is entitled to the possession thereof.' The
plaintiff need not be the owner so long as he is able to specify his right to the possession of the
property and his legal basis therefor."[25]

In Filinvest Credit Corporation v. Court of Appeals,[26] this Court likewise held that -

x x x It is not only the owner who can institute a replevin suit. A person "entitled to the possession" of
the property also can, as provided in the same paragraph cited by the trial court, which reads:

Sec. 2. Affidavit and bond. - Upon applying for such order the plaintiff must show ...

(a) That the plaintiff is the owner of the property claimed, particularly describing it, or is entitled to the
possession thereof; x x x
As correctly cited by respondent in his Comment:[27]

x x x [A] party praying for the recovery of possession of personal property must show by his own
affidavit or that of some other person who personally knows the facts that he is the owner of the
property claimed, particularly describing it, or is entitled to the possession thereof. It must be borne in
mind that replevin is a possessory action the gist of which focuses on the right of possession that, in
tum, is dependent on a legal basis that, not infrequently, looks to the ownership of the object sought
to be replevied. Wrongful detention by the defendant of the properties sought in an action for replevin
must be satisfactorily established. If only a mechanistic averment thereof is offered, the writ should
not be issued.[28]
Petitioner admits and claims in his pleadings that on July 22, 2009, he purchased the subject vehicle
from Lopez, who executed and signed in blank a deed of sale and surrendered all documents of title
to him;[29] that he did not register the sale in his favor, such that the vehicle remained in the name of
Lopez;[30] that in September, 2010, he delivered the subject vehicle, together with all its documents of
title and the blank deed of sale, to Ong, with the express intention of selling the vehicle through the
latter as broker/second hand car dealer; that Ong appears to have issued in his favor two guarantee
checks amounting to P4.95 million; and that these checks bounced. [31]Thereafter, Ong was able to
sell the vehicle using the deed of sale executed and signed in blank by Lopez to Chua, who secured
a certificate of registration in his name.[32] Chua then sold the vehicle, via a Deed of Sale of Motor
Vehicle dated December 7, 2010, to respondent, who caused registration of the vehicle in his name
on March 7, 2011.[33] Apparently, Ong did not remit Chua's payment to petitioner, prompting the latter
to file formal complaints/charges for 1) estafa and carnapping on May 18, 2011 before the Office of
the City Prosecutor of Quezon City, and 2) carnapping on June 15, 2011 before the PNP-HPG in
Camp Crame, Quezon City against Ong and Centeno.[34] It appears as well that prior to the filing of
these formal complaints, or sometime in November, 2010, petitioner appeared before the Quezon
City Anti-Carnapping Unit based in Camp Karingal, Quezon City and, claiming that the subject vehicle
was carnapped, filed a "Failed to Return Vehicle" report; that on February 23, 2011, petitioner,
respondent, Ong, and Chua appeared at Camp Karingal to shed light on the claimed carnapping; that
the parties were requested to voluntarily surrender the subject vehicle, but the request proved futile;
and that petitioner was instead advised to file appropriate charges and file a complaint with the PNP-
HPG in order to include the subject vehicle in the "hold order list".

This Court is not unaware of the practice by many vehicle buyers and second-hand car traders of not
transferring registration and ownership over vehicles purchased from their original owners, and rather
instructing the latter to execute and sign in blank deeds of sale covering these vehicles, so that these
buyers and dealers may freely and readily trade or re-sell the vehicles in the second-hand car market
without difficulty. This way, multiple transfers, sales, or trades of the vehicle using these undated
deeds signed in blank become possible, until the latest purchaser decides to actually transfer the
certificate of registration in his name. For many car owners-sellers, this is an easy concession; so
long as they actually receive the sale price, they will sign sale deeds in blank and surrender them to
the buyers or dealers; and for the latter, this is convenient since they can "flip" or re-sell the vehicles
to the public many times over with ease, using these blank deeds of sale.

In many cases as well, busy vehicle owners selling their vehicles actually leave them, together with all
the documents of title, spare keys, and deeds of sale signed in blank, with second-hand car traders
they know and trust, in order for the latter to display these vehicles for actual viewing and inspection
by prospective buyers at their lots, warehouses, garages, or showrooms, and to enable the traders to
facilitate sales on-the-spot, as-is-where-is, without having to inconvenience the owners with random
viewings and inspections of their vehicles. For this kind of arrangement, an agency relationship is
created between the vehicle owners, as principals, and the car traders, as agents. The situation is
akin to an owner of jewelry who sells the same through an agent, who receives the jewelry in trust
and offers it for sale to his/her regular clients; if a sale is made, the agent takes payment under the
obligation to remit the same to the jewelry owner, minus the agreed commission or other
compensation.

From petitioner's own account, he constituted and appointed Ong as his agent to sell the vehicle,
surrendering to the latter the vehicle, all documents of title pertaining thereto, and a deed of sale
signed in blank, with full understanding that Ong would offer and sell the same to his clients or to the
public. In return, Ong accepted the agency by his receipt of the vehicle, the blank deed of sale, and
documents of title, and when he gave bond in the form of two guarantee checks worth P4.95 million.
AH these gave Ong the authority to act for and in behalf of petitioner. Under the Civil Code on
agency,

Art. 1869. Agency may be express, or implied from the acts of the principal, from his silence or
Jack of action, or his failure to repudiate the agency, knowing that another person is acting on his
behalf without authority.

Agency may be oral, unless the law requires a specific form.

Art. 1870. Acceptance by the agent may also be express, or implied from his acts which carry
out the agency, or from his silence or inaction according to the circumstances. (Emphasis and
underscoring supplied)
"The basis of agency is representation and the same may be constituted expressly or impliedly. In an
implied agency the principal can be bound by the acts of the implied agent."[35] The same is true with
an oral agency.
Acting for and in petitioner's behalf by virtue of the implied or oral agency, Ong was thus able to sell
the vehicle to Chua, but he failed to remit the proceeds thereof to petitioner; his guarantee checks
bounced as well. This entitled petitioner to sue for estafa through abuse of confidence. This is exactly
what petitioner did: on May 18, 2011, he tiled a complaint for estafa and carnapping against Ong
before the Quezon City Prosecutor's Office.

Since Ong was able to sell the subject vehicle to Chua, petitioner thus ceased to be the owner
thereof. Nor is he entitled to the possession of the vehicle; together with his ownership, petitioner lost
his right of possession over the vehicle. His argument that respondent is a buyer In bad faith, when
the latter nonetheless proceeded with the purchase and registration of the vehicle on March 7, 2011,
despite having been apprised of petitioner's earlier November, 2010 "Failed to Return Vehicle" report
filed with the PNP-HPG, is unavailing. Petitioner had no right to file said report, as he was no longer
the owner of the vehicle at the time; indeed, his right of action is only against Ong, for collection of the
proceeds of the sale.

Considering that he was no longer the owner or rightful possessor of the subject vehicle at the time
he filed Civil Case No. Q-11-69644 in July, 2011, petitioner may not seek a return of the same
through replevin. Quite the contrary, respondent, who obtained the vehicle from Chua and registered
the transfer with the Land Transportation Office, is the rightful owner thereof, and as such, he is
entitled to its possession. For this reason, the CA was correct in decreeing the dismissal of Civil Case
No. Q-11-69644, although it erred in ordering the return of the vehicle to the PNP-HPG, which had no
further right to hold the vehicle in its custody. As the registered and rightful owner of the subject
vehicle, the trial court must return the same to respondent.

Petitioner cannot be allowed to cut his losses by ostensibly securing the recovery of the subject
vehicle in lieu of its price, which Ong failed and continues to fail to remit. On the other hand, Ong's
declarations contained in his Affidavit,[36] to the effect that petitioner remains the owner of the vehicle,
and that Chua came into illegal possession and ownership of the same by unlawfully appropriating
the same for himself without paying for it, are unavailing. Faced with a possible criminal charge for
estafa initiated by petitioner for failing or refusing to remit the price for the subject vehicle, Ong's
declarations are considered self-serving, that is, calculated to free himself from the criminal charge.
The premise is that by helping petitioner to actually recover his vehicle by insisting that the same was
unlawfully taken from him, instead of remitting its price to petitioner, Ong expects that he and
petitioner may redeem themselves from their bad judgment; for the petitioner, the mistake of
bestowing his full faith and confidence upon Ong, and blindly surrendering the vehicle, its documents
of title, and a deed of sale executed and signed in blank, to the latter; and for Ong, his failure to remit
the proceeds of the sale to petitioner; and petitioner might then opt to desist from pursuing the estafa
and other criminal charges against him.

Having disposed of the case in the foregoing manner, there is no need to discuss the other issues
raised by the parties.

WHEREFORE, the Petition is DENIED. The October 9, 2012 Decision and February 19, 2013
Resolution of the Court of Appeals in CA-G.R SP No. 124967 are AFFIRMED WITH
MODIFICATION, in that the subject Land Rover Range Rover, with Plate Number ZMG 272 and
particularly described in and made subject of these proceedings, is ORDERED RETURNED to
respondent Alvin Tomlin as its registered owner.

