RIZZAJAY R. CASTRO SPECIAL CIVIL ACTION & PROVISIONAL REMEDIES

ATTY. CHRISTIAN VILLASIS TUE 5:30 - 8:30 PM

HW CASE DIGESTS 3

1)

ADOMA V GATCHECO A.M. No. P-05-1942. January 17, 2005

FACTS :

Complainant Adoma claimed that A Writ of Replevin for the recovery of an L-300 van was issued in his favor. Respondent Sheriff Gatcheco implemented the writ. Gatcheco was accompanied by respondent Eugenio Taguba, a process server of MTCC, Santiagao City. After the two respondents seized the vehicle, they demanded payment of P8,000.00, allegedly promised by complainant Adoma but the latter was able to give only P1,000.00 and another P1,000.00 the following day.

Writ of Replevin stated that the vehicle will be delivered to complainant after 5 days from the implementation thereof. With the vehicle still undelivered on the 7th day, complainant Adoma threatened to file an administrative case against respondent Sheriff Gatheco. FInally, respondent Gatcheco was force to released the vehicle to complainant. Respondent continued to demand P6,000.00. Hence this administrative case.

Court referred the instant administrative complaint to Judge Albano, Executive Judge, Regional Trial Court, Isabela, for investigation, report and recommendation.

Judge Madrid found the testimony of complaint corroborated by two witnesses, to be more credible. However, she found that respondent sheriff did not actually demand money for the implementation of the writ because it was complainant who promised to give money in exchange for the implementation of the writ of replevin. Judge Madrid concluded that respondent Sheriff is guilty of misconduct considering that he accepted partial payment and insisted on its full payment.

As to respondent Taguba, Judge Madrid recommended that he be reprimanded for trying to abet the misconduct of respondent sheriff. Court referred the case to the OFfice of the Court Administrator (OCA) for evaluation, report and recommendation.

OCA affirmed investigating Judge Madrid’s report and recommended Sheriff guilty for conduct of unbecoming a court employee and that respondent Taguba be reprimanded for trying to abet the misconduct of a fellow employee of another court.

ISSUE :

Whether Respondent Gatcheco and Taguba is guilty of the administrative complaint filed against them and for violating Sec. 9, Rule 141 of ROC which states the procedure for the execution of writs and other processes.

RULING :

Section 9, Rule 141 of ROC, states the procedure for the execution of writs and other processes are: first, the sheriff must make an estimate of the expenses to be incurred by him; second, he must obtain court approval for such estimated expenses; third, the approved estimated expenses shall be deposited by the interested party with the Clerk of Court and ex-oficio sheriff; fourth, the Clerk of Court shall disburse the amount to the executing sheriff; and fifth, the executing sheriff shall liquidate his expenses within the same period for rendering a return on the writ. Any amount received by the sheriff in excess of the lawful fees allowed by the Rules of Court is an unlawful exaction which renders him liable for grave misconduct and gross dishonesty.

In the instant case, Respondent Sheriff totally disregarded the aforecited procedure. He failed to make and submit estimate of the sheriffs expenses. The amounts received and demanded by him are therefore unauthorized fees. His acts of accepting and soliciting said monetary considerations make him liable not only for conduct unbecoming a court employee but also for grave misconduct and dishonesty.

Moreover, Respondent Sheriff deliberately failed to place complainant in possession of the vehicle after five days from the implementation of the writ because the latter failed to give the whole amount he promised. Since Petitioner did not object to the complainants bond nor posted a redelivery bond to recover possession of the vehicle taken under the writ of replevin, Respondent sheriff is under obligation to deliver the van to complainant. However, it took respondent sheriff 13 days before he released the vehicle to complainant, a clear violation of Section 6, Rule 60 of the 1997 Revised Rules of Civil Procedure which provides:

SEC. 6. Disposition of property by sheriff. If within five (5) days after the taking of the property by the sheriff, the adverse party does not object to the sufficiency of the bond, or of the surety or sureties thereon; or if the adverse party so objects and the court affirms its approval of the applicant’s bond or approves a new bond, or if the adverse party requires the return of the property but his bond is objected to and found insufficient and he does not forthwith file an approved bond, the property shall be delivered to the applicant. If for any reason the property is not delivered to the applicant, the sheriff must return it to the adverse party.

Procedure for execution of a final judgment is the same as that in carrying out a writ of preliminary attachment, as set forth in Rule 141 of the Rules of Court.

Respondent not only utterly failed to live up to the high ethical standards required of a sheriff, but also, he totally ignored Section 9, Rule 141 of the Rules of Court. Respondent failed to demonstrate that he followed the procedure laid down by Rule 141.

Section 52, Rule IV of the Uniform Rules on Administrative Cases in the Civil Service (Resolution No. 991936, provides:

Section 52. Classification of Offenses. - Administrative offenses with corresponding penalties are classified into grave, less grave or light, depending on their gravity or depravity and effects on the government service.

A. The following are grave offenses with their corresponding penalties:

1. Dishonesty1st Offense Dismissal;

3. Grave Misconduct1st Offense Dismissal;

20. Conduct prejudicial to the best interest of the service1st offense Suspension (6 mos. 1 day to 1 year)2nd offense Dismissal

With respect to respondent Taguba, we find the sanction of reprimand too light a penalty for his transgression. Although it was not him who deliberately delayed the delivery of the vehicle to force complainant to yield to the Sheriff’s demand, and that complainant did not point to him as the one who received the amount of P2,000.00, respondent Taguba assisted respondent sheriff in soliciting money from complainant. Note that respondent Taguba is a process server of another branch of the MTCC of Santiago City but he volunteered to aid respondent sheriff in the implementation of the writ.

WHEREFORE, Romeo Gatheco, Sheriff III is found GUILTY of Grave Misconduct, Dishonesty and Conduct and Respondent Eugenio Taguba, Process Server, Municipal Trial Court is GUILTY of Conduct

2)

THOMAS YANG vs THE HONORABLE MARCELINO R. VALDEZ ET. AL.G.R. NO. 73317 August 31, 1989

FACTS:

Respondent spouses Ricardo and Milagros Morante filed an action in the RTC Branch 22 of General Santos City to recover possession of 2 Isuzu Cargo Trucks against Petitioner Thomas Yang and Manuel Yaphuckon. The trucks were however registered in the name of petitioner Thomas Yang and the same were in the possession of Manuel Yaphuckon.

Respondent Judge Valdez issued an order of seizure directing the Provincial Sheriff to take immediately possession and custody of the vehicles involved.

Manuel Yaphuckon filed a Motion seeking repossession of the cargo trucks and posted a Replevin counter-bond of P560,000.00 but was disapproved by the Respondent Judge.

Respondent Spouses amended their complaint by excluding Manuel Yaphuckon as Party Defendant. The trial court ordered the release and delivery of the Cargo Trucks to Respondent Spouses.

Petitioner Yang put up a Counter-bond in the amount of P560,000.00 which was denied by the Respondent Judge for having filed out of time.

ISSUES:

Whether respondent judge erred in issuing replevin though the trucks were registered in the name of petitioner; and Whether petitioner’s counter-bond filed out of time

RULING:

The provisional remedy of Replevin is in the nature of possessory action and the applicant who seeks immediate possession of the property involved need not be the holder of legal title to the property. It suffices, if at the time he applies for Writ of Replevin, he is, in the words of Section 2, Rule 60, entitled to the possession thereof.

Section 2. Rule 60. Affidavit and Bond. – The applicant must show by his own affidavit or that of some other person who personally knows the facts:

(a) That the applicant is the owner of the property claimed, particularly describing it, or is entitled to the possession thereof;

(b) That the property is wrongfully detained by the adverse party, alleging the cause of detention thereof according to the best of his knowledge, information, and belief;

(c) That the property has not been distrained or taken for a tax assessment or a fine pursuant to a law, or seized under a writ of execution or preliminary attachment, or otherwise placed under custodial egis, or if so seized, that it is exempt from such seizure or custody; and

(d) The actual market value of the property.

Even at the inception of the service of summons and a copy of the order of replevin, Defendant Yang had already been duly served, especially so, when counsel manifested in their comment to the opposition filed by the plaintiffs that Manuel Yaphuckon has duly authorized to represent Petitioner Yang. From then on defendant should have been on guard as to the provision of Section 6. Rule 60, the five (5) days period within which to file the counter-replevin for the approval of the court, counted from the actual taking of the property by the sheriff.

3)

4)

SAN JUAN v JUDGE VALENZUELA

FACTS :

Petitioner Buenaventura San Juan and Private Respondent Dorotea Mejia’s marriage solemnized on was declared null and void by the Court of First Instance of Rizal on the ground of a prior and subsisting marriage between petitioner and one Isabel Bandin. Respondent Mejia instituted the instance action against petitioner, seeking support for herself and her two minor children. After issues were joined, Respondent Judge Valenzuela, on Motion of Mejia, rendered the judgement to wit;

Pursuant to Section 5, Rule 61 support pendente lite is hereby granted, and the same is fixed at P2,500.00 a month commencing from January 1, 1982 to be paid to the plaintiff on or the 5th day of each month until this case is finally adjudicated without prejudice to any judgment for support in arrears due the plaintiff if the evidence will so warrant after trial.chan

Petitioner filed a Motion for Reconsideration on the grounds that; 1. The amount was disproportionate. Since the Petitioner is not obliged to support respondent due to the marriage was declared null and void and that no evidence was presented as Petitioners resources which altogether was denied.

Pending resolution of this petition, Petitioner filed with the Trial Court a manifestation proposing to settle his obligation of P15,000.00, representing the amount of support which accrued from January to June, 1982 and to pay the same in three equal installments, the first to be paid upon approval by the court of his scheme of payment, and the balance within a period of 2 months thereafter which was subsequently approved by the court. Petitioner also prayed the reduction of the amount of support pendente lite to P1,000.00 monthly on the ground that the sum of P2,500.00 previously fixed by respondent judge is now beyond his means to pay According to private respondent. the court had not yet acted on petitioner's request for reduction of the monthly support because the respondent judge left for abroad.

ISSUE :

Whether or not the amount of support rendered by the lower court was proper and whether or not petitioner is obliged to support respondent and her minor children the marriage being null and void.

RULING :

Unquestionably, the petitioner's willingness to pay the amount of support pendente lite in the mariner indicated in his manifestation, and the approval thereof by the respondent Judge have rendered this petition moot and academic.

As to the factual issue of whether the amount of P2,500.00 previously fixed by respondent judge is now beyond the means of petitioner, the same should be resolved by the lower court on the basis of the evidence to be presented at the proper hearing. The order of December 24 fixing the amount of support pendente lite is not final in character in the sense that it can be the subject of modification, depending on the changing conditions affecting the ability of the obligor to pay the amount fixed for support.

5)

SPS. ESTANISLAO vs. EAST WEST BANKING CORPORATIONG.R. No. 178537 February 11, 2008

FACTS :

Petitioner Spouses obtained a loan from Respondent East West Banking Corporation in the amount of P3,925,000.00 evidenced by a promissory note and secured by 2 Deeds of Chattel Mortgage with one covering 2 dump trucks and a bulldozer to secure the loan amount of P2,375,000.00, the other covering bulldozer and a wheel loader to secure the loan amount of P1,550,000.00. Petitioner Spouses defaulted in the amortizations and the entire obligation became due and demandable.