SO ORDERED.
CASE DIGEST:

DEL CASTILLO, J.:


This Petition for Review on Certiorari[1] assails the October 9, 2012 Decision[2] and February 19,2013
Resolution[3] of the Court of Appeals (CA) which respectively granted the respondent's Petition
for Certiorari and denied petitioner's Motion for Reconsideration[4] in CA-G.R. SP No. 124967.

Factual Antecedents

In July, 2011, petitioner William Anghian Siy filed before the Regional Trial Court of Quezon City
(RTC) a Complaint for Recovery of Possession with Prayer for Replevin[5] against Frankie Domanog
Ong (Ong), Chris Centeno (Centeno), John Co Chua (Chua), and herein respondent Alvin Tomlin.
The case was docketed as Civil Case No. Q-11-69644 and assigned to RTC Branch 224.

In his Complaint, petitioner alleged that he is the owner of a 2007 model Range Rover with Plate
Number ZMG 272 which he purchased from Alberto Lopez III (Lopez) on July 22, 2009; that in 2010,
he entrusted the said vehicle to Ong, a businessman who owned a second-hand car sales showroom
("Motortrend" in Katipunan, Quezon City), after the latter claimed that he had a prospective buyer
therefor; that Ong failed to remit the proceeds of the purported sale nor return the vehicle; that
petitioner later found out that the vehicle had been transferred to Chua; that in December, 2010,
petitioner filed a complaint before the Quezon City Police District's Anti-Carnapping Section; that Ong,
upon learning of the complaint, met with petitioner to arrange the return of the vehicle; that Ong still
failed to surrender the vehicle; that petitioner learned that the vehicle was being transferred to
respondent; and that the vehicle was later impounded and taken into custody by the PNP-Highway
Patrol Group (HPG) at Camp Crame, Quezon City after respondent attempted to process a PNP
clearance of the vehicle with a view to transferring ownership thereof. Petitioner thus prayed that a
writ of replevin be issued for the return of the vehicle to him, and that the defendants be ordered to
pay him P100,000.00 attorney's fees and the costs of suit.

After hearing the application, the trial court issued a July 29, 2011 Order [6] decreeing as follows:

WHEREFORE, in view of the foregoing, and with the ADMISSION of the plaintiff's Documentary
Exhibits in support of this Application, issue a Writ of Replevin in favor of the plaintiff subject to the
posting of the bond in the amount of EIGHT MILLION PESOS (Php8,000,000.00) to be executed in
favor of the defendants for the return of the said property if such return be adjudged, and for the
payment to the adverse parties of such sum as they may recover from the applicant in this action.

SO ORDERED.[7]
Petitioner posted the required P8 million bond[8] which was approved by the trial court.[9] A Writ of
Replevin[10] was then issued.

The subject vehicle was seized by the court-appointed special sheriff who then filed the
corresponding Sheriffs Return.[11]

On August 17, 2011, respondent filed an Omnibus Motion[12] seeking to quash the Writ of Replevin,
dismiss the Complaint, and turn over or return the vehicle to him. Respondent claimed that he is the
lawful and registered owner of the subject vehicle, having bought the same and caused registration
thereof in his name on March 7, 2011; that the Complaint in Civil Case No. Q-11-69644 should be
dismissed for failure to pay the correct amount of docket fees; that the Complaint is defective for
failing to allege the correct and material facts as to ownership, possession/detention by defendant,
warranty against distraint/levy/seizure, and actual value of the vehicle; and that the implementation of
the writ was attended by procedural irregularities.

Particularly, respondent argued that petitioner could not prove his ownership of the vehicle as the
only pieces of evidence he presented in this regard were a manager's check and cash voucher as
proof of payment, and the affidavit of Lopez attesting to the sale between him and petitioner which
are insufficient; that in fact, he is the registered owner of the vehicle, as shown by the Official Receipt
and Certificate of Registration[13] dated March 7, 2011 issued in his name by the Land Transportation
Office (LTO); that it has not been shown that he wrongfully detained the vehicle, as petitioner was
never in possession thereof, since the same was already detained and seized by the HPG at the
time; that petitioner failed to allege, as required under Section 2 of Rule 60 of the 1997 Rules of Civil
Procedure[14] (1997 Rules), that the vehicle has not been distrained or taken for a tax assessment or
a fine pursuant to law, or seized under a writ of execution or preliminary attachment, or otherwise
placed under custodia legis, or if so seized, that it is exempt from such seizure or custody; and that
petitioner failed to allege the actual market value (P4 million) of the vehicle, and instead, he
intentionally understated its value at only P2 million in order to avoid paying the correct docket fees.

As for the alleged procedural defects, respondent claimed that the sheriff implemented the writ
against the HPG, which is not a party to the case; that the Complaint must be dismissed for failure to
pay the correct docket tees based on the actual value of the vehicle; and that the trial court acted with
undue haste in granting the writ of replevin.

Finally, respondent argued that he is the true owner of the subject vehicle as he was able to register
the transfer in his favor and obtain a certificate of registration in his name; and that as between
petitioner's documentary evidence and his official registration documents, the latter should prevail.

Petitioner filed his Opposition/Comment[15] to the omnibus motion.

Ruling of the Regional Trial Court

On November 21, 2011, the trial court issued an Order[16] denying respondent's Omnibus Motion for
lack of merit. It held that respondent's remedy is not to move to quash the writ of replevin, but to post
a counterbond within the reglementary period allowed under the 1997 Rules; that for failure to post
said counterbond, respondent's prayer for the return of the vehicle to him is premature; that the
issues of ownership and insufficiency of the allegations in the complaint are best determined during
trial; and that an allegation of undervaluation of the vehicle cannot divest the court of jurisdiction.

Respondent moved for reconsideration, but he was rebuffed just the same.

Ruling of the Court of Appeals

Respondent filed a Petition for Certiorari[17] before the CA docketed as CA G.R. SP No. 124967
claiming as he did in his Omnibus Motion that the trial court should have dismissed Civil Case No. Q-
11-69644 on account of failure to pay the correct docket fees, defective complaint, procedural
irregularities in the service of the writ of replevin, the fact that he is the registered owner of the subject
vehicle, and for the reason that the trial court irregularly took cognizance of the case during the period
for inventory of its cases. Respondent sought injunctive relief as well.

On October 9, 2012, the CA rendered the assailed Decision granting the Petition. It held that the trial
court did not acquire jurisdiction over the instant case for failure of petitioner to pay the correct docket
fees, since petitioner misdeclared the value of the subject vehicle at only P2 million in his Complaint,
when the market value thereof was around P4.5 million to P5 million; that this misdeclaration was
undertaken with the clear intention to defraud the government; and that petitioner failed to comply
with the requirements under Section 2, Rule 60 of the 1997 Rules, in that he gave a grossly
inadequate value for the subject vehicle in the Complaint and failed to allege therein that the vehicle
has not been distrained or taken for a tax assessment or a fine pursuant to law, or seized under a writ
of execution or preliminary attachment, or otherwise placed under custodia legis.

The CA added that it was improper for the sheriff to serve a copy of the writ of replevin upon the
respondent on the day following the seizure of the subject vehicle, and not prior to the taking thereof;
that the trial court is deemed to have acted without or in excess of its jurisdiction when it seized and
detained the vehicle on the basis of an improperly served writ; and that respondent was correct in
moving to quash the writ, as the proper remedy in case of an improperly served writ of replevin is to
file a motion to quash the same or a motion to vacate the order of seizure, and not to file a
counterbond as the trial court declared.

The CA thus decreed:

WHEREFORE, premises considered, the instant Petition for Certiorari is hereby GRANTED with the
following effects:

[T]he Order dated 21 November 2011 rendered by the Regional Trial Court of Quezon City,
1)
Branch 224 is REVERSED and SET ASIDE;
[T]he Order dated 13 March 2012 similarly rendered by the Regional Trial Court of Quezon City,
2)
Branch 224 is REVERSED and SET ASIDE;
Civil Case No. Q-11-69644 pending before the Regional Trial Court of Quezon City, Branch 224
3)
is hereby DISMISSED for want of jurisdiction;
The subject Range Rover with plate number ZMG 272 should be RETURNED to the Philippine
4)
National Police-Highway Patrol Group for its proper disposition and finally;
Prayer for the Issuance of Temporary Restraining Order and/or Preliminary Injunction is DENIED
5)
for being moot and academic.

SO ORDERED.[18]
Petitioner moved to reconsider, but in its assailed February 19, 2013 Resolution, the CA remained
unconvinced. Hence, the present Petition.

In a November 10, 2014 Resolution,[19] this Court resolved to give due course to the Petition.

Issues

Petitioner pleads the following assignment of errors:

WHETHER X X X THE TRIAL COURT HAS ACQUIRED JURISDICTION OVER THE SUBJECT
MATTER OF THE COMPLAINT FOR RECOVERY OF POSSESSION WITH PRAYER FOR
REPLEVIN.