Respondent bank filed a suit before the RTC of Antipolo for Replevin with damages, praying that the equipment covered by the first deed of chattel mortgage be seized and delivered to it. Respondent moved for suspension of the proceedings on account of an earnest attempt to arrive at an amicable settlement of the case.

RTC suspended the proceedings, and during the course of negotiations, a deed of assignment was drafted stating that, “the ASSIGNOR is indebted to the ASSIGNEE in the aggregate sum of P7,305,459.52, inclusive of accrued interests and penalties as of August 16, 2000, and in full payment thereof, the ASSIGNOR does hereby ASSIGN, TRANSFER and CONVEY unto the ASSIGNEE those motor vehicles, with all their tools and accessories. That the ASSIGNEE hereby accepts the assignment in full payment of the above-mentioned debt.”

Respondent filed a manifestation and motion to admit an amended complaint for the seizure and delivery of 2 more heavy equipment which are covered under the second deed of chattel mortgage.

Petitioners sought to dismiss the amended complaint. Spouses alleged that their previous payments on loan amortizations, the execution of the deed of assignment on August 16, 2000, and respondent’s acceptance of the 3 units of heavy equipment, had the effect of full payment or satisfaction of their total outstanding obligation which is a bar on respondent bank from recovering any more amounts from them.

The trial court dismissed the amended complaint for lack of merit. It held that the deed of assignment and the petitioners’ delivery of the heavy equipment effectively extinguished petitioners’ total loan obligation.

Upon appeal to the CA by the respondent the decision of the RTC was reversed.

Hence, this petition to the SC.

ISSUE :

Whether or not respondent is entitled to replevin on the alleged second chattel mortgage

RULING :

The Court held in the negative. CA erroneously denominated the Replevin suit as a collection case. Original and amended complaints show that what the Respondent initiated was a pure replevin suit, and not a collection case. Recovery of the heavy equipment was the principal aim of the suit; payment of the total obligation was merely an alternative prayer which respondent sought in the event manual delivery of the heavy equipment could no longer be made.

Replevin, broadly understood, is both a form of principal remedy and a provisional relief. It may refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the plaintiff by another, or to the provisional remedy that would allow the plaintiff to retain the thing during the pendency of the action and hold it pendente lite.

The deed of assignment was a perfected agreement which extinguished petitioners’ total outstanding obligation to the respondent. The deed explicitly provides that the assignor (petitioners), "in full payment" of its obligation in the amount of P7,305,459.52, shall deliver the three units of heavy equipment to the assignee (respondent), which "accepts the assignment in full payment of the above-mentioned debt." This could only mean that should petitioners complete the delivery of the three units of heavy equipment covered by the deed, respondent’s credit would have been satisfied in full, and petitioners’ aggregate indebtedness of P7,305,459.52 would then be considered to have been paid in full as well.

Since there is no more credit to collect, no principal obligation to speak of, then there is no more second deed of chattel mortgage that may subsist. A chattel mortgage cannot exist as an independent contract since its consideration is the same as that of the principal contract. Being a mere accessory contract, its validity would depend on the validity of the loan secured by it. This being so, the amended complaint for replevin should be dismissed, because the chattel mortgage agreement upon which it is based had been rendered ineffectual.

6)

DAISIE T. DAVID v COURT OF APPEALS, RAMON R. VILLAR

G.R. No. 111180 November 16, 1995

FACTS :

Petitioner Daisie T. David worked as secretary of Private Respondent Ramon Villar, a businessman, married and a father of 4 grown-up children. Petitioner and Private Respondent have an intimate relationship and as a

result, 3 children were born - Christopher J. (March 9, 1985), Christine ( June 9, 1986) and Cathy Mae April 24, 1988).

The relationship became known to Private Respondent's Wife when Daisie took Christopher J, to Villar's house and introduced him to Villar's legal wife. After this, the children of Daisie were freely brought by Villar to his house as they were eventually accepted by his legal family.

In the summer of 1991, Villar asked Daisie to allow Christopher J., then six years of age, to go with his family to Boracay. Daisie agreed, but after the trip, Villar refused to give back the child. Villar said he had enrolled Christopher J. for the next school year.

Daisie filed a petition for habeas corpus on behalf of Christopher J.

The RTC rendered decision in favor of the petitioner. On appeal, CA reversed and set aside RTC’s decision on the ground that habeas corpus is not proper in the case and that Villar is more capable to provide support for the child. Thus, this appeal.

ISSUES :

Whether the filing of the petitioner for habeas corpus is not proper in the case; and

Whether the petitioner has been deprived of her rightful custody of her child by the respondent

RULING :

NO.

The decision of the CA which was based on law and jurisprudence, wherein the question of custody of a minor child may be decided in a habeas corpus case contemplate a situation where the parents are married to each other but are separated, is untenable.

Rule 102, paragraph 1 of the Rules of Court provides that "the writ of habeas corpus shall extend to all cases of illegal confinement or detention by which any person is deprived of his liberty, or by which the rightful custody of any person is withheld from the person entitled thereto." Indeed, the Rule makes no distinction between the case of a mother who is separated from her husband and is entitled to the custody of her child and that of a mother of an illegitimate child who, by law, is vested with sole parental authority, but is deprived of her rightful custody of her child. Admittedly, petitioner has been deprived of her rightful custody of her child by private respondent, she is entitled to issuance of the writ of habeas corpus.

Second Issue -

Yes. Under Art. 213 of the Family Code, "No child under seven years of age shall be separated from the mother unless the court finds compelling reasons to order otherwise."

In the case at bar, as has already been pointed out, Christopher J., being less than seven years of age at least at the time the case was decided by the RTC, cannot be taken from the mother's custody. Even now that the child is over seven years of age, the mother's custody over him will have to be upheld because the child categorically expressed preference to live with his mother. Under Art. 213 of the Family Code, courts must respect the "choice of the child over seven years of age, unless the parent chosen is unfit" and here it has not been shown that the mother is in any way unfit to have custody of her child. Indeed, if private respondent loves his child, he should not condition the grant of support for him on the award of his custody to him (private respondent).

7)

TEODORO E. LERMA v. THE HONORABLE COURT OF APPEALS and CONCEPCION DIAZ

G.R. No. L-33352. December 20, 1974

FACTS :

Petitioner Lerma and Private Respondent Diaz are married. Petitioner filed a criminal complaint for Adultery

against the Respondent and a certain Teodoro Ramirez with the CFI of Rizal. 3 months after the said filing, the

Respondent filed with the lower court, a complaint against the petitioner for legal separation and/or

separation of properties, custody of their children and support, with an urgent petition for support pendente

lite for her and their youngest son. The Respondent’s complaint for legal separation is based on two grounds:

concubinage and attempt against her life.

Petitioner filed his opposition to the respondent’s application for support pendente lite, setting up as defense

the adultery charge he had filed against the Respondent.

RTC Judge granted the respondent’s application for support pendente lite. Petitioner then filed with

respondent Court of Appeals a petition for certiorari and prohibition with preliminary injunction to annul the

order of the trial court on the ground that they were issued with grave abuse of discretion. Respondent court

issued a writ of preliminary injunction to stop the Judge from enforcing his order.

Respondent court set aside the assailed orders and granted the Petitioner an opportunity to present evidence

before the lower court in support of his defense against the application for support pendente lite.

Respondent moved to reconsider the decision and this time, the respondent court, set aside its prior decision

and rendered another, dismissing the petition.

Hence an instant petition for review by certiorari. During the pendency of the petition, petitioner filed an

urgent motion for a writ of preliminary injunction and/or restraining order, alleging among others that the

respondent’s action for support should be dismissed on the ground that the respondent and her co-accused,

Teddy Ramirez, had been convicted by the Court of First Instance of Rizal and said judgment of conviction

was pending appeal in the Court of Appeals and that there has been an order issued ordering the petitioner to

pay the respondent the awarded support pendente lite and that unless the lower court was enjoined from

enforcing its assailed orders, the present petition would be rendered moot and academic, to the prejudice of

the petitioner.

The Court, acting on the petitioner’s motion, resolved "to issue a temporary restraining order effective

immediately and until further orders from this Court."

Required to comment on the petitioner’s urgent motion for preliminary injunction, the respondent filed an

opposition, with a prayer for the immediate lifting of the temporary restraining order issued ex-parte. The

opposition reiterated that: (1) that an order granting support pendente lite, although interlocutory, is

immediately executory even if appealed, unless enjoined; (2) that the dismissal of the petition by the

respondent Court of Appeals rendered functus oficcio the writ of preliminary injunction it had previously

issued; and (3) that under Article 292 of the New Civil Code, which provides that "during the proceedings for

legal separation, or for annulment of marriage, the spouses and children shall be supported from the conjugal

partnership property . . .," such support is mandatory even if there be a showing that the wife is guilty of

adultery.

Court denied the petitioner’s urgent motion for a writ of preliminary injunction. Petitioner filed this instant

motion for reconsideration. Court granted and reinstated the temporary restraining order previously issued

until further orders.

Petitioner maintains the lower court disregarded the procedural law on support pendente lite which is Rule

61 of the Revised Rules of Court, specifically Section 5 thereof, when it issued the disputed orders without

provisionally determining the pertinent facts of the case, particularly insofar as they might have a bearing on

its probable outcome, merely relying on the bare allegations of the complaint.

Petitioner also claims he was deprived of the opportunity to present evidence in support of his defense of

adultery against the respondent’s application for support pendente lite.

ISSUE :

Whether adultery is a good defense against the respondent’s claim for support pendente lite

RULING:

YES. Adultery is a good defense against an action for support pendente lite. Ruling has been adopted by the

Court in various cases. However, while adultery may be a defense in an action for personal support, that is,

support of the wife by the husband from his own funds, it is not a defense when the support is to be taken

from the conjugal partnership property.

Procedural law on support pendente lite is Rule 61 of the Revised Rules of Court, specifically Section 5

thereof, which partly provides:

"The court shall determine provisionally the pertinent facts, and shall render such order as equity and justice

may require, having due regard to the necessities of the applicant, the means of the adverse party, the

probable outcome of the case, and such other circumstances as may aid in the proper elucidation of the

questions involved. . . ."

The question of whether or not the petitioner should be allowed to present evidence in the lower court in

support of his defense that his wife had committed adultery has become moot and academic.

The Respondent CA, in upholding the questioned orders of the lower court, relied on Article 292 of the Civil

Code, which reads:

"ART. 292. During the proceedings for legal separation, or for annulment of marriage, the spouses

and children shall be supported from the conjugal partnership property. After the final judgment of

legal separation, or of annulment of marriage, the obligation of mutual support between the spouses

ceases. However, in case of legal separation, the court may order that the guilty spouse shall give

support to the innocent one, the judgment specifying the terms of such order."

It is suggested that while adultery may be a defense in an action for personal support, that is, support of the

wife by the husband from his own funds, it is not a defense when the support is to be taken from the conjugal

partnership property.