II.

WHETHER X X X THE PETITIONER FAILED TO ALLEGE ALL THE MATERIAL FACTS IN THE
COMPLAINT FOR REPLEVIN AND AFFIDAVIT OF MERIT UNDER SECTIONS 2 & 4, RULE 60 OF
THE REVISED RULES OF COURT.

III.

WHETHER X X X THE SHERIFF PROPERLY IMPLEMENTED THE WRIT OF REPLEVIN BY


SERVING THE SAME TO ANY PERSON WHO IS IN POSSESSION OF THE PROPERTY
SUBJECT THEREOF.[20]
Petitioner's Arguments

Praying that the assailed CA dispositions be reversed and set aside and that, instead, Civil Case No.
Q-11-69644 be reinstated, petitioner argues that the trial court acquired jurisdiction over the replevin
case considering the payment of docket fees based on a valuation of the subject vehicle arrived at in
good faith by petitioner, who in estimating the vehicle's value took into consideration various factors
such as depreciation, actual condition, year model, and other circumstances; that the payment of an
inadequate docket fee is not a ground for dismissal of a case, and the trial court may simply allow the
plaintiff to complete the payment of the correct docket fees within a reasonable time; [21] and that his
eventual submission to the trial court's valuation of P4 million and his willingness to pay the bond and
corresponding docket fee proves his good faith and sincerity.

On the issue relating to his supposed defective complaint on account of insufficient allegations made
therein, petitioner contends that there is nothing in the 1997 Rules which requires him to copy the
requirements in Section 2 of Rule 60 and incorporate them to the letter in his complaint, as the rule
merely requires an applicant in replevin to show the circumstances in his complaint or affidavit of
merit, which he claims he did.

Finally, petitioner insists that the writ of replevin was properly served upon respondent. He did not
address the issue relating to the sheriff's service of summons, the writ of replevin, and the
corresponding order of the trial court on the day following the seizure and detention of the subject
vehicle, arguing rather sweepingly that it is sufficient for the sheriff to have served respondent with a
copy of the writ of replevin, together with the complaint, affidavit, and bond. He conceded that
respondent was in constructive possession of the vehicle, as he was the registered owner thereof.

In his Reply,[22] petitioner retorts that the Petition is grounded on questions of law; that even though
respondent was able to register the vehicle in his name, he is nonetheless a buyer and possessor in
bad faith, and thus, the transfer of ownership over the subject vehicle in his favor is illegal; that a
criminal case for estafa relative to the vehicle is pending against Ong, Chua, and Centeno; that
Lopez's purported sale to Chua was anomalous; and that respondent should have filed a
counterbond.

Respondent's Arguments

In his Comment,[23] respondent essentially counters that the Petition should be dismissed as it raises
issues of fact; that a liberal application of the rule requiring the payment of correct docket fees cannot
apply to petitioner's case since he intentionally defrauded the court in misdeclaring the value of the
subject vehicle; that while they need not be stated verbatim, the enumeration of required allegations
under Section 2 of Rule 60 must still be specifically included in a complaint for replevin or in the
accompanying affidavit of merit; that petitioner failed to show that he is the owner of the vehicle or
that he is entitled to its possession, and that the vehicle is wrongfully detained by him, and that it has
not been distrained, seized or placed under custodia legis; and that he is a buyer in good faith and for
value.
Our Ruling

The Petition must be denied.

"In a complaint for replevin, the claimant must convincingly show that he is either the owner or clearly
entitled to the possession of the object sought to be recovered, and that the defendant, who is in
actual or legal possession thereof, wrongfully detains the same."[24] "Rule 60 x x x allows a plaintiff, in
an action for the recovery of possession of personal property, to apply for a writ of replevin if it can be
shown that he is 'the owner of the property claimed ... or is entitled to the possession thereof.' The
plaintiff need not be the owner so long as he is able to specify his right to the possession of the
property and his legal basis therefor."[25]

In Filinvest Credit Corporation v. Court of Appeals,[26] this Court likewise held that -

x x x It is not only the owner who can institute a replevin suit. A person "entitled to the possession" of
the property also can, as provided in the same paragraph cited by the trial court, which reads:

Sec. 2. Affidavit and bond. - Upon applying for such order the plaintiff must show ...

(a) That the plaintiff is the owner of the property claimed, particularly describing it, or is entitled to the
possession thereof; x x x
As correctly cited by respondent in his Comment:[27]

x x x [A] party praying for the recovery of possession of personal property must show by his own
affidavit or that of some other person who personally knows the facts that he is the owner of the
property claimed, particularly describing it, or is entitled to the possession thereof. It must be borne in
mind that replevin is a possessory action the gist of which focuses on the right of possession that, in
tum, is dependent on a legal basis that, not infrequently, looks to the ownership of the object sought
to be replevied. Wrongful detention by the defendant of the properties sought in an action for replevin
must be satisfactorily established. If only a mechanistic averment thereof is offered, the writ should
not be issued.[28]
Petitioner admits and claims in his pleadings that on July 22, 2009, he purchased the subject vehicle
from Lopez, who executed and signed in blank a deed of sale and surrendered all documents of title
to him;[29] that he did not register the sale in his favor, such that the vehicle remained in the name of
Lopez;[30] that in September, 2010, he delivered the subject vehicle, together with all its documents of
title and the blank deed of sale, to Ong, with the express intention of selling the vehicle through the
latter as broker/second hand car dealer; that Ong appears to have issued in his favor two guarantee
checks amounting to P4.95 million; and that these checks bounced. [31]Thereafter, Ong was able to
sell the vehicle using the deed of sale executed and signed in blank by Lopez to Chua, who secured
a certificate of registration in his name.[32] Chua then sold the vehicle, via a Deed of Sale of Motor
Vehicle dated December 7, 2010, to respondent, who caused registration of the vehicle in his name
on March 7, 2011.[33] Apparently, Ong did not remit Chua's payment to petitioner, prompting the latter
to file formal complaints/charges for 1) estafa and carnapping on May 18, 2011 before the Office of
the City Prosecutor of Quezon City, and 2) carnapping on June 15, 2011 before the PNP-HPG in
Camp Crame, Quezon City against Ong and Centeno.[34] It appears as well that prior to the filing of
these formal complaints, or sometime in November, 2010, petitioner appeared before the Quezon
City Anti-Carnapping Unit based in Camp Karingal, Quezon City and, claiming that the subject vehicle
was carnapped, filed a "Failed to Return Vehicle" report; that on February 23, 2011, petitioner,
respondent, Ong, and Chua appeared at Camp Karingal to shed light on the claimed carnapping; that
the parties were requested to voluntarily surrender the subject vehicle, but the request proved futile;
and that petitioner was instead advised to file appropriate charges and file a complaint with the PNP-
HPG in order to include the subject vehicle in the "hold order list".

This Court is not unaware of the practice by many vehicle buyers and second-hand car traders of not
transferring registration and ownership over vehicles purchased from their original owners, and rather
instructing the latter to execute and sign in blank deeds of sale covering these vehicles, so that these
buyers and dealers may freely and readily trade or re-sell the vehicles in the second-hand car market
without difficulty. This way, multiple transfers, sales, or trades of the vehicle using these undated
deeds signed in blank become possible, until the latest purchaser decides to actually transfer the
certificate of registration in his name. For many car owners-sellers, this is an easy concession; so
long as they actually receive the sale price, they will sign sale deeds in blank and surrender them to
the buyers or dealers; and for the latter, this is convenient since they can "flip" or re-sell the vehicles
to the public many times over with ease, using these blank deeds of sale.

In many cases as well, busy vehicle owners selling their vehicles actually leave them, together with all
the documents of title, spare keys, and deeds of sale signed in blank, with second-hand car traders
they know and trust, in order for the latter to display these vehicles for actual viewing and inspection
by prospective buyers at their lots, warehouses, garages, or showrooms, and to enable the traders to
facilitate sales on-the-spot, as-is-where-is, without having to inconvenience the owners with random
viewings and inspections of their vehicles. For this kind of arrangement, an agency relationship is
created between the vehicle owners, as principals, and the car traders, as agents. The situation is
akin to an owner of jewelry who sells the same through an agent, who receives the jewelry in trust
and offers it for sale to his/her regular clients; if a sale is made, the agent takes payment under the
obligation to remit the same to the jewelry owner, minus the agreed commission or other
compensation.

From petitioner's own account, he constituted and appointed Ong as his agent to sell the vehicle,
surrendering to the latter the vehicle, all documents of title pertaining thereto, and a deed of sale
signed in blank, with full understanding that Ong would offer and sell the same to his clients or to the
public. In return, Ong accepted the agency by his receipt of the vehicle, the blank deed of sale, and
documents of title, and when he gave bond in the form of two guarantee checks worth P4.95 million.
AH these gave Ong the authority to act for and in behalf of petitioner. Under the Civil Code on
agency,

Art. 1869. Agency may be express, or implied from the acts of the principal, from his silence or
Jack of action, or his failure to repudiate the agency, knowing that another person is acting on his
behalf without authority.