The Court did not see that the distinction is material in this case. In the first place Article 292 is not in itself

the source of the legal right to receive support. It merely states that the support, not only of the spouses but

also of the children, shall be taken from the conjugal property during the pendency of the legal separation

proceeding. It does not preclude the loss of such right in certain cases. In the second place, the said article

contemplates the pendency of a court action and, inferentially at least, a prima facie showing that the action

will prosper. For if the action is shown to be groundless, the mere filing thereof will not necessarily set Article

292 in operation.

This is also the sense of Section 5 of Rule 61, which requires, among other things, when support pendente lite

is applied for, that the court determine provisionally "the probable outcome of the case."

Article 100 of the Civil Code provides that "the legal separation may be claimed only by the innocent spouse,

provided there has been no condonation of or consent to the adultery or concubinage .. (and) where both

spouses are offenders, a legal separation cannot be claimed by either of them . . ."

In a provisional sense at lease, within the meaning of Rule 61 (Section 5), the probable failure of the

respondent’s suit for legal separation can be foreseen since she is not an innocent spouse, having been

convicted of adultery by the Court of First Instance. It is true that the judgment of conviction is on appeal in

the Court of Appeals, but the same undoubtedly satisfies the standard of provisional showing set by the

aforesaid Rule. If legal separation cannot be claimed by the guilty spouse in the first place, the fact that an

action for that purpose is filed anyway should not be permitted to be used as a means to obtain support

pendente lite, which, without such action, would be denied on the strength of the decisions of this Court

recognizing adultery as a good defense.

Otherwise, as pointed out by the petitioner, all that an erring spouse has to do to circumvent such defense

would be to file a suit for legal separation no matter how groundless.

The right to separate support or maintenance, even from the conjugal partnership property, presupposes the

existence of a justifiable cause for the spouse claiming such right to live separately. This is implicit in Article

104 of the Civil Code, which states that after the filing of the petition for legal separation the spouses shall be

entitled to live separately from each other. A petition in bad faith, such as that filed by one who is himself or

herself guilty of an act which constitutes a ground for legal separation at the instance of the other spouse,

cannot be considered as within the intendment of the law granting separate support. In fact under Article 303

of the same Code the obligation to give support shall cease "when the recipient, be he a forced heir or not, has

committed some act which gives rise to disinheritance;" and under Article 921 one of the causes for

disinheriting a spouse is "when the spouse has given cause for legal separation." The loss of the substantive

right to support in such a situation is incompatible with any claim for support pendente lite.

This ruling, of course, is not meant to be a prejudgment of either the legal separation proceeding pending in

the lower court or the criminal case for adultery pending in the Court of Appeals. It is to be understood only

in the light of Rule 61, Section 5, of the Rules of Court, which specifically governs the subject of support

pendente lite.

The Court set aside the resolution of respondent Court of Appeals and the orders of respondent Juvenile and

Domestic Relations Court and their enforcement enjoined, without prejudice to such judgment as may be

rendered in the pending action for legal separation between the parties.

8)

DE OLAYVAR v OLAYVARG.R. No. L-8088. November 29, 1955

FACTS :

Rosita Veloso De Olayvar instituted an action against Aristoteles Olayvar in the Court of First Instance of Leyte praying that support be given her and her four children coupled with a petition for support pendente lite. But earlier, defendant filed a case for legal separation in Cebu between the same parties on the ground of adultery wherein the right of plaintiff to demand support is incidentally involved.

Defendant in his answer to the later case (Leyte) set up as special defense about their pending case for legal separation in Cebu.

While the separation case in Cebu is pending, the court deemed it proper to hold in abeyance further action on the case for support for the reason that the case in Cebu "should have priority in order to ascertain the rights of the parties with particular reference to support in favor of the plaintiff." The court however modified later this ruling on the premise that, as the legal separation case might take a long time before it is finally disposed of, it is imperative that the matter of support be given preferential consideration.

After the failed attempt of the defendant to have this ruling reconsidered, he filed a motion to dismiss predicated on the same plea that there is between the same parties a case for legal separation in the Court of First Instance of Cebu invoking in his favor the rule that a complaint may be dismissed where "there is another action pending between the same parties for the same cause." [Rule 8, section 1(d)] And on March 24, 1954, the court entered an order dismissing the case in line with the plea of the defendant. This is the order subject of the present appeal.

ISSUE :

Whether the defendant’s claim that an action (support pendente lite) may be dismissed on the ground that "there is another action pending (legal separation) between the same parties for the same cause" tenable.

RULING :

YES. The defendant’s claim is tenable, thus the present action must be dismissed.

In order that an action may be dismissed on the ground that "there is another action pending between the same parties for the same cause" [Rule 8, section 1 (d)], the following requisites must concur: (1) identity of parties, or at least such as representing the same interests in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) the identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amount to res adjudicata in the other. 1 (Moran, Comments on the Rules of Court, 1952 ed., Vol. I, p. 169.)

Do these requisites concur in the two cases under consideration? An analysis of the facts deducible from the pleadings would reveal an affirmative answer. Note that the present action is for support not only of plaintiff but of her children. The action is predicated on the infidelity of defendant who because of his propensity towards other women made him neglectful of his marital duties. The case of legal separation, on the other hand, asserts adultery on the part of plaintiff which is a valid defense against an action for support. Our new Civil Code provides that the obligation to give support shall cease "when the recipient, be he a forced heir or not, has committed some act which gives rise to disinheritance" [Article 303 (4)], and under Article 921 of the same Code, it shall be sufficient cause for disinheritance "when the spouse has given cause for legal separation." It further appears that in the separation case the wife interposed an answer wherein, repudiating the charge of adultery, she demanded that she and her children be given the proper maintenance and support to which they are entitled under the law.

All of the foregoing show that the two cases raise practically the same issues. There is therefore no need of prosecuting them separately and independently for that would amount to duplicity of action. And as it appears that the case of legal separation was instituted earlier than the one for support, it is fair that the latter be dismissed as was correctly done by the lower court.

9)

IDONAH SLADE PERKINS v EUGENE ARTHUR PERKINS

G.R. No. 35787 September 12, 1932

FACTS :

The parties to this action are husband and wife, married in Manila in 1914, and the wife has entered suit for separate maintenance. The CFI of Manila granted certain amounts for maintenance and P1000 for cost of Litigation. Prior to the resolution of the action for separate maintenance filed by the wife, the court ordered for support in certain items of debts, advances, and living expenses existing at the time of the order fixing the monthly allowance. Such order is now the subject for appeal. Appellee, in her brief, has moved to dismiss the appeal contending that the order is interlocutory.

ISSUE :

Whether the extent to give support includes payment of certain items debts, advances, and living expenses.

RULING :

Article 148 of the Civil Code reads in part:

“The obligation to give support may be enforced whenever the person having a right to claim it requires such assistance for his or her maintenance; such allowance, however, shall only be paid from the date of the filing of the complaint,” and the character and the nature of the support is defined in Article 142. The pertinent portion thereof reads:

By support is understood all that is necessary for food, shelter, clothing and medical attendance, according to the social standing of the family.

In the opinion of the court, some of the items are clearly without the rules laid down in the Code, while others may be partly within the rules. Some, in their entirety, long precede the date of the filing of this suit.

While the item known as the “Manila Hotel” is evidently allowable in part, being for ordinary necessities of life, it covers a period both before and after the filing of the suit. Others, such as the claim for money loaned to the wife, are not within the rule (13 R. C. L., 1209; Ramirez and De Marcaida vs. Redfern, 49 Phil., 849). It is impossible, from the evidence of record, for this court to state how much should be allowed. It is also noted that no allowance has as yet been made for the period from the filing of suit to the date of allowance of

temporary maintenance two months thereafter. It is impossible, from the evidence of record, for this court to state how much should be allowed. It is also noted that no allowance has as yet been made for the period from the filing of suit to the date of allowance of temporary maintenance two months thereafter.

It being impossible for this court to state the amount that should be allowed, the case must be remanded for further proceedings in accord with the views herein expressed, and it is so ordered. No pronouncement is made regarding costs.

10)

LORENZO MENDOZA v PARUNGAO & DAVIDG.R. No. 26231 August 7, 1926

FACTS :

Court of First Instance of Nueva Ecija rendered judgment in civil case No. 3745 in which Respondent Gorgonia Paruñgao was plaintiff and the herein petitioner Lorenzo Mendoza defendant, declaring the Marriage between the two null on account of the return of the first husband of the petitioner, who had been dead after an absence of more than seven years.

Antonio Buenaventura, first husband of the Respondent Gorgonia Paruñgao, died in the barrio of Cebu in the municipality of Cabanatuan Nueva Ecija.

Said judgment annulling the marriage being on appeal, on September 14, 1925, the said respondent Gorgonia Paruñgao brought an action, numbered 3962 in the Court of First Instance of Nueva Ecija, against the petitioner Lorenzo Mendoza in which she alleged the existence of certain conjugal property acquired during her marriage with the said petitioner, and asked for a settlement of the same and the sum of P300 as alimony during the pendency of the suit.

Upon petition of a party the court issued an order directing the defendant Lorenzo Mendoza, during the pendency of the case and from the filing of the complaint, to pay the plaintiff the sum of P50 monthly and in advance by way of support.

Upon petition of the plaintiff, the court issued an order granting the said plaintiff support.

Defendant Lorenzo Mendoza filed a motion praying for the reconsideration.

Court of First Instance of Nueva Ecija issued another order of execution of the said order.

A writ of execution was issued against the property of the defendant in order to collect the sum of P325 the total amount of the monthly payments due.

Said writ of execution not having been complied with the Court of First Instance of Nueva Ecija, then presided over by the Honorable Manuel V. Moran, vacation judge, on June 8, 1926, issued an order citing the defendant Lorenzo Mendoza, the provincial sheriff Manuel Tecson, the deputy sheriff Laureano Aquino, and the other sheriff, Manuel Munsayac to appear and show cause why they should not be punished for contempt for not having complied with said writ of execution.

Court of First Instance of Nueva Ecija issued an order denying the motion of the defendant praying that the writs of attachment.

ISSUE :

Whether or not the respondent Gorgonia Paruñgao, when she filed her complaint for the liquidation of the conjugal property and alimony was entitled to support during the pendency of the action.

RULING :

The right to support between spouses arises from law (art. 143 of the Civil Code) and is based upon their obligation to mutually help each other created by the matrimonial bond. After the complaint for annulment of marriage has been filed by the wife and admitted she is entitled to support during the pendency of the suit (arts. 67 and 68, par. 4, Civil Code), but once the nullity is decreed, the right ceases, because the mutual obligation created by the marriage is extinguished.

Marriage of the respondent with the petitioner having been annulled, by virtue of the rule, she was no longer entitled to support. This does not mean, however, that she is not entitled to payment in advance of a part of her undetermined share of the conjugal property if, after the liquidation sought by her, there exists such conjugal property. In those states of the United States where the institution of conjugal partnership prevails, it has been held by the courts that the necessary sum may be taken from the community property for the support of the wife (24 C. J., 246; 31 C. J., 175).

In the case now before us, the order of the Court of First Instance may be considered as an order for the payment of P50 monthly as an advance payment on account of such share of the conjugal property as may be found from the liquidation to belong to Gorgonia Paruñgao. This order, however, being of an interlocutory character and not final (sec. 123, Act No. 190) no writ of execution can be issued thereon (sec. 443, Act No. 190; 23 C. J., 314); but it’s unjustified disobedience may constitute contempt of court and, after the proper proceedings prescribed by law in such cases, may be punished as such.