Agency may be oral, unless the law requires a specific form.

Art. 1870. Acceptance by the agent may also be express, or implied from his acts which carry
out the agency, or from his silence or inaction according to the circumstances. (Emphasis and
underscoring supplied)
"The basis of agency is representation and the same may be constituted expressly or impliedly. In an
implied agency the principal can be bound by the acts of the implied agent."[35] The same is true with
an oral agency.

Acting for and in petitioner's behalf by virtue of the implied or oral agency, Ong was thus able to sell
the vehicle to Chua, but he failed to remit the proceeds thereof to petitioner; his guarantee checks
bounced as well. This entitled petitioner to sue for estafa through abuse of confidence. This is exactly
what petitioner did: on May 18, 2011, he tiled a complaint for estafa and carnapping against Ong
before the Quezon City Prosecutor's Office.
Since Ong was able to sell the subject vehicle to Chua, petitioner thus ceased to be the owner
thereof. Nor is he entitled to the possession of the vehicle; together with his ownership, petitioner lost
his right of possession over the vehicle. His argument that respondent is a buyer In bad faith, when
the latter nonetheless proceeded with the purchase and registration of the vehicle on March 7, 2011,
despite having been apprised of petitioner's earlier November, 2010 "Failed to Return Vehicle" report
filed with the PNP-HPG, is unavailing. Petitioner had no right to file said report, as he was no longer
the owner of the vehicle at the time; indeed, his right of action is only against Ong, for collection of the
proceeds of the sale.

Considering that he was no longer the owner or rightful possessor of the subject vehicle at the time
he filed Civil Case No. Q-11-69644 in July, 2011, petitioner may not seek a return of the same
through replevin. Quite the contrary, respondent, who obtained the vehicle from Chua and registered
the transfer with the Land Transportation Office, is the rightful owner thereof, and as such, he is
entitled to its possession. For this reason, the CA was correct in decreeing the dismissal of Civil Case
No. Q-11-69644, although it erred in ordering the return of the vehicle to the PNP-HPG, which had no
further right to hold the vehicle in its custody. As the registered and rightful owner of the subject
vehicle, the trial court must return the same to respondent.

Petitioner cannot be allowed to cut his losses by ostensibly securing the recovery of the subject
vehicle in lieu of its price, which Ong failed and continues to fail to remit. On the other hand, Ong's
declarations contained in his Affidavit,[36] to the effect that petitioner remains the owner of the vehicle,
and that Chua came into illegal possession and ownership of the same by unlawfully appropriating
the same for himself without paying for it, are unavailing. Faced with a possible criminal charge for
estafa initiated by petitioner for failing or refusing to remit the price for the subject vehicle, Ong's
declarations are considered self-serving, that is, calculated to free himself from the criminal charge.
The premise is that by helping petitioner to actually recover his vehicle by insisting that the same was
unlawfully taken from him, instead of remitting its price to petitioner, Ong expects that he and
petitioner may redeem themselves from their bad judgment; for the petitioner, the mistake of
bestowing his full faith and confidence upon Ong, and blindly surrendering the vehicle, its documents
of title, and a deed of sale executed and signed in blank, to the latter; and for Ong, his failure to remit
the proceeds of the sale to petitioner; and petitioner might then opt to desist from pursuing the estafa
and other criminal charges against him.

Having disposed of the case in the foregoing manner, there is no need to discuss the other issues
raised by the parties.

WHEREFORE, the Petition is DENIED. The October 9, 2012 Decision and February 19, 2013
Resolution of the Court of Appeals in CA-G.R SP No. 124967 are AFFIRMED WITH
MODIFICATION, in that the subject Land Rover Range Rover, with Plate Number ZMG 272 and
particularly described in and made subject of these proceedings, is ORDERED RETURNED to
respondent Alvin Tomlin as its registered owner.

SO ORDERED.
DIVISION

[ GR No. 195450, Feb 01, 2017 ]

DEVELOPMENT BANK OF PHILIPPINES v. EMMANUEL C. CARPIO +

DECISION

This is a petition for review on certiorari seeking to reverse and set aside the July 9, 2008
Decision[1] and the January 21, 2011 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No.
85719, which dismissed the petition for certiorari and mandamus praying for the annulment of the
May 17, 2004 and July 9, 2004 Orders[3] of the Regional Trial Court, Branch 16, Davao City (RTC), in
Civil Case No. 28,721-01.

The Antecedents

On August 21, 2001, Dabay Abad, Hatab Abad, Omar Abas, Hanapi Abdullah, Rojea Ab Abdullah,
Abdullah Abedin, Alex Abedin, et al. (Abad, et al.), represented by their attorney-in-fact, Manuel L. Te,
filed a complaint for delivery of certificates of title, damages, and attorney's fees against petitioner
Development Bank of the Philippines (DBP) and Guarantee Fund for Small and Medium Enterprise
(GFSME) before the RTC.[4]

In their , Complaint,[5] Abad, et al. prayed, among others, for the issuance of a writ of seizure, pending
hearing of the case, for delivery of their certificates of title they claimed to be unlawfully detained by
DBP and GFSME. They alleged that their certificates of title were submitted to DBP for safekeeping
pursuant to the loan agreement they entered into with DBP. The same certificates of title were turned
over by DBP to GFSME because of its call on GFSME's guarantee on their loan, which became due
and demandable, and pursuant to the guarantee agreement between DBP and GFSME.

As prayed for, the RTC issued the Writ of Seizure[6] on August 24, 2001. The writ was accompanied
by Plaintiffs Bond for Manual Delivery of Personal Property[7] issued by Country Bankers Insurance
Corporation (CBIC).

On September 5, 2001, DBP filed its Omnibus Motion to Dismiss Complaint and to Quash Writ of
Seizure[8] on the ground of improper venue, among others. Abad, et al. filed their Opposition[9] and
later, their Supplemental Opposition,[10] to which they attached the Delivery Receipt[11] showing that
the court sheriff took possession of 228 certificates of title from GFSME.

In its Order,[12] dated September 25, 2001, the RTC granted DBP's omnibus motion and dismissed
the case for improper venue.

On December 20, 2001, DBP and GFSME filed their Joint Motion to Order Plaintiffs to Return Titles to
Defendants DBP and GFSME.[13]After Abad, et al. filed their opposition, the RTC issued the
Order,[14] dated January 27, 2003, directing Abad, et al. to return the 228 certificates of title.

Abad, et al. filed a petition for certiorari and prohibition with the Court praying, among others, for the
nullification and reversal of the January 27, 2003 Order of the RTC. The Court, however, in its June 9,
2003 Resolution,[15] dismissed the petition.
On September 18, 2003, DBP filed its Motion for Writ of Execution [16] of the January 27, 2003 Order
before the RTC. On December 16, 2003, the RTC issued the corresponding Writ of Execution. [17] The
Sheriffs Return of Service,[18] however, indicated that Abad, et al. failed to deliver the certificates of
title.

The Subject Motion against the Bond

Due to the non-delivery of the certificates of title by Abad, et al., DBP filed its Motion/Application to
Call on Plaintiff's Surety Bond,[19]dated February 3, 2004, praying for the release of the bond issued
by CBIC to answer for the damages it sustained as a result of the failure to return the 228 certificates
of title.

The RTC Ruling

In its Order, dated May 17, 2004, the RTC denied the subject motion explaining that the resolution of
the motion was no longer part of its residual power. It pointed out that although there was indeed an
order to return the 228 certificates of title to DBP, it was not made as a result of a trial of the case, but
as a consequence of the order of dismissal based on improper venue.

DBP moved for reconsideration. Nevertheless, in its July 9, 2004 Order, the RTC denied the motion.

Aggrieved, DBP filed a petition for certiorari and mandamus before the CA.

The CA Ruling

In its July 9, 2008 Decision, the CA dismissed the petition for certiorari and mandamus. It noted that
DBP did not move for reconsideration of the September 25, 2001 Order of dismissal. It considered
the RTC decision as final and executory. It added that Section 20, Rule 57 of the Rules of Court
provided that the claim for damages against the bond must be filed before trial or before appeal was
perfected or before the judgment became executory.[20]

DBP moved for reconsideration, but its motion was denied by the CA in its January 21, 2011
Resolution.

Hence, this petition.

ISSUE

THE COURT OF APPEALS ERRED IN ITS BLIND ADHERENCE TO AND STRICT APPLICATION
OF SECTION 20, RULE 57 OF THE 1997 RULES OF CIVIL PROCEDURE.[21]
Petitioner DBP argues that it could not have anticipated that Abad, et al. (respondents) would not
abide by the writ of execution; hence, prior to such failure of execution, it would be premature to claim
for damages against the bond because DBP had not yet suffered any consequential damages with
the implementation of the writ of seizure; and that Section 20, Rule 57 of the Rules of Court was not
applicable as the damages resulting from the improper issuance of the writ of seizure occurred only
after the unjustified refusal of respondents to return the titles despite the order from the RTC.