The issuance of the writs of execution on January 20 and March 23, 1926, and the order of June 8, 1926, to show cause in connection with the noncompliance of said writs of execution, constitutes an excess of jurisdiction, which is the proper subject-matter of the extraordinary remedy of certiorari.

For the foregoing and not considering it necessary to order the forwarding of the record to this court, the remedy applied for is granted, declaring void the writ of execution of March 23, 1926, and all the proceedings had therein and making the preliminary injunction issued by this court absolute, with the costs against the respondents.

11)

RIVERA v VARGAS G.R. No. 165895 June 5, 2009

FACTS:

Respondent Florencio Vargas filed a complaint against petitioner and several John Does before the Regional Trial Court (RTC) for the recovery of a 150 T/H rock crushing plant located in Sariaya, Quezon. In his complaint, Vargas claims ownership of the said equipment, having purchased and imported the same directly from Hyun Dae Trading Co., in South Korea. The equipment was allegedly entrusted to petitioner’s husband, Jan T. Rivera, who died, as caretaker of respondents construction aggregates business in Batangas. According to Vargas, petitioner failed to return the said equipment after her husband’s death despite his repeated demands, thus forcing him to resort to court action. The complaint was accompanied by a prayer for the issuance of a writ of replevin and the necessary bond amounting to P2,400,000.00.

Summons was served upon petitioner through her personal secretary at her residence in Parañaque City. Writ of replevin was served upon and signed by a certain Joseph Rejumo, the security guard on duty in petitioners crushing plant in Sariaya, Quezon contrary to the Sheriff’s return stating that the writ was served upon Rivera.

Rivera filed her answer, manifestation, and motion for the acceptance of petitioners redelivery bond. In her answer, petitioner countered that the rock-crushing plant was ceded in favor of her husband as his share following the dissolution of the partnership formed between Jan Rivera and respondent’s wife, Iluminada Vargas (Iluminada), while the partnerships second rock-crushing plant in Cagayan was ceded in favor of Iluminada. She further averred that from the time that the partnership was dissolved until Jan Rivera’s death, it was petitioner’s husband who exercised ownership over the said equipment without any disturbance from respondent.

The RTC issued an Order disapproving petitioner’s redelivery bond application for failure to comply with the requirements under Sections 5 and 6 of Rule 60 of the Rules of Court.Without directly saying so, the RTC faulted petitioner for her failure to file the application for redelivery bond within 5 days from the date of seizure as provided in the Rules of Court. Petitioner moved for reconsideration, but the same was also denied.

ISSUE :

Whether the RTC committed grave abuse of discretion in denying her counter-bond on the ground that it was filed out of time

RULING :

Replevin is one of the most ancient actions known to law, taking its name from the object of its process. It originated in common law as a remedy against the wrongful exercise of the right of distress for rent and, according to some authorities, could only be maintained in such a case. But by the weight of authority, the remedy is not and never was restricted to cases of wrongful distress in the absence of any statutes relating to the subject, but is a proper remedy for any unlawful taking. Replevied, used in its technical sense, means delivered to the owner,while the words to replevy means to recover possession by an action of replevin.

Broadly understood in this jurisdiction, replevin is both a form of principal remedy and of provisional relief. It may refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the plaintiff by another, or to the provisional remedy that would allow the plaintiff to retain the thing during the pendency of the action and to hold it pendente lite.The action is primarily possessory in nature and generally determines nothing more than the right of possession.

The law presumes that every possessor is a possessor in good faith. He is entitled to be respected and protected in his possession as if he were the true owner thereof until a competent court rules otherwise. Before a final judgment, property cannot be seized unless by virtue of some provision of law. The Rules of Court, under Rule 60, authorizes such seizure in cases of replevin. However, a person seeking a remedy in an action for replevin must follow the course laid down in the statute, since the remedy is penal in nature. When no attempt is made to comply with the provisions of the law relating to seizure in this kind of action, the writ or order allowing the seizure is erroneous and may be set aside on motion by the adverse party. Be it noted, however, that a motion to quash the writ of replevin goes to the technical regularity of procedure, and not to the merits of the case in the principal action.

The process regarding the execution of the writ of replevin in Section 4 of Rule 60 is unambiguous: the sheriff, upon receipt of the writ of replevin and prior to the taking of the property, must serve a copy thereof to the adverse party (petitioner, in this case) together with the application, the affidavit of merit, and the replevin bond. The reasons are simple, i.e., to provide proper notice to the adverse party that his property is being seized in accordance with the courts order upon application by the other party, and ultimately to allow the adverse party to take the proper remedy consequent thereto.

Service of the writ upon the adverse party is mandatory in line with the constitutional guaranty on procedural due process and as safeguard against unreasonable searches and seizures. If the writ was not served upon the adverse party but was instead merely handed to a person who is neither an agent of the adverse party nor a person authorized to receive court processes on his behalf, the service thereof is erroneous and is, therefore, invalid, running afoul of the statutory and constitutional requirements. The service is likewise invalid if the writ of replevin was served without the required documents. Under these circumstances, no right to seize and to detain the property shall pass, the act of the sheriff being both unlawful and unconstitutional.

Petitioner avers that the writ of replevin was served upon the security guard where the rock-crushing plant to be seized was located. The signature of the receiving party indicates that the writ was received by a certain Joseph Rejumo, the guard on duty in a plant in Sariaya, Quezon, where the property to be seized was located, and witnessed by Claudio Palatino, respondents caretaker. The sheriff’s return, however, peremptorily states that both the writ of replevin and the summons were served upon Rivera. Nine (9) days after the writ was served on the security guard, petitioner filed an answer to the complaint accompanied by a prayer for the approval of her redelivery bond. The RTC, however, denied the redelivery bond for having been filed beyond the five-day mandatory period prescribed in Sections 5 and 6 of Rule 60.But since the writ was invalidly served, petitioner is correct in contending that there is no reckoning point from which the mandatory five-day period shall commence to run.

The trial court is reminded that not only should the writ or order of replevin comply with all the requirements as to matters of form or contents prescribed by the Rules of Court.The writ must also satisfy proper service in order to be valid and effective: i.e. it should be directed to the officer who is authorized to serve it; and it should be served upon the person who not only has the possession or custody of the property involved but who is also a party or agent of a party to the action. Consequently, a trial court is deemed to have acted without or in excess of its jurisdiction with respect to the ancillary action of replevin if it seizes and detains a personalty on the basis of a writ that was improperly served, such as what happened in this case. At the outset, petitioner’s proper remedy should have been to file a motion to quash the writ of replevin or a motion to vacate the order of seizure. Nevertheless, petitioners filing of an application for a redelivery bond, while not necessary, did not thereby waive her right to question the improper service. It now becomes imperative for the trial court to restore the parties to their former positions by returning the seized property to petitioner and by discharging the replevin bond filed by respondent. The trial, with respect to the main action, shall continue. Respondent may, however, file a new application for replevin should he choose to do so.

12)

BA FINANCE CORPORATION v COURT OF APPEALS and ROBERTO M. REYESG.R. No. 102998 July 5, 1996

FACTS :

The spouses Reynaldo and Florencia Manahan executed, on 15 May 1980, a promissory note binding themselves to pay Carmasters, Inc., the amount of P83,080.00 in thirty-six monthly installments commencing 01 July 1980. To secure payment, the Manahan spouses executed a deed of chattel mortgage over a motor vehicle.

Carmasters later assigned the promissory note and the chattel mortgage to petitioner BA Finance Corporation with the conformity of the Manahans. When the latter failed to pay the due installments, petitioner sent demand letters. The demands not having been heeded, petitioner, on 02 October 1987, filed a complaint for replevin with damages against the spouses, as well as against a John Doe, praying for the recovery of the vehicle with an alternative prayer for the payment of a sum of money should the vehicle not be returned.

Upon petitioner's motion and the filing of a bond in the amount of P169,161.00 the lower court issued a writ of replevin. The court, however, cautioned petitioner that should summons be not served on the defendants within thirty (30) days from the writ's issuance, the case would be dismissed to failure to prosecute. The warning was based on what the court perceived to be the deplorable practice of some mortgagees of "freezing (the) foreclosure or replevin cases" which they would so "conveniently utilize as a leverage for the collection of unpaid installments on mortgaged chattels."

The service of summons upon the spouses Manahan was caused to be served by petitioner at No. 35 Lantana St., Cubao, Quezon City. The original of the summons had the name and the signature of private respondent Roberto M. Reyes indicating that he received, on 14 October 1987, a copy of the summons and the complaint.

Petitioner, through its Legal Assistant, Danilo E. Solano, issued a certification to the effect that it had received from Orson R. Santiago, the deputy sheriff of the Regional Trial Court of Manila, Branch 20, the Ford Cortina seized from private respondent Roberto M. Reyes, the John Doe referred to in the complaint, in Sorsogon, Sorsogon. On 20 October 1987, the lower court came out with an order of seizure.

Alleging possession in good faith, private respondent filed, on 26 October 1987, a motion for an extension of time within which to file his answer and/or a motion for intervention. The court granted the motion.

A few months later, or on 18 February 1988, the court issued dismissal order for failure to prosecute and further ordering the plaintiff to return the property seized with all its accessories to defendant John Doe in the person of Roberto M. Reyes as there is no showing that the principal defendants were served with summons inspite of the lapse of four (4) months.

On 26 February 1988, petitioner filed a notice of dismissal of the case "without prejudice and without pronouncement as to costs, before service of Summons and Answer, under Section 1, Rule 17, of the Rules of Court." It also sought in another motion the withdrawal of the replevin bond. In view of the earlier dismissal of the case (for petitioner's failure to prosecute), the court, on 02 March 1988, merely noted the notice of dismissal and denied the motion to withdraw the replevin bond considering that the writ of replevin had meanwhile been implemented.

On 09 March 1988, private respondent filed a motion praying that petitioner be directed to comply with the court order requiring petitioner to return the vehicle to him. In turn, petitioner filed, on 14 March 1988, a motion for the reconsideration of the orders of 18 February 1988 and 02 March 1988

On 20 April 1988, the court granted petitioner's motion for reconsideration and accordingly recalled the order directing the return of the vehicle to private respondent, set aside the order dismissing the case, directed petitioner "to cause the service of summons together with a copy of the complaint on the principal defendants within five (5) days from receipt" thereof at petitioner's expense, and ordered private respondent to answer the complaint.

A few months later, or on 02 August 1988, petitioner filed a motion to declare private respondent in default. The court granted the motion on that same day and declared private respondent "in default for his failure to file the . . . answer within the reglementary period." The court likewise granted petitioner's motion to set the case for the presentation, ex parte, of evidence. Petitioner, thereupon, submitted the promissory note, the deed of chattel mortgage, the deed of assignment, a statement of account in the name of Florencia Manahan and two demand letters.

On 27 February 1989, the trial court rendered a decision dismissing the complaint against the Manahans for failure of petitioner to prosecute the case against them. It also dismissed the case against private respondent for failure of petitioner to show any legal basis for said respondent's liability as Roberto M. Reyes is merely ancillary debtor

Petitioner Appeal to the CA and contended the subject motor vehicle was taken from the possession of said Roberto M. Reyes, a third person with respect to the contract of chattel mortgage between the appellant and the defendants spouses Manahan. The CA disagree and subsequently, denied petitioner's motion for reconsideration stating that:

The Civil Code expressly provides that every possessor has a right to be respected in his possession (Art. 539, New Civil Code); that good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof (Art. 527, ibid.); and that the possession of movable property acquired in good faith is equivalent to a title; nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same (Art. 559, ibid.). Thus, it has been held that a possessor in good faith is entitled to be respected and protected in his possession as if he were the true owner thereof until a competent court rules otherwise (Chus Hai vs. Kapunan, 104 Phil. 110; Yu, et al. vs. Hon. Honrado, etc., et al., 99 SCRA 237). In the case at bar, the trial court did not err in holding that the complaint does not state any cause of action against Roberto M. Reyes, and in ordering the return of the subject chattel to him.

ISSUE :

Whether a mortgagee can maintain an action for replevin against any possessor of the object of a chattel mortgage even if the latter were not a party to the mortgage

RULING:

The Court denied the petition. Because the plaintiff was not able to establish the essential conditions to take possession thereof.

A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to the possession of the property unless and until the mortgagor defaults and the mortgagee thereupon seeks to foreclose thereon. Since the mortgagee's right of possession is conditioned upon the actual fact of default which itself may be controverted, the inclusion of other parties like the debtor or the mortgagor himself, may be required in order to allow a full and conclusive determination of the case. When the mortgagee seeks a replevin in order to effect the eventual foreclosure of the mortgage, it is not only the existence of, but also the mortgagor's default on, the chattel mortgage that, among other things, can properly uphold the right to replevy the property. The burden to establish a valid justification for that action lies with the plaintiff. An adverse possessor, who is not the mortgagor, cannot just be deprived of his possession, let alone be bound by the terms of the chattel mortgage contract, simply because the mortgagee brings up an action for replevin.

Replevin, broadly understood, is both a form of principal remedy and of a provisional relief. It may refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the plaintiff by another, or to the provisional remedy that would allow the plaintiff to retain the thing during the pendency of the action and hold it pendente lite. The action is primarily possessory in nature and generally determines nothing more than the right of possession.

Replevin is so usually described as a mixed action, being partly in rem and partly in personam — in rem insofar as the recovery of specific property is concerned, and in personam as regards to damages involved. As an "action in rem," the gist of the replevin action is the right of the plaintiff to obtain possession of specific personal property by reason of his being the owner or of his having a special interest therein. Consequently, the person in possession of the property sought to be replevied is ordinary the proper and only necessary party defendant, and the plaintiff is not required to so join as defendants other persons claiming a right on the property but not in possession thereof. Rule 60 of the Rules of Court allows an application for the immediate possession of the property but the plaintiff must show that he has a good legal basis, i.e., a clear title thereto, for seeking such interimpossession.

1. Where the right of the plaintiff to the possession of the specific property is so conceded or evident, the action need only be maintained against him who so possesses the property.

There can be no question that persons having a special right of property in the goods the recovery of which is sought; such as a chattel mortgagee, may maintain an action for replevin therefor. Where the mortgage authorizes the mortgagee to take possession of the property on default, he may maintain an action to recover possession of the mortgaged chattels from the mortgagor or from any person in whose hands he may find them.In effect then, the mortgagee, upon the mortgagor's default, is constituted an attorney-in-fact of the mortgagor enabling such mortgagee to act for and in behalf of the owner.

2. In case the right of possession on the part of the plaintiff, or his authority to claim such possession or that of his principal, is put to great doubt (a contending party might contest the legal bases for plaintiffs cause of action or an adverse and independent claim of ownership or right of possession is raised by that party), it could become essential to have other persons involved and accordingly impleaded for a complete determination and resolution of the controversy

In a suit for replevin, a clear right of possession must be established. A foreclosure under a chattel mortgage may properly be commenced only once there is default on the part of the mortgagor of his obligation secured by the mortgage. The replevin in the instant case has been sought to pave the way for the foreclosure of the object covered by the chattel mortgage. The conditions essential for that foreclosure would be to show, firstly, the existence of the chattel mortgage and, secondly, the default of the mortgagor. These requirements must be established since the validity of the plaintiffs exercise of the right of foreclosure are inevitably dependent thereon. (Servicewide Specialists, Inc.,vs. Court of Appeals, et al., G.R. No. 103301, 08 December 1995.

13)

SMART COMMUNICATIONS, INC. v ASTORGA

G.R. No. 148132 January 28, 2008

FACTS :

Regina M. Astorga (Astorga) was employed by respondent Smart Communications, Incorporated (SMART) as District Sales Manager of the Corporate Sales Marketing Group/ Fixed Services Division (CSMG/FSD). Astorga enjoyed additional benefits, one of which is a car plan.

SMART launched an organizational realignment to achieve more efficient operations. Part of the reorganization was the outsourcing of the marketing and sales force. Thus, SMART entered into a joint venture agreement with NTT of Japan, and formed SMART-NTT Multimedia, Incorporated (SNMI). Since SNMI was formed to do the sales and marketing work, SMART abolished the CSMG/FSD, Astorga’s division.

To soften the blow of the realignment, SNMI agreed to absorb the CSMG personnel who would be recommended by SMART. SMART then conducted a performance evaluation of CSMG personnel and those who garnered the highest ratings were favorably recommended to SNMI. Astorga landed last in the performance evaluation, thus, she was not recommended by SMART. SMART, nonetheless, offered her a supervisory position in the Customer Care Department, but she refused the offer because the position carried lower salary rank and rate.

Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. SMART issued a memorandum advising Astorga of the termination of her employment on ground of redundancy,

The termination of her employment prompted Astorga to file a complaint for illegal dismissal, non-payment of salaries and other benefits with prayer for moral and exemplary damages against SMART

SMART responded that there was valid termination and also sent a letter to Astorga demanding that she pay the current market value of the Honda Civic Sedan which was given to her under the company’s car plan program, or to surrender the same to the company for proper disposition.11 Astorga, however, failed and refused to do either, thus prompting SMART to file a suit for replevin with the Regional Trial Court of Makati (RTC).

ISSUE :

Whether RTC was correct when it assumed jurisdiction over the action for Replevin filed by SMART.

RULING :

YES. Replevin is an action whereby the owner or person entitled to repossession of goods or chattels may recover those goods or chattels from one who has wrongfully distrained or taken, or who wrongfully detains such goods or chattels. It is designed to permit one having right to possession to recover property in specie from one who has wrongfully taken or detained the property.30 The term may refer either to the action itself, for the recovery of personalty, or to the provisional remedy traditionally associated with it, by which possession of the property may be obtained by the plaintiff and retained during the pendency of the action.

Contrary to the CA’s ratiocination, the RTC rightfully assumed jurisdiction over the suit and acted well within its discretion in denying Astorga’s motion to dismiss. SMART’s demand for payment of the market value of the car or, in the alternative, the surrender of the car, is not a labor, but a civil, dispute. It involves the relationship of debtor and creditor rather than employee-employer relations.33 As such, the dispute falls within the jurisdiction of the regular courts.

In Basaya, Jr. v. Militante,34 this Court, in upholding the jurisdiction of the RTC over the replevin suit, explained:

Replevin is a possessory action, the gist of which is the right of possession in the plaintiff. The primary relief sought therein is the return of the property in specie wrongfully detained by another person. It is an ordinary statutory proceeding to adjudicate rights to the title or possession of personal property. The question of whether or not a party has the right of possession over the property involved and if so, whether or not the adverse party has wrongfully taken and detained said property as to require its return to plaintiff, is outside the pale of competence of a labor tribunal and beyond the field of specialization of Labor Arbiters.

14)

15)

ROGER V. NAVARRO vs. HON. JOSE L. ESCOBIDO

FACTS :

Respondent Karen T. Go filed two complaints before the RTC for replevin and/or sum of money with damages against Navarro. In these complaints, Karen Go prayed that the RTC issue writs of replevin for the seizure of two (2) motor vehicles in Navarro’s possession. In his Answers, Navarro alleged as a special affirmative defense that the two complaints stated no cause of action, since Karen Go was not a party to the Lease Agreements with Option to Purchase (collectively, the lease agreements) — the actionable documents on which the complaints were based. RTC dismissed the case but set aside the dismissal on the presumption that Glenn Go’s (husband) leasing business is a conjugal property and thus ordered Karen Go to file a motion for the inclusion of Glenn Go as co-plaintiff as per Rule 4, Section 3 of the Rules of Court. Navarro filed a petition

for certiorari with the CA. According to Navarro, a complaint which failed to state a cause of action could not be converted into one with a cause of action by mere amendment or supplemental pleading. CA denied petition.

ISSUE :

Whether or not Karen Go is a real party in interest

RULING :

YES. Karen Go is the registered owner of the business name Kargo Enterprises, as the registered owner of Kargo Enterprises, Karen Go is the party who will directly benefit from or be injured by a judgment in this case. Thus, contrary to Navarro’s contention, Karen Go is the real party-in-interest, and it is legally incorrect to say that her Complaint does not state a cause of action because her name did not appear in the Lease Agreement that her husband signed in behalf of Kargo Enterprises.

Glenn and Karen Go are effectively co-owners of Kargo Enterprises and the properties registered under this name; hence, both have an equal right to seek possession of these properties. Therefore, only one of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a complete relief can be accorded in the suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-owners.

We hold that since Glenn Go is not strictly an indispensable party in the action to recover possession of the leased vehicles, he only needs to be impleaded as a pro-forma party to the suit, based on Section 4, Rule 4 of the Rules, which states:Section 4.Spouses as parties. — Husband and wife shall sue or be sued jointly, except as provided by law.Even assuming that Glenn Go is an indispensable party to the action, misjoinder or non-joinder of indispensable parties in a complaint is not a ground for dismissal of action as per Rule 3, Section 11 of the Rules of Court.

16)

ADVENT CAPITAL AND FINANCE CORPORATION vs ROLAND YOUNG G.R. No. 183018 August 3, 2011

FACTS :

The present controversy stemmed from a replevin suit instituted by petitioner Advent against respondent Young to recover the possession of a 1996 Mercedes Benz E230 which is registered in Advents name. Prior to the replevin case, Advent filed for corporate rehabilitation with the rehabilitation court. The court issued an Order (stay order) which states that the enforcement of all claims whether for money or otherwise, and whether such enforcement is by court action or otherwise, against Advent, its guarantors and sureties not solidarily liable with it, is stayed.

Young claimed among others, several employee benefits allegedly due him as Advents former president and chief executive officer. Advent's rehabilitation plan was approved which included in its assets the subject car which remained in Young's possession at the time. The trial court issued a Writ of Seizure directing the Sheriff to seize the subject car from Young. Young filed an Answer alleging that as a former employee of Advent, he

had the option to purchase the subject car. The trial court dismissed the replevin case and Young's counterclaim. The CA ruled in favor of Young and directed the returning the car to him.