In its Comment,[22] dated August 11, 2011, respondent CBIC averred that Section 20, Rule 57 of the
Rules of Court specified that an application for damages on account of improper, irregular or
excessive attachment must be filed before the trial or before appeal is perfected or before the
judgment becomes executory; that the motion to call on plaintiffs surety bond was filed more than two
(2) years after the September 25, 2001 Order of the RTC, dismissing the case, became final and
executory; that, under Section 10, Rule 60 of the Rules of Court, the surety's liability under the
replevin bond should be included in the final judgment; that, there being no judgment as to who,
between the plaintiffs and the defendants, was entitled to the possession of the certificates of title, the
RTC properly denied the motion to call on plaintiffs surety bond; that, any claim for damages against
the bond was only proper with respect to any loss that DBP might have suffered by being compelled
to surrender the possession of the certificates of title pending trial of the action; that, in this case, the
motion to call on plaintiffs surety bond was filed after the trial was already terminated with the
issuance of the order of dismissal; and that, instead of moving to claim for damages, DBP sought to
quash the writ of seizure, even though it might already have some basis to claim for damages at that
time as could be gleaned from the wordings of their motion to dismiss the complaint, based on,
among others, improper venue and inapplicability of replevin as proper remedy.

Respondents, on the other hand, failed to file their comment despite several opportunities granted to
them. Thus, their right to file a comment on the petition for review was deemed waived.

In its Consolidated Reply,[23] dated August 15, 2016, DPB asserted that Section 20, Rule 57 of the
Rules of Court did not cover a situation where there was an instantaneous dismissal of the case due
to improper venue; that the damages resulting from the improper issuance of the writ of seizure
occurred only after the unjustified refusal of respondents to return the titles despite order from the
RTC; and, that DBP could not resort to the surety prior to recovering the titles from respondents at
any time during the trial or before the judgment became final and executory.

The Court's Ruling

The petition lacks merit.

The trial court did not reach the residual jurisdiction stage

Residual jurisdiction refers to the authority of the trial court to issue orders for the protection and
preservation of the rights of the parties which do not involve any matter litigated by the appeal; to
approve compromises; to permit appeals by indigent litigants; to order execution pending appeal in
accordance with Section 2, Rule 39; and to allow the withdrawal of the appeal, provided these are
done prior to the transmittal of the original record or the record on appeal, even if the appeal has
already been perfected or despite the approval of the record on appeal [24] or in case of a petition for
review under Rule 42, before the CA gives due course to the petition. [25]

The "residual jurisdiction" of the trial court is available at a stage in which the court is normally
deemed to have lost jurisdiction over the case or the subject matter involved in the appeal. This stage
is reached upon the perfection of the appeals by the parties or upon the approval of the records on
appeal, but prior to the transmittal of the original records or the records on appeal. In either instance,
the trial court still retains its so-called residual jurisdiction to issue protective orders, approve
compromises, permit appeals of indigent litigants, order execution pending appeal, and allow the
withdrawal of the appeal.[26]

From the foregoing, it is clear that before the trial court can be said to have residual jurisdiction over a
case, a trial on the merits must have been conducted; the court rendered judgment; and the
aggrieved party appealed therefrom.

In this case, there was no trial on the merits as the case was dismissed due to improper venue and
respondents could not have appealed the order of dismissal as the same was a dismissal, without
prejudice. Section 1(h), Rule 41 of the Rules of Civil Procedure states that no appeal may be taken
from an order dismissing an action without prejudice. Indeed, there is no residual jurisdiction to speak
of where no appeal has even been filed.[27]

In Strongworld Construction Corporation, et al. v. Hon. Perello, et al.,[28] the Court elucidated on the
difference between a dismissal with prejudice and one without prejudice:

We distinguish a dismissal with prejudice from a dismissal without prejudice. The former disallows
and bars the refiling of the complaint; whereas, the same cannot be said of a dismissal without
prejudice. Likewise, where the law permits, a dismissal with prejudice is subject to the right of appeal.

xxx

Section 1, Rule 16 of the 1997 Revised Rules of Civil Procedure enumerates the grounds for which a
motion to dismiss may be filed, viz.:

Section 1. Grounds. Within the time for but before filing the answer to the complaint or pleading
asserting a claim, a motion to dismiss may be made on any of the following grounds:

(a) That the court has no jurisdiction over the person of the defending party;
(b) That the court has no jurisdiction over the subject matter of the claim;
(c) That venue is improperly laid;
(d) That the plaintiff has no legal capacity to sue;
(e) That there is another action pending between the same parties for the same cause;
(f) That the cause of action is barred by a prior judgment or by the statute of limitations;
(g) That the pleading asserting the claim states no cause of action;
That the claim or demand set forth in the plaintiffs pleading has been paid, waived, abandoned,
(h)
or otherwise extinguished;
That the claim on which the action is founded is unenforceable under the provisions of the
(i)
statute of frauds; and
(j) That a condition precedent for filing the claim has not been complied with.
Section 5 of the same Rule, recites the effect of a dismissal under Sections i(f), (h), and (i), thereof,
thus:

SEC. 5. Effect of dismissal. Subject to the right of appeal, an order granting a motion to dismiss
based on paragraphs (f), (h), and (i) of section 1 hereof shall bar the refiling of the same action or
claim.

Briefly stated, dismissals that are based on the following grounds, to wit: (1) that the cause of action
is barred by a prior judgment or by the statute of limitations; (2) that the claim or demand set forth in
the plaintiffs pleading has been paid, waived, abandoned or otherwise extinguished; and (3) that the
claim on which the action is founded is unenforceable under the provisions of the statute of frauds,
bar the refiling of the same action or claim. Logically, the nature of the dismissal founded on any of
the preceding grounds is with prejudice because the dismissal prevents the refiling of the same action
or claim. Ergo, dismissals based on the rest of the grounds enumerated are without prejudice
because they do not preclude the refiling of the same action.

xxx

As has been earlier quoted, Section i(h), Rule 41 of the 1997 Revised Rules of Civil Procedure
mandates that no appeal may be taken from an order dismissing an action without prejudice. The
same section provides that in such an instant where the final order is not appealable, the aggrieved
party may file an appropriate special civil action under Rule 65.[29]
Here, the RTC dismissed the replevin case on the ground of improper venue. Such dismissal is
one without prejudice and does not bar the refiling of the same action; hence, it is not appealable.
Clearly, the RTC did not reach, and could not have reached, the residual jurisdiction stage as the
case was dismissed due to improper venue, and such order of dismissal could not be the subject of
an appeal. Without the perfection of an appeal, let alone the unavailability of the remedy of appeal,
the RTC did not acquire residual jurisdiction. Hence, it is erroneous to conclude that the RTC may
rule on DBP's application for damages pursuant to its residual powers.

Equity cannot supersede the Rules of Court

DBP admits that it filed the application for damages after the order of dismissal had become final and
executory. In seeking relief from this Court, however, it invokes equity and argues that a strict
application of Section 20, Rule 57 of the Rules of Court would prejudice its right to recover damages
arising from the improper attachment of the certificates of title.

DBP, however, must be reminded that equity, "which has been aptly described as a 'justice outside
legality,' is applied only in the absence of, and never against, statutory law or, as in this case, judicial
rules of procedure.[30] The pertinent positive rules being present here, they should preempt and
prevail over all abstract arguments based only on equity."[31] As the Court has stated in Lim Tupas v.
CA,[32] "[e]motional appeals for justice, while they may wring the heart of the Court, cannot justify
disregard of the mandate of the law as long as it remains in force. The applicable maxim, which goes
back to the ancient days of the Roman jurists and is now still reverently observed - is 'aequetas
nunquam contravenit legis.'"[33]

Accordingly, the CA did not commit any reversible error when it applied the rules of procedure in
resolving the issue at hand.

The application for damages was belatedly filed

Section 10, Rule 60 of the Rules of Court provides that in replevin cases, as in receivership and
injunction cases, the damages to be awarded to either party upon any bond filed by the other shall be
claimed, ascertained, and granted in accordance with Section 20 of Rule 57 which reads:

SEC. 20. Claim for damages on account of illegal attachment. If the judgment on the action be in
favor of the party against whom attachment was issued, he may recover, upon the bond given or
deposit made by the attaching creditor, any damages resulting from the attachment. Such damages
may be awarded only upon application and after proper hearing, and shall be included in the
final judgment. The application must be filed before the trial or before appeal is perfected or before
the judgment becomes executory, with due notice to the attaching creditor and his surety or sureties,
setting forth the facts showing his right to damages and the amount thereof.