ISSUE :

Whether the CA committed reversible error in directing the return of the seized car to Young

RULING :

The petition is partially meritorious.

We agree with the Court of Appeals in directing the trial court to return the seized car to Young since this is the necessary consequence of the dismissal of the replevin case for failure to prosecute without prejudice. Upon the dismissal of the replevin case for failure to prosecute, the writ of seizure, which is merely ancillary in nature, became functus officio and should have been lifted. There was no adjudication on the merits, which means that there was no determination of the issue who has the better right to possess the subject car. Advent cannot therefore retain possession of the subject car considering that it was not adjudged as the prevailing party entitled to the remedy of replevin.

The dismissal of the replevin case for failure to prosecute results in the restoration of the parties status prior to litigation, as if no complaint was filed at all. To let the writ of seizure stand after the dismissal of the complaint would be adjudging Advent as the prevailing party, when precisely no decision on the merits had been rendered. Accordingly, the parties must be reverted to their status quo ante. Since Young possessed the subject car before the filing of the replevin case, the same must be returned to him, as if no complaint was filed at all.

17)

EUFEMIA ALMEDA vs. BATHALA MARKETING INDUSTRIES

FACTS :

Respondent Bathala Marketing Industries, Inc., as lessee, represented by its president renewed its Contract of Lease with Almeda, as lessor, husband of petitioner Eufemia and father of petitioner Romel Almeda. Under the said contract, Ponciano agreed to lease a portion of the Almeda Compound. The contract of lease stated that in case of extraordinary inflation, the value of Philippine peso at the time of the establishment of the obligation shall be the basis of payment.

During the effectivity of the contract, Ponciano died. Thereafter, respondent dealt with petitioners. Petitioners advised respondent that the former shall assess and collect VAT on its monthly rentals. Respondent opposed petitioners' demand and insisted that there was no extraordinary inflation to warrant the application of Article 1250 in light of the pronouncement of this Court in various cases. Respondent refused to pay the VAT and adjusted rentals as demanded by petitioners but continued to pay the stipulated amount set forth in their contract.

Respondent instituted an action for declaratory relief for purposes of determining the correct interpretation of conditions of the lease contract to prevent damage and prejudice. Petitioners in turn filed an action for ejectment, rescission and damages against respondent for failure of the latter to vacate the premises after the demand made by the former. Petitioners later moved for the dismissal of the declaratory relief case for being an improper remedy considering that respondent was already in breach of the obligation and that the case would not end the litigation and settle the rights of the parties. The trial court, however, was not persuaded, and consequently, denied the motion.

ISSUE :

Whether the action for declaratory relief is proper

RULING :

Yes. Declaratory relief is defined as an action by any person interested in a deed, will, contract or other written instrument, executive order or resolution, to determine any question of construction or validity arising from the instrument, executive order or regulation, or statute, and for a declaration of his rights and duties thereunder.

After petitioners demanded payment of adjusted rentals and in the months that followed, respondent complied with the terms and conditions set forth in their contract of lease by paying the rentals stipulated therein. Respondent religiously fulfilled its obligations to petitioners even during the pendency of the present suit. There is no showing that respondent committed an act constituting a breach of the subject contract of lease. Thus, respondent is not barred from instituting before the trial court the petition for declaratory relief. Given all these attendant circumstances, the Court is disposed to entertain the instant declaratory relief action instead of dismissing it, notwithstanding the pendency of the ejectment/rescission case before the trial court.With premises considered, the petition is DENIED. The Decision of the CA is affirmed.

18)

CARMEN DANAO MALANA v TAPPA

G.R. No. 181303 September 17, 2009

FACTS :

Petitioners Carmen Danao Malana, et al. alleged to be the owners of a land in Tugegarao which they inherited from Anastacio Danao. During the lifetime of Danao, he allowed Consuelo Pauig to build on and occupy the southern portion of the subject property. Danao and Consuelo agreed that the latter would vacate the said land at any time that Danao and his heirs might need it. Danao’s heirs claimed that respondents Benigno Tappa, et al. continued to occupy the subject property even after Consuelo‘s death, building their residences thereon using permanent materials. Danao’s heirs also learned that Tappa, et al. were claiming ownership over the subject property. Averring that they already needed it, Danao’s heirs demanded that respondents vacate the same. The call was unheeded. Meanwhile, Danao’s heirs referred their land dispute to the Lupong Tagapamayapa. During the conciliation proceedings, respondents asserted that they owned the subject property and presented documents ostensibly supporting their claim of ownership. The heirs opposed this, saying that the documents were falsified and highly dubious. This notwithstanding, Tappa, et al. created a cloud upon the heirs‘ title to the property. Thus, the heirs filed a case for Reivindicacion, Quieting of Title, and Damages in the RTC.

ISSUE :

Whether the judge commit grave abuse of discretion in motu proprio dismissing the complaint for lack of jurisdiction

RULING :

No. Petition is dismissed. RTC should remand the records to the MTC.

An action for declaratory relief should be filed by a person interested under a deed, a will, a contract or other written instrument, and whose rights are affected by a statute, an executive order, a regulation or an ordinance. The relief sought under this remedy includes the interpretation and determination of the validity of the written instrument and the judicial declaration of the parties‘ rights or duties thereunder. Petitions for declaratory relief are governed by Rule 63. Section 1 states that an action for the reformation of an instrument, to quiet title, and to consolidate ownership in a sale with a right to repurchase may be brought― under the RTC. These remedies are considered similar to declaratory relief because they result in the adjudication of the legal rights of the litigants, often without the need of execution. Whereas the Rules of Court uses may, the amended Judicial Reorganization Act uses the word shall in determining jurisdiction.― ―

JRA explicitly requires the MTC to exercise exclusive original jurisdiction over all civil actions which involve title to or possession of real property where the assessed value does not exceed P20,000 (OMM) or P50,000 (MM).

In this case, the assessed value of the subject property is only P410.00; therefore, the jurisdiction is with the MTC, not the RTC. Further, an action for declaratory relief presupposes that there has been no actual breach of the instruments involved or of rights arising thereunder. The purpose of an action for declaratory relief is to secure an authoritative statement of the rights and obligations of the parties under a statute, deed or contract for their guidance in the enforcement thereof, and not to settle issues arising from an alleged breach thereof. Where the law or contract has already been contravened prior to the filing of an action for declaratory relief, the courts can no longer assume jurisdiction over the action. In the present case, the case for quieting of title was filed after Danao heirs already demanded, and Tappa refused to vacate the subject property. Since the heirs had already been deprived of the possession of their property, the proper remedy for them is the filing of an accion publiciana or an accion reivindicatoria, not a case for declaratory relief. An accion publiciana is a suit for the recovery of possession, filed one year after the occurrence of the cause of action or from the unlawful withholding of possession of the realty. Jurisdiction over such an action would depend on the value of the property involved. Given that the property is only at P410.00, then the MTC, not the RTC, has jurisdiction over an action to recover the same.

19)

COMMISSIONER OF CUSTOMS and DISTRICT COLLECTOR OF THE PORT OF SUBIC vs HYPERMIX FEEDS

CORPORATION

FACTS :

On 7 November 2003, petitioner Commissioner of Customs issued CMO 27-2003. Under the Memorandum, for tariff purposes, wheat was classified according to the following: (1) importer or consignee; (2) country of origin; and (3) port of discharge. The regulation provided an exclusive list of corporations, ports of discharge, commodity descriptions and countries of origin. Depending on these factors, wheat would be classified either as food grade or feed grade. The corresponding tariff for food grade wheat was 3%, for feed grade, 7%.

CMO 27-2003 further provided for the proper procedure for protest or Valuation and Classification Review Committee (VCRC) cases. Under this procedure, the release of the articles that were the subject of protest required the importer to post a cash bond to cover the tariff differential.

A month after the issuance of CMO 27-2003, on 19 December 2003, respondent filed a Petition for Declaratory Relief with the Regional Trial Court (RTC) of Las Pias City. It anticipated the implementation of the regulation on its imported and perishable Chinese milling wheat in transit from China. Respondent contended that CMO 27-2003 was issued without following the mandate of the Revised Administrative Code on public participation, prior notice, and publication or registration with the University of the Philippines Law Center.

Respondent also alleged that the regulation summarily adjudged it to be a feed grade supplier without the benefit of prior assessment and examination; thus, despite having imported food grade wheat, it would be subjected to the 7% tariff upon the arrival of the shipment, forcing them to pay 133% more than was proper.

Furthermore, respondent claimed that the equal protection clause of the Constitution was violated when the regulation treated non-flour millers differently from flour millers for no reason at all.

Lastly, respondent asserted that the retroactive application of the regulation was confiscatory in nature.On 19 January 2004, the RTC issued a Temporary Restraining Order (TRO) effective for twenty (20) days from notice.

Petitioners thereafter filed a Motion to Dismiss. They alleged that: (1) the RTC did not have jurisdiction over the subject matter of the case, because respondent was asking for a judicial determination of the classification of wheat; (2) an action for declaratory relief was improper; (3) CMO 27-2003 was an internal administrative rule and not legislative in nature; and (4) the claims of respondent were speculative and premature, because the Bureau of Customs (BOC) had yet to examine respondents products. They likewise opposed the application for a writ of preliminary injunction on the ground that they had not inflicted any injury through the issuance of the regulation; and that the action would be contrary to the rule that administrative issuances are assumed valid until declared otherwise.

On 28 February 2005, the parties agreed that the matters raised in the application for preliminary injunction and the Motion to Dismiss would just be resolved together in the main case. Thus, on 10 March 2005, the RTC rendered its Decision without having to resolve the application for preliminary injunction and the Motion to Dismiss.

The trial court ruled in favor of respondent. Dissatisfied with the Decision of the lower court, petitioners appealed to the CA, raising the same allegations in defense of CMO 27-2003. The appellate court, however, dismissed the appeal. It held that, since the regulation affected substantial rights of petitioners and other importers, petitioners should have observed the requirements of notice, hearing and publication. Hence, this Petition.

ISSUE :

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE WHICH IS NOT IN ACCORD WITH

THE LAW AND PREVAILING JURISPRUDENCE; and

THE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT THE TRIAL COURT HAS

JURISDICTION OVER THE CASE.

RULING :

The Petition has no merit. We shall first discuss the propriety of an action for declaratory relief.

Rule 63, Section 1 provides:

Who may file petition. Any person interested under a deed, will, contract or other written

instrument, or whose rights are affected by a statute, executive order or regulation,

ordinance, or any other governmental regulation may, before breach or violation thereof,

bring an action in the appropriate Regional Trial Court to determine any question of

construction or validity arising, and for a declaration of his rights or duties, thereunder.

The requirements of an action for declaratory relief are as follows: (1) there must be a justiciable controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved must be ripe for judicial determination. We find that the Petition filed by respondent before the lower court meets these requirements.

It is therefore clear that a petition for declaratory relief is the right remedy given the circumstances of the case. WHEREFORE, in view of the foregoing, the Petition is DENIED. SO ORDERED.

20)

DIAZ and TIMBOL V THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE

G.R. No. 193007 July 19, 2011

FACTS :

Diaz and Timbol (petitioners) filed this petition for declaratory relief assailing the validity of the impending imposition of value-added tax (VAT) by the Bureau of Internal Revenue (BIR) on the collections of tollway operators.