If the judgment of the appellate court be favorable to the party against whom the attachment was
issued, he must claim damages sustained during the pendency of the appeal by filing an
application with notice to the party in whose favor the attachment was issued or his surety or sureties,
before the judgment of the appellate court becomes executory. The appellate court may allow the
application to be heard and decided by the trial court. [Emphases supplied]
In other words, to recover damages on a replevin bond (or on a bond for preliminary attachment,
injunction or receivership), it is necessary (1) that the defendant-claimant has secured a favorable
judgment in the main action, meaning that the plaintiff has no cause of action and was not, therefore,
entitled to the provisional remedy of replevin; (2) that the application for damages, showing claimant's
right thereto and the amount thereof, be filed in the same action before trial or before appeal is
perfected or before the judgment becomes executory; (3) that due notice be given to the other party
and his surety or sureties, notice to the principal not being sufficient; and (4) that there should be a
proper hearing and the award for damages should be included in the final judgment. [34]

Likewise, to avoid multiplicity of suits, all incidents arising from the same controversy must be settled
in the same court having jurisdiction of the main action. Thus, the application for damages must be
filed in the court which took cognizance of the case, with due notice to the other parties.[35]

In this case, DBP filed the application for damages long after the order of dismissal had become final
and executory. It explained that this belated filing was due to its recourse to other remedies, such as
the enforcement of the writ of execution. The Court, however, finds this reason to be wanting in
persuasiveness. To begin with, the filing of an application for damages does not preclude resort to
other remedies. Nowhere in the Rules of Court is it stated that an application for damages bars the
filing of a motion for a writ of seizure, a writ of execution or any other applicable remedy. DBP, from
the beginning, had already perceived the attachment to be improper; hence, it could have easily filed
an application before the judgment became executory.

In Jao v. Royal Financing Corporation,[36] the Court precluded the defendant therein from claiming
damages against the surety bond because it failed to file the application for damages before the
termination of the case, thus:

x x x The dismissal of the case filed by the plaintiffs-appellees on July 11, 1959, had become final
and executory before the defendant-appellee corporation filed its motion for judgment on the bond
on September 7, 1959. In the order of the trial court, dismissing the complaint, there appears no
pronouncement whatsoever against the surety bond. The appellee-corporation failed to file its
proper application for damages prior to the termination of the case against it. It is barred to do
so now. The prevailing party, if such would be the proper term for the appellee-corporation, having
failed to file its application for damages against the bond prior to the entry of final judgment, the
bondsman-appellant is relieved of further liability thereunder. [Emphases supplied] [37]
Thus, the RTC has indeed no residual jurisdiction on DBP's claim for damages.

Remedies

The Court is not unmindful of the plight of DBP. Its chosen remedy, however, cannot be
countenanced as it disregards the Rules of Court and the settled jurisprudence on the matter.
Nevertheless, this is not to say that DBP has no other available remedies in order to recover
respondents' indebtedness.

First, DBP could enforce its guarantee agreement with GFSME. A contract of guaranty gives rise to a
subsidiary obligation on the part of the guarantor.[38] A guarantor agrees that the creditor, after
proceeding against the principal, may proceed against the guarantor if the principal is unable to pay.
Moreover, he contracts to pay if, by the use of due diligence, the debt cannot be made out of the
principal debtor.[39]

Further, it may file an action for damages based on Article 19 of the New Civil Code against
respondents for unlawfully taking the certificates of title, which served as security for their loan.
In Globe Mackay Cable and Radio Corporation v. Court of Appeals,[40] the Court held:

This article, known to contain what is commonly referred to as the principle of abuse of rights, sets
certain standards which must be observed not only in the exercise of one's rights, but also in the
performance of one's duties. These standards are the following: to act with justice; to give everyone
his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation
on all rights; that in their exercise, the norms of human conduct set forth in Article 19 must be
observed. A right, though by itself legal because recognized or granted by law as such, may
nevertheless become the source of some illegality. When a right is exercised in a manner which does
not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is
thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down
a rule of conduct for the government of human relations and for the maintenance of social order, it
does not provide a remedy for its violation. Generally, an action for damages under either Article 20
or Article 21 would be proper.[41] [Emphasis supplied]
Finally, nothing precludes DBP from instituting an action for collection of sum of money against
respondents. Besides, if the parcels of land covered by the certificates of title, which DBP sought to
recover from respondents, were mortgaged to the former, then DBP, as mortgage-creditor, has the
option of either filing a personal action for collection of sum of money or instituting a real action to
foreclose on the mortgage security. The two remedies are alternative and each remedy is complete
by itself. If the mortgagee opts to foreclose the real estate mortgage, he waives the action for the
collection of the debt, and vice versa.[42]

WHEREFORE, the petition is DENIED. The July 9, 2008 Decision and the January 21, 2011
Resolution of the Court of Appeals, in CA-G.R. SP No. 85719, are AFFIRMED in toto.

SO ORDERED.

DIVISION

[ GR No. 209794, Jun 27, 2016 ]

LAND BANK OF THE PHILIPPINES v. SPOUSES JOSE AMAGAN & AURORA


AMAGAN +

RESOLUTION

CAGUIOA, J:
The instant petition for review on certiorari under Rule 45 of the Rules of Court, with a prayer for the
issuance of a Preliminary Mandatory Injunction and the grant of a Writ of Replevin, seeks to reinstate
Petitioner Land Bank of the Philippines' (LBP) Complaint for Replevin [1]filed against Respondents
Spouses Jose and Aurora Amagan (Respondents).

The issues raised in this case are pretty straightforward: (1) whether the Office: of the Government
Corporate Counsel (OGCC) is the principal law office of Government Owned and Controlled
Corporations (GOCCs), and (2) whether the OGCC had validly consented to, or otherwise authorized,
the participation of the LBP Legal Services Group, in the prosecution of the instant Complaint for
Replevin.

In turn, the resolution of these issues is simple, direct and unequivocal. In a number of cases, this
Court has consistently held that it is the OGCC, and not the LBP Legal Services Group, which is the
principal law office tasked to primarily handle cases filed by or against LBP, but this does not
preclude participation of the LBP Legal Services Group as long as the OGCC consents to such
participation, and the LBP Legal Services Group acts under the control and supervision of the OGCC.
It is beyond cavil in this case that indeed the OGCC has consented to the filing by the LBP Legal
Services Group of the instant Complaint for Replevin, and its continued prosecution of the same. For
these reasons, we grant the Petition, reverse and set aside the questioned orders of the Regional
Trial Court, Branch 37, General Santos City, and accordingly order the reinstatement of Civil Case
No. 8042.

The salient facts that gave rise to the foregoing issues are very simple:

On March 31, 2011, LBP, through the LBP Legal Services Group, filed a Complaint for
Replevin,[2] docketed as Civil Case No. 8042 and raffled to Branch 37 of the Regional Trial Court of
General Santos City (RTC).

After LBP filed an Amended Complaint, pursuant to the April 27, 2011 Order of the RTC, specifically
indicating the properties and chattels subject of the same,[3] Respondents filed a Motion to
Dismiss,[4] which was followed by another Motion to Dismiss (with Urgent Prayer for Quashal of Writ
of Replevin)[5] both anchored on the fact that the instant Complaint for Replevin was not filed or
initiated by the OGCC, and that the LBP Legal Services Group is not authorized to initiate the instant
complaint against Respondents.

In its Comment/Opposition filed on June 14, 2012,[6] LBP informed the RTC that the OGCC had, in
fact, earlier issued Letters of Authority[7] as far back as June 5, 2009, already authorizing, and
delegating its powers to, the LBP Legal Services Group, through Attys. Rosemarie M. Osoteo, Nestor
A. Velasco, and Buenaventura R. Del Rosario, in order to appear as counsel for LBP in its current
and future cases.

Subsequently, in a Manifestation and Confirmation of Authority dated August 28, 2012, [8] the OGCC
confirmed the authority previously delegated to the aforementioned lawyers of the LBP Legal
Services Department signed by no less than Government Corporate Counsel Raoul C. Creencia.[8a]

Notwithstanding the foregoing clarifications, the RTC, on April 18, 2013, issued the first assailed
Order[9] dismissing the Petition for Replevin, to wit:

WHEREFORE, in view of all the foregoing and for the reason that plaintiff has strayed from the
commonly accepted practice among agencies or instrumentalities of the government to avail of the
service or facilities of the Government Service Insurance System for their insurable interest and for
the complaint not being filed or instituted by the proper party, as provided by law, amounting to lack of
cause of action, the Complaint for Replevin is DISMISSED.

The wrench [sic] of replevin imposed on the properties proceeding from the order of this court dated
18 July 2011 is lifted. Defendants are restored in good standing in the operation of the processing
complex and all the machineries and facilities contained therein. Accordingly, the Sheriff of this court
is relieved of his duties as custodial overseer of the complex. The visitorial authority of the Sheriff, on
behalf of the court, stays unless revoked or modified by a competent court or authority.

SO ORDERED.[10]
In a Motion for Reconsideration dated April 29, 2013, signed by the OGCC, LBP sought to reconsider
the first assailed Order.[11]
On October 1, 2013, the RTC issued the second assailed Order [12] denying the Motion for
Reconsideration, to wit:

The court stands by its resolution. The complaint was not initiated by the Office of the Government
Corporate Counsel as shown by the absence of the signature of any government corporate counsel in
any part of the complaint. If it is any further indication of the non-participation of the OGCC in the
complaint, the papers used did not bear the zeal [sic] of the agency. The authority to attend hearings
on this case or even the signature of ATTY. RAOUL C. CREENCIA, a government corporate counsel,
cannot supplant the mandatory requirement of the law for the complaint to be initiated by the OGCC.
These assertions of plaintiff cannot substitute for the specific act required of the OGCC to perform
namely, to file the case directly or serve as a curative potion that could retroact to the time of the filing
of the case.

The signature of ATTY. RAOUL C. CREENCIA, a Government Corporate Counsel in the Motion for
Reconsideration filed by the Legal Department of Land Bank has just heightened the obvious that the
complaint was not initiated by the OGCC as mandated by law. This is no simple technical defect that
can be rectified by the simple expedeniency [sic] of affixing a signature of a government corporate
counsel in the Motion for Reconsideration. This is too little too late. This is about substantive law
which need to be observed or complied with to entrench the complaint with authority.

This court wishes to point out by way of further emphasis that the plaintiff bank deviated from a time
honored practice among government agencies to engage the services of the Government Service
Insurance System for their insurance needs and requirements. This may not be mandatory but is
advisable.

WHEREFORE, for the foregoing reasons, plaintiffs Motion for Reconsideration is DENIED.

SO ORDERED.
Hence, this Petition, filed directly with this Court on pure questions of law.

As stated at the outset, we find meritorious, and accordingly grant, the Petition.

Section 10, Chapter 3, Title III, Book IV, of the Administrative Code of 1987 explicitly designates the
OGCC as the principal law office of GOCCs and their subsidiaries, grants it control and supervision
over all legal departments or divisions thereof, and empowers it to promulgate rules and regulations
to effectively implement the objectives of the office of the OGCC:

Section 10. Office of the Government Corporate Counsel. - The Office of the Government Corporate
Counsel (OGCC) shall act as the principal law office of all government-owned or controlled
corporations, their subsidiaries, other corporate off-springs and government acquired asset
corporations and shall exercise control and supervision over all legal departments or divisions
maintained separately and such powers and functions as are now or may hereafter be provided by
law. In the exercise of such control and supervision, the Government Corporate Counsel shall
promulgate rules and regulations to effectively implement the objectives of the Office.
In turn, Rule 5, Section 1 of the Rules Governing the Exercise by the Office of the Government
Corporate Counsel of its Authority, Duties and Powers as Principal Law Office of all GOCCs (2011
OGCC Rules) states that the OGCC shall handle all cases by the GOCCs, unless the legal
departments of its client government corporations or entities are duly authorized or deputized
by the OGCC.

This Court had earlier occasion to tackle this question in Land Bank of the Philippines v. Teresita
Panlilio-Luciano,[13] which authority was cited in the Letters of Authority issued by the
OGCC,[14] where it was already definitively held that the LBP Legal Department was not precluded
from participating as counsel for LBP, as long as the OGCC consents to such participation, and the
said Legal Department acts under the control and supervision of the OGCC. In Land Bank of the
Philippines v. AMS Farming Corporation,[15] this Court already recognized the letter of authority of the
OGCC giving its conformity to and acquiescence for the LBP Legal Department to appear as its
collaborating counsel in all LBP cases, and that there was no need for the concurrence of the COA
since the LBP was being represented by its own Legal Department and was not incurring additional
cost for the said legal services.

In Luciano, we already clarified the dynamics of OGCC's role as principal law office of all GOCCs and
that of the LBP Legal Services Group[16] - which ruling has been consistently invoked by this Court in
a number of cases involving LBP:[17]

Does this ruling of the Court likewise preclude participation in this petition from the LBP Legal
Department? It does not, so long as the OGCC consents to such participation, and the Legal
Department so acts under the control and supervision of the OGCC. For all practical intents, the
members of the LBP Legal Department would be free to develop the theories behind this case, or to
draft and co-sign pleadings. However, these actions must meet the approval of the OGCC, such
approval being sufficiently evidenced by the OGCC's signature on the pleadings filed before this
Court.[18] (Emphasis supplied)
Here, there is no serious dispute that the OGCC had, in fact, directly participated as counsel for LBP
when it filed its Manifestation and Confirmation of Authority before the RTC, attaching thereto the
Letters of Authority it had earlier issued which authorized the lawyers in the LBP Legal Sendees
Group to handle the instant case. To be sure, subsequent pleadings and motions in the RTC and in
this Court were filed by the OGCC as the lead counsel of LBP, with the LBP Legal Services Group
acting as collaborating counsel thereof. These filings of the OGCC clearly and unequivocally
demonstrate the OGCC's control and supervision over the actions of the LBP Legal Services Group,
and its approval of the actions already undertaken by the latter.

Considering that the OGCC already entered its appearance as lead counsel for LBP in the instant
case, and had clearly demonstrated that the suit of LBP was being litigated by its "principal law
office," then the ratiocination by the court a quo in its second assailed Order dated October 1, 2013 -
that the complaint should still have been initiated by the OGCC - is clearly puerile, and unduly puts
stress on a technicality that, in the final analysis, does not even exist. Accordingly, the assailed orders
of April 18, 2013 and October 1, 2013 should be, as they are hereby, reversed.

As to the legality of LBP's act of obtaining the required replevin bond from a private insurance firm
and not from the GSIS, this has been rendered a non-issue by the RTC itself as it had acknowledged
the legality of obtaining bonds from private insurance companies. [19]

Lastly, as regards the Petition's prayer for the issuance of a Preliminary Mandatory Injunction to allow
it and/or its authorized representatives to inspect and conduct an appraisal of the chattels mortgaged
by Respondents to determine their current condition and value, we note that its exercise would, in this
case, require a determination of the facts and circumstances on which the prayer is premised. As
such, the lower court would be in a better position to hear and resolve these factual assertions. [20]

In this connection, this Court has, in the past, under authority of Section 6, Rule 46 of the Rules of
Court, remanded cases to lower courts for the reception of evidence and determination of
facts.[21] Given the urgency of the matter, the RTC is ordered to act with dispatch on petitioner's
prayer for the issuance of a Preliminary Mandatory Injunction and the grant of a Writ of Replevin.

WHEREFORE, PREMISES CONSIDERED, the petition for review filed by Petitioner Land Bank of
the Philippines is GRANTED, as follows:

1. Civil Case No. 8042 is hereby REINSTATED; and

2. the Regional Trial Court, Branch 37, General Santos City is hereby directed to immediately set a
hearing for the reception of evidence and accordingly resolve with dispatch the prayer for the
issuance of a Preliminary Mandatory Injunction and the grant of a Writ of Replevin.

SO ORDERED.

THIRD DIVISION

[ G.R. No. 209011, April 20, 2016 ]

MALAYAN INSURANCE COMPANY, INC., PETITIONER, VS. DIANA P. ALIBUDBUD,


RESPONDENT.

DECISION

REYES, J.:
Before this Court is a Petition for Review[1] under Rule 45 of the 1997 Rules of Court filed by Malayan
Insurance Company, Inc. (Malayan) seeking to reverse and set aside the Decision [2] dated May 15,
2013 and Resolution[3] dated September 6, 2013 of the Court of Appeals (CA) in CA-G.R. CV No.
92940, which dismissed their complaint for replevin against Diana P. Alibudbud (Alibudbud) for lack of
jurisdiction.

Factual Background

Alibudbud was employed by Malayan on July 5, 2004 as Senior Vice President (SVP) for its Sales
Department. As SVP, she was issued a 2004 Honda Civic sedan bearing plate no. XPR 822 under
Malayan's Car Financing Plan[4] conditioned on the following stipulations: (1) she must continuously
stay and serve Malayan for at least three full years from the date of the availment of the Car
Financing Plan; and (2) that in case of resignation, retirement or termination before the three-year
period, she shall pay in full 100% share of Malayan and the outstanding balance of his/her share of
the cost of the motor vehicle.[5]

Relatively, Alibudbud also executed a Promissory Note [6] and a Deed of Chattel Mortgage[7] in favor of
Malayan wherein it was expressly stated that: (1) the loan of P360,000.00 shall be payable in 60
equal monthly installments at the rate of P7,299.50 each, commencing on August 15, 2004 and every
succeeding month thereafter until fully paid; (2) Alibudbud shall refund Malayan an amount equivalent
to its 50% equity share in the motor vehicle, or P360,000.00 if she leaves Malayan within three years
from the availment of the subject vehicle; (3) should Alibudbud resign, retire or otherwise be
terminated or separated from Malayan's employ, any remaining unpaid balance on the principal
obligation shall immediately fall due and demandable upon her who shall remit the same to Malayan
within five days from effectivity of such separation/termination; (4) Malayan is authorized to apply to
the payment of outstanding obligation of Alibudbud any such amounts of money that may be due her
from the company; (5) interests on all amounts outstanding as of the date when all Alibudbud's
obligations are treated immediately due and payable, shall be compounded every 30 days until said
obligations are fully paid; (6) Alibudbud shall pay a penalty at the rate of 16% per annum on all
amounts due and unpaid; (7) in case Alibudbud fails to pay any installment, or any interest, or the
whole amount remaining unpaid which has immediately become due and payable upon her
separation from the Malayan, the mortgage on the property may be foreclosed by Malayan, or it may
take other legal action to enforce collection of the obligation; (8) upon default, Alibudbud shall deliver
the possession of the subject vehicle to Malayan at its principal place of business; and (9) should
Alibudbud fail or refuse to deliver the possession of the mortgaged property to Malayan, thereby
compelling it to institute an action for delivery, Alibudbud shall pay Malayan attorney's fees of 25% of
the principal due and unpaid, and all expenses and cost incurred in relation therewith including the
premium of the bond obtained for the writ of possession.[8]

On July 18, 2005, Alibudbud was dismissed from Malayan due to redundancy. In view thereof,
Malayan demanded that she surrender the possession of the car to the company. Alibudbud sternly
refused to do so.