Petitioners claim that, since the VAT would result in increased toll fees, they have an interest as regular users of tollways in stopping the BIR action.

Petitioners allege that the BIR attempted during the administration of President Gloria Macapagal-Arroyo to impose VAT on toll fees. The imposition was deferred, however, in view of the consistent opposition of Diaz and other sectors to such move. But, upon President Benigno C. Aquino III’s assumption of office in 2010, the BIR revived the idea and would impose the challenged tax on toll fees beginning August 16, 2010 unless judicially enjoined.

Petitioners hold the view that Congress did not, intend to include toll fees within the meaning of "sale of services" that are subject to VAT; that a toll fee is a "user’s tax," not a sale of services; that to impose VAT on toll fees would amount to a tax on public service; and that, since VAT was never factored into the formula for computing toll fees, its imposition would violate the non-impairment clause of the constitution.

Court issued a temporary restraining order (TRO), enjoining the implementation of the VAT. Court required the government, represented by respondents Cesar V. Purisima, Secretary of the Department of Finance, and Kim S. Jacinto-Henares, Commissioner of Internal Revenue, to comment on the petition within 10 days from notice. Later, the Court issued another resolution treating the petition as one for prohibition.

(OSG) filed the government’s comment. It stated that government avers that the NIRC imposes VAT on all kinds of services of franchise grantees, including tollway operations, except where the law provides otherwise; that the Court should seek the meaning and intent of the law from the words used in the statute; and that the imposition of VAT on tollway operations has been the subject as early as 2003 of several BIR rulings and circulars.

Government also argues that petitioners have no right to invoke the non-impairment of contracts clause since they clearly have no personal interest in existing toll operating agreements (TOAs) between the government

and tollway operators. At any rate, the non-impairment clause cannot limit the State’s sovereign taxing power which is generally read into contracts.

Government contends that the non-inclusion of VAT in the parametric formula for computing toll rates cannot exempt tollway operators from VAT. In any event, it cannot be claimed that the rights of tollway operators to a reasonable rate of return will be impaired by the VAT since this is imposed on top of the toll rate. Further, the imposition of VAT on toll fees would have very minimal effect on motorists using the tollways.

Petitioners Diaz and Timbol point out that tollway operators cannot be regarded as franchise grantees under the NIRC since they do not hold legislative franchises. Further, the BIR intends to collect the VAT by rounding off the toll rate and putting any excess collection in an escrow account. This would be illegal since only the Congress can modify VAT rates and authorize its disbursement. Finally, BIR Revenue Memorandum Circular 63-2010 (BIR RMC 63-2010), which directs toll companies to record an accumulated input VAT of zero balance in their books contravenes Section 111 of the NIRC which grants entities that first become liable to VAT a transitional input tax credit of 2% on beginning inventory. For this reason, the VAT on toll fees cannot be implemented.

ISSUES :

On Procedural Issues - Whether or not the Court may treat the petition for declaratory relief as one for prohibition; andWhether or not petitioners Diaz and Timbol have legal standing to file the action.

On Substantive Issues -

Whether or not the government is unlawfully expanding VAT coverage by including tollway operators and tollway operations in the terms "franchise grantees" and "sale of services" under Section 108 of the Code; and

Whether or not the imposition of VAT on tollway operators a) amounts to a tax on tax and not a tax on services; b) will impair the tollway operators’ right to a reasonable return of investment under their TOAs; and c) is not administratively feasible and cannot be implemented.

RULINGS :

On Procedural Issues -

Arguing that petitioners’ allegations clearly made out a case for declaratory relief, an action over which the Court has no original jurisdiction. Petition does not meet the requirements of Rule 65 for actions for prohibition since the BIR did not exercise judicial, quasi-judicial, or ministerial functions when it sought to impose VAT on toll fees. Besides, petitioners Diaz and Timbol has a plain, speedy, and adequate remedy in the ordinary course of law against the BIR action in the form of an appeal to the Secretary of Finance.

Precedents for treating a petition for declaratory relief as one for prohibition (Exception) if the case has far-reaching implications and raises questions that need to be resolved for the public good.

Imposition of VAT on toll fees has far-reaching implications. Its imposition would impact, not only on the more than half a million motorists who use the tollways everyday, but more so on the government’s effort to raise revenue for funding various projects and for reducing budgetary deficits.

To dismiss the petition and resolve the issues later, after the challenged VAT has been imposed, could cause more mischief both to the tax-paying public and the government. A belated declaration of nullity of the BIR action would make any attempt to refund to the motorists what they paid an administrative nightmare with no solution.

Although the petition does not strictly comply with the requirements of Rule 65, the Court has ample power to waive such technical requirements when the legal questions to be resolved are of great importance to the public.

On Substantive Issues -

Relevant law is Section 108 of the NIRC, as amended. VAT is levied, assessed, and collected, according to Section 108, on the gross receipts derived from the sale or exchange of services as well as from the use or lease of properties. Third paragraph of Section 108 defines "sale or exchange of services" as follows:

‘sale or exchange of services’ means the performance of all kinds of services in the Philippines for others for a fee, remuneration or consideration, including those performed or rendered by construction and service contractors; …

services of franchise grantees of electric utilities, telephone and telegraph, radio and television broadcasting and all other franchise grantees except those under Section 119 of this Code and non-life insurance companies (except their crop insurances)

Thus, the law imposes VAT on "all kinds of services" rendered in the Philippines for a fee, including those specified in the list. Enumeration of affected services is not exclusive. By qualifying "services" with the words "all kinds," Congress has given the term "services" an all-encompassing meaning. Listing of specific services are intended to illustrate how pervasive and broad is the VAT’s reach rather than establish concrete limits to its application.

P.D. 1112 or the Toll Operation Decree establishes the legal basis for the services that tollway operators render. Tollway operators construct, maintain, and operate expressways, also called tollways, at the Operator’s expense. Tollways serve as alternatives to regular public highways that meander through populated areas and branch out to local roads. In consideration for constructing tollways at their expense, the operators are allowed to collect government-approved fees from motorists using the tollways until such operators could fully recover their expenses and earn reasonable returns from their investments.

When a tollway operator takes a toll fee from a motorist, the fee is in effect for the latter’s use of the tollway facilities over which the operator enjoys private proprietary rights that its contract and the law recognize.

In this sense, the tollway operator is no different from the following service providers under Section 108 who allow others to use their properties or facilities for a fee.

Tollway operators are franchise grantees and they do not belong to exceptions that Section 119 spares from the payment of VAT. The word "franchise" broadly covers government grants of a special right to do an act or series of acts of public concern.

Nothing in Section 108 indicates that the "franchise grantees" it speaks of are those who hold legislative franchises. Indeed, franchises conferred or granted by local authorities, as agents of the state, constitute as much a legislative franchise as though the grant had been made by Congress itself. Term "franchise" has been broadly construed as referring, not only to authorizations that Congress directly issues in the form of a special law, but also to those granted by administrative agencies to which the power to grant franchises has been delegated by Congress.

Second Issue on Substantive Law :

Petitioners argue that a toll fee is a "user’s tax" and to impose VAT on toll fees is tantamount to taxing a tax. Court stated that the discussion in the MIAA case on toll roads and toll fees was made, not to establish a rule that tollway fees are user’s tax, but to make the point that airport lands and buildings are properties of public dominion and that the collection of terminal fees for their use does not make them private properties.

What the government seeks to tax here are fees collected from tollways that are constructed, maintained, and operated by private tollway operators at their own expense under the build, operate, and transfer scheme that the government has adopted for expressways.

Fees paid by the public to tollway operators for use of the tollways, are not taxes in any sense. (Main purpose of Tax) A tax is imposed under the taxing power of the government principally for the purpose of raising revenues to fund public expenditures. Whereas, Toll fees are collected by private tollway operators as reimbursement for the costs and expenses incurred in the construction, maintenance and operation of the tollways, as well as to assure them a reasonable margin of income. Although toll fees are charged for the use of public facilities, therefore, they are not government exactions that can be properly treated as a tax.

VAT on tollway operations is not really a tax on the tollway user, but on the tollway operator. Under Section 105 of the Code, VAT is imposed on any person who, in the course of trade or business, sells or renders services for a fee. Seller of services, who in this case is the tollway operator, is the person liable for VAT. The latter merely shifts the burden of VAT to the tollway user as part of the toll fees.

Even if the imposition of VAT on tollway operations may seem burdensome to implement, it is not necessarily invalid unless some aspect of it is shown to violate any law or the Constitution.

Commissioner of Internal Revenue did not usurp legislative prerogative or expand the VAT law’s coverage when she sought to impose VAT on tollway operations. Section 108(A) of the Code clearly states that services of all other franchise grantees are subject to VAT, except as may be provided under Section 119 of the Code. Tollway operators are not among the franchise grantees subject to franchise tax under the latter provision. Neither are their services among the VAT-exempt transactions under Section 109 of the Code.

If the legislative intent was to exempt tollway operations from VAT, as petitioners so strongly allege, then it would have been well for the law to clearly say so. Tax exemptions must be justified by clear statutory grant

and based on language in the law too plain to be mistaken. But as the law is written, no such exemption obtains for tollway operators. The Court is thus duty-bound to simply apply the law as it is found.

Thus, any unwarranted burden that may be perceived to result from enforcing such policy must be properly referred to Congress. The Court has no discretion on the matter but simply applies the law.

Court DENIES Respondent’s Secretary of Finance and Commissioner of Internal Revenue’s motion for reconsideration.

DISMISSES the Petitioners’ Renato V. Diaz and Aurora Ma. F. Timbol’s petition for lack of merit, and SETS ASIDE the Court’s temporary restraining order.

21)

GAMBOA vs TEVESG.R. NO. 176579 June 28, 2011

FACTS :

PLDT was granted a franchise to engage in the telecommunications business in 1928 through Act No. 3436. During the Martial Law 26 percent of the outstanding common shares were sold by General Telephone and Electronics Corporation (GTE an American Company) to Philippine Telecommunications Investment Corporation (PTIC), who in turn assigned 111,415 shares of stock of PTIC (46 percent of outstanding capital stock) to Prime Holdings Inc. (PHI). These shares of PTIC were later sequestered by PCGG and adjudged by the court to belong to the Republic.

54 percent shares were sold to Hong Kong-based firm First Pacific, and the remaining 46 percent was sold through public bidding by the Inter-agency Privatization Council, and eventually ended up being bought by First Pacific subsidiary Metro Pacific Assets Holdings Inc. (MPAH) after the corporation exercise its first refusal. The transaction was an indirect sale of 12 million shares or 6.3 percent of the outstanding common shares of PLDT, making First Pacific’s common shareholdings of PLDT to 37 percent and the total common shareholdings of foreigners in PLDT to 81.47 percent. Japanese NTT DoCoMo owns 51.56 percent of the other foreign shareholdings/equity.

Petitioner gamboa, alleged that the sale of 111,415 shares to MPAH violates Sec. 11 of Art. XII of the Constitution, which limits foreign ownership of the capital of a public utility to not more than 40 percent.

ISSUE :

Whether petitioner’s choice of remedy was proper

RULING :

NO. However, since the threshold and purely legal issue on the definition of the term ‘capital’ in Section 11, Article XII of the Constitution has far-reaching implications to the national economy, the Court treats the petition for declaratory relief as one for mandamus. It is well settled that this Court may treat a petition for declaratory relief as one for mandamus if the issue involved has far-reaching implications.

22)

23)

LUCIANO VELOSO et al v COMMISSION ON AUDIT,

FACTS :

On December 7, 2000, the City Council of Manila enacted Ordinance No. 8040 entitled An Ordinance Authorizing the Conferment of Exemplary Public Service Award to Elective Local Officials of Manila Who Have Been Elected for Three (3) Consecutive Terms in the Same Position. Section 2 thereof provides:

SEC. 2. The EPSA shall consist of a Plaque of Appreciation, retirement and gratuity pay remuneration equivalent to the actual time served in the position for three (3) consecutive terms, subject to the availability of funds as certified by the City Treasurer. PROVIDED, That [it] shall be accorded to qualified elected City Officials on or before the first day of service in an appropriated public ceremony to be conducted for the purpose. PROVIDED FURTHER, That this Ordinance shall only cover the Position of Mayor, Vice-Mayor and Councilor: PROVIDED FURTHERMORE, That those who were elected for this term and run for higher elective position thereafter, after being elected shall still be eligible for this award for the actual time served: PROVIDED FINALLY That the necessary and incidental expenses needed to implement the provisions of this Ordinance shall be appropriated and be included in the executive budget for the year when any city official will qualify for the Award.

Atty. Gabriel J. Espina (Atty. Espina), Supervising Auditor of the City of Manila, issued Audit Observation Memorandum (AOM) No. 2005-100(05)07(05)with the following observations:

1. The initial payment of monetary reward as part of Exemplary Public Service Award (EPSA) amounting to P9,923,257.00 to former councilors of the City Government of Manila who have been elected for three (3) consecutive terms to the same position as authorized by City Ordinance No. 8040 is without legal basis.

2. The amount granted as monetary reward is excessive and tantamount to double compensation in contravention to Article 170 (c) of the IRR of RA 7160 which provides that no elective or appointive local official shall receive additional, double or indirect compensation unless specifically authorized by law.

3. The appropriations for retirement gratuity to implement EPSA ordinance was classified as Maintenance and Other Operating Expenses instead of Personal Services contrary to Section 7, Volume III of the Manual on the New Government Accounting System (NGAS) for local government units and COA Circular No. 2004-008 dated September 20, 2004 which provide the updated description of accounts under the NGAS.

After evaluation of the AOM, the Director, Legal and Adjudication Office COA issued Notice of disallowance No. 06-010-100-05 dated May 24, 2006.

The former councilors filed a Motion to Lift the Notice of Disallowance which was favored by the Legal and Adjudication Office, the pertinent portion of the decision:

Citing Article 170 of the Implementing Rules and Regulations (IRR) the Legal and Adjudication Office held that the monetary reward given to the former councilors can be one of gratuity and, therefore, cannot be considered as additional, double or indirect compensation. Giving importance to the principle of local autonomy, the LAO-local upheld the power of local government units (LGUs) to grant allowances. More importantly, it emphasized that the Department of Budget and Management (DBM) did not disapprove the appropriation for the EPSA of the City which indicate that the same is valid.

Upon review, the COA rendered the assailed Decision No. 2008-088 sustaining Notice of Disallowance No. 06-010-100-05 - The motion for reconsideration was likewise denied. The COA opined that the monetary reward under the EPSA is covered by the term "compensation." Though it recognizes the local autonomy of LGUs, it emphasized the limitations thereof set forth in the Salary Standardization Law (SSL). It explained that the SSL does not authorize the grant of such monetary reward or gratuity. It also stressed the absence of a specific law passed by Congress which ordains the conferment of such monetary reward or gratuity to the former councilors. In response to the question on its jurisdiction to rule on the legality of the disbursement, the COA held that it is vested by the Constitution the power to determine whether government entities comply with laws and regulations in disbursing government funds and to disallow irregular disbursements. ]

Petitioners insist that the power and authority of the COA to audit government funds and accounts does not carry with it in all instances the power to disallow a particular disbursement.[20] (Citing Guevara v. Gimenez ) and that that the COA has no discretion or authority to disapprove payments on the ground that the same was unwise or that the amount is unreasonable. The COA's remedy, according to petitioners, is to bring to the attention of the proper administrative officer such expenditures that, in its opinion, are irregular, unnecessary, excessive or extravagant

Aggrieved, petitioners through special civil action for certiorari alleging grave abuse of discretion on the part of the COA claiming that The respondent Commission on Audit did not only commit a reversible error but was, in fact, guilty of grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled that the monetary award given under the EPSA partakes of the nature of an additional compensation prohibited under the Salary Standardization Law, and other existing laws, rules and regulations, and not a GRATUITY "voluntarily given in return for a favor or services rendered purely out of generosity of the giver or grantor. Apart from being totally oblivious of the fact that the monetary award given under the EPSA was intended or given in return for the exemplary service rendered by its recipient(s), the respondent COA further committed grave abuse of discretion when it effectively nullified a duly-enacted ordinance which is essentially a judicial function.

ISSUE :

Whether the COA committed grave abuse of discretion in affirming the disallowance of P9,923,257.00

RULING :

It is the general policy of the Court to sustain the decisions of administrative authorities, especially one which is constitutionally-created not only on the basis of the doctrine of separation of powers but also for their presumed expertise in the laws they are entrusted to enforce.

Findings of administrative agencies are accorded not only respect but also finality when the decision and order are not tainted with unfairness or arbitrariness that would amount to grave abuse of discretion.

It is only when the COA has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, that this Court entertains a petition questioning its rulings.

There is grave abuse of discretion when there is an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the judgment rendered is not based on law and evidence but on caprice, whim and despotism In this case, we find no grave abuse of discretion on the part of the COA in issuing the assailed decisions

24)

NAZARETH v VILLARG.R. No. 188635 January 29, 2013

FACTS :

No money shall be paid out of the Treasury except in pursuance of an appropriation made by law. A violation of this constitutional edict warrants the disallowance of the payment. However, the refund of the disallowed

payment of a benefit granted by law to a covered person, agency or office of the Government may be barred by the good faith of the approving official and of the recipient.

Being assailed by petition for certiorari on the ground of its being issued with grave abuse of discretion amounting to lack or excess of jurisdiction is the decision rendered on June 4, 2009 by the Commission on Audit (COA) in COA Case No. 2009-045 entitled Petition of Ms. Brenda L. Nazareth, Regional Director, Department of Science and Technology, Regional Office No. IX, Zamboanga City, for review of Legal and Adjudication Office (LAO)-National Decision No. 2005-308 dated September 15, 2005 and LAO-National Resolution No. 2006-308A dated May 12, 2006 on disallowances of subsistence, laundry, hazard and other benefits in the total amount of P3,591,130.36, affirming the issuance of notices of disallowance (NDs) by the Audit Team Leader of COA Regional Office No. IX in Zamboanga City against the payment of benefits to covered officials and employees of the Department of Science and Technology (DOST) for calendar year (CY) 2001 out of the savings of the DOST.

The petitioner DOST Regional Director hereby seeks to declare the decision dated June 4, 2009 "null and void," and prays for the lifting of the disallowance of the payment of the benefits for CY2001 for being within the ambit of Republic Act No. 8439 (R.A. No. 8439), otherwise known as the Magna Carta for Scientists, Engineers, Researchers, and other Science and Technology Personnel in the Government (Magna Carta, for short), and on the strength of the Memorandum of Executive Secretary Ronaldo B. Zamora dated April 12, 2000 authorizing the use of the savings for the purpose.

Hence, this special civil action for certiorari, with the petitioner insisting that the COA gravely abused its discretion amounting to lack or excess of jurisdiction in affirming the disallowance of the Magna Carta benefits for CY 2001 despite the provisions of R.A. No. 8439, and in ruling that the Memorandum of April 12, 2000 did not cover the payment of the Magna Carta benefits for CY 2001.

ISSUE :

Whether the special civil action for certiorari is meritorious

RULING :

The Court held in the negative. The COA is endowed with sufficient latitude to determine, prevent, and disallow the irregular, unnecessary, excessive, extravagant, or unconscionable expenditures of government funds. It has the power to ascertain whether public funds were utilized for the purposes for which they had been intended by law. The "Constitution has made the COA the guardian of public funds, vesting it with broad powers over all accounts pertaining to government revenue and expenditures and the uses of public funds and property, including the exclusive authority to define the scope of its audit and examination, to establish the techniques and methods for such review, and to promulgate accounting and auditing rules and regulations"

Only when the COA has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, may the Court entertain and grant a petition for certiorari brought to assail its actions. Section 1 of Rule 65, Rules of Court, demands that the petitioner must show that, one, the tribunal, board or officer exercising judicial or quasi-judicial functions acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction, and, two, there is neither an appeal nor any plain, speedy and adequate remedy in the ordinary course of law for the purpose of amending or nullifying the proceeding. Inasmuch as the sole office of the writ of certiorari is the correction of errors of jurisdiction, which includes the commission of grave abuse of discretion amounting to lack of jurisdiction, the petitioner should establish that the COA gravely abused its discretion. The abuse of discretion must be grave, which means either that the judicial or quasi-judicial power was exercised in an arbitrary or despotic manner by reason of passion or personal hostility, or that the respondent judge, tribunal or board evaded a positive duty, or virtually refused to perform the duty enjoined or to act in contemplation of law, such as when such

judge, tribunal or board exercising judicial or quasi-judicial powers acted in a capricious or whimsical manner as to be equivalent to lack of jurisdiction. Mere abuse of discretion is not enough to warrant the issuance of the writ.

Section 7 of R. A. No. 8439 confers the Magna Carta benefits consisting of additional allowances and benefits to DOST officers and employees, such as honorarium, share in royalties, hazard, subsistence, laundry, and housing and quarter allowances, longevity pay, and medical examination. But the Magna Carta benefits will remain merely paper benefits without the corresponding allocation of funds in the GAA.

As we see it, the COA correctly ruled on the matter at hand. Article VI Section 29 (1) of the 1987 Constitution firmly declares that: "No money shall be paid out of the Treasury except in pursuance of an appropriation made by law." This constitutional edict requires that the GAA be purposeful, deliberate, and precise in its provisions and stipulations. As such, the requirement under Section 20 of R.A. No. 8439 that the amounts needed to fund the Magna Carta benefits were to be appropriated by the GAA only meant that such funding must be purposefully, deliberately, and precisely included in the GAA. The funding for the Magna Carta benefits would not materialize as a matter of course simply by fiat of R.A. No. 8439, but must initially be proposed by the officials of the DOST as the concerned agency for submission to and consideration by Congress. That process is what complies with the constitutional edict. R.A. No. 8439 alone could not fund the payment of the benefits because the GAA did not mirror every provision of law that referred to it as the source of funding.

The petitioner dismally failed to discharge her burden. We conclude and declare, therefore, that the COA’s assailed decision was issued in steadfast compliance of its duty under the Constitution and in the judicious exercise of its general audit power conferred to it by the Constitution.