On September 21, 2005, Malayan instituted a Complaint[9] for replevin and/or sum of money before
the Regional Trial Court (RTC) of Manila and prayed for the seizure of the car from Alibudbud, or that
she be ordered to pay P552,599.93 representing the principal obligation plus late payment charges
and P138,149.98 as attorney's fees, should said car be no longer in running and presentable
condition when its return be rendered impossible.

On October 12, 2005, Alibudbud, in turn, filed a complaint[10] for illegal dismissal against Malayan
before the Labor Arbiter (LA) wherein she prayed for her reinstatement.

In her Answer with Compulsory Counterclaim,[11] Alibudbud asseverated that a reasonable


depreciation of 20% should be deducted from the subject vehicle's book value of P720,000.00, or
P576,000.00, which makes her liable to pay only P288,000.00 for the car's value. [12]She asserted a
counterclaim of P17,809.00[13] as compensatory damages and P40,000.00 as attorney's fees.[14] She
prayed for the suspension of the proceedings in view of the pendency of the labor dispute she filed.
This was, however, questioned by Malayan in its reply[15] as there was no prejudicial
question[16] raised in the labor dispute.

On January 30, 2006, Alibudbud filed a Motion to Suspend Proceedings [17] to reiterate her prayer to
defer the proceedings, asseverating that the labor case she filed presents a prejudicial question to the
instant case. She explained that the resolution of the labor case will determine her rights and
obligations, as well as that of Malayan.

In an Order[18] dated February 17, 2006, the RTC of Manila, Branch 27, denied Alibudbud's motion. It
was opined that: (1) reference shall be made only on the Promissory Note which Alibudbud executed
in favor of Malayan in determining the rights and obligations of the parties; (2) the cause of action in
the replevin case is rooted from the Promissory Note; and (3) the issue in the labor dispute is in no
way connected with the rights and obligations of the parties arising out of the Promissory Note.

Trial on the merits ensued.

On July 13, 2006, Alibudbud moved for the dismissal[19] of the action grounded on the impropriety of
the bond put up by Malayan. This was, however, denied by the RTC in its Order[20] dated October 5,
2006 with the pronouncement that Malayan "can[,] by itself[,] file a surety bond in order to guaranty
the return of the subject property to the adverse party if such return be finally adjudged x x x."[21]

Alibudbud sought for reconsideration,[22] but it was denied in the RTC's Order[23] dated December 19,
2006.

Alibudbud then successively filed motions to suspend the proceedings in the civil case anchored on
the same averment that suspension is necessary since she is seeking reinstatement in the labor case
which, if granted, would result to irreconcilable conflict not contemplated by law, much less conducive
to the orderly administration of justice.[24] However, both motions were denied in an Order[25] dated
June 6, 2007. The RTC pointed out that the issue raised in the civil action is completely separable
with the issue raised in the labor case.[26]

Malayan applied for an ex-parte issuance of a writ of preliminary attachment,[27] which the RTC
granted in its Order dated June 8, 2007.[28] The Honda Civic sedan was, accordingly, attached.

Meanwhile, the complaint for illegal dismissal filed by Alibudbud was dismissed. The LA's
Decision[29] dated February 19, 2008 held that the redundancy she suffered resulted from a valid re-
organization program undertaken by Malayan in view of the downturn in the latter's sales. [30] It further
ruled that Alibudbud failed to establish any violation or arbitrary action exerted upon her by Malayan,
which merely exercised its management prerogative when it terminated her services. [31]

On November 28, 2008, the RTC rendered a Decision[32] which granted the complaint for replevin.
The RTC mentioned the following observations and conclusions, to wit: (1) Alibudbud is under
obligation to pay in full the acquisition cost of the car issued to her by Malayan; (2) the LA's Decision
dated February 19, 2008 which dismissed the illegal dismissal complaint settled the issue being
banked upon by Alibudbud when she moved for the suspension of the proceedings in the civil action;
(3) Alibudbud's ownership over the car is not yet absolute for it bears the notation "encumbered",
thereby signifying her obligation to pay its value within the period set forth in the Promissory Note and
Deed of Chattel Mortgage; and (4) the replevin action was converted into a money claim in view of
Alibudbud's vehement refusal to surrender the possession of the car.

Ruling of the CA

On appeal, the CA ruled, in its Decision[33] dated May 15, 2013, to set aside the decision of the trial
court. The CA explained that the RTC has no jurisdiction to take cognizance over the replevin action
because of the "employer-employee" relations between the parties which Malayan never denied.
Certainly, Alibudbud could not have availed of the benefits of the Car Financing Plan if she was not
employed by Malayan. Citing Section 1,[34] Rule 9 of the 1997 Rules of Court, the CA upheld to
dismiss the replevin action considering that the ground of lack of jurisdiction may be raised at any
stage of the proceedings since jurisdiction is conferred by law.[35]

Malayan's motion for reconsideration[36] was denied.[37] Hence, this petition.

Ruling of the Court

The petition is impressed with merit.

It is well-settled that "(t)he jurisdiction of the Supreme Court in cases brought to it from the CA is
limited to reviewing and revising the errors of law imputed to it, its findings of fact being conclusive. In
several decisions, however, the Court enumerated the exceptional circumstances when the Supreme
Court may review the findings of fact of the CA,"[38] such as in the instant case.

A careful study of the case would reveal that the RTC correctly took cognizance of the action for
replevin contrary to the pronouncement of the CA.

"Replevin is an action whereby the owner or person entitled to repossession of goods or chattels may
recover those goods or chattels from one who has wrongfully distrained or taken, or who wrongfully
detains such goods or chattels. It is designed to permit one having right to possession to recover
property in specie from one who has wrongfully taken or detained the property. The term may refer
either to the action itself, for the recovery of personalty, or to the provisional remedy traditionally
associated with it, by which possession of the property may be obtained by the plaintiff and retained
during the pendency of the action."[39]

In reversing the trial court's ruling, the CA declared that "[Alibudbud] could not have availed of the Car
Financing Plan if she was not an employee of [Malayan]. The status of being an employee and officer
of [Alibudbud] in [Malayan] was, therefore, one of the pre-condition before she could avail of the
benefits of the Car Financing Plan. Such being the case, there is no doubt that [Alibudbud's] availing
of the Car Financing Plan being offered by [Malayan] was necessarily and intimately connected with
or related to her employment in the aforesaid Company." [40]

It should be noted, however, that the present action involves the parties' relationship as debtor and
creditor, not their "employer-employee" relationship. Malayan's demand for Alibudbud to pay the 50%
company equity over the car or, to surrender its possession, is civil in nature. The trial court's ruling
also aptly noted the Promissory Note and Deed of Chattel Mortgage voluntarily signed by Alibudbud
to secure her financial obligation to avail of the car being offered under Malayan's Car Financing
Plan.[41] Clearly, the issue in the replevin action is separate and distinct from the illegal dismissal
case. The Court further considers it justified for Malayan to refuse to accept her offer to settle her car
obligation for not being in accordance with the Promissory Note and Deed of Chattel Mortgage she
executed.[42]Even the illegal dismissal case she heavily relied upon in moving for the suspension of
the replevin action was settled in favor of Malayan which was merely found to have validly exercised
its management prerogative in order to improve its company sales.

As consistently held, "[t]he characterization of an employee's services as superfluous or no longer


necessary and, therefore, properly terminable, is an exercise of business judgment on the part of the
employer. The wisdom and soundness of such characterization or decision is not subject to
discretionary review provided, of course, that a violation of law or arbitrary or malicious action is not
shown."[43]

WHEREFORE, in view of the foregoing, the Decision dated May 15, 2013 and Resolution dated
September 6, 2013 of the Court of Appeals in CA-G.R. CV No. 92940 are REVERSED and SET
ASIDE. The Decision dated November 28, 2008 of the Regional Trial Court of Manila, Branch 27, in
Civil Case No. 05-113528 is, accordingly, REINSTATED.

SO ORDERED.