REM2 R62 Interpleader Cases Dela Pena

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Today is Wednesday, November 13, 2013

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 73794 September 19, 1988

ETERNAL GARDENS MEMORIAL PARKS CORPORATION, petitioner,

vs.

FIRST SPECIAL CASES DIVISION INTERMEDIATE APPELLATE COURT and NORTH PHILIPPINE UNION

MISSION OF THE SEVENTH-DAY ADVENTISTS, respondents.

PARAS, J.:

This is a special civil action for certiorari, prohibition and mandamus seeking to set aside the two resolutions of

public respondent First Special Cases Division of the then Intermediate Appellate Court in AC-G.R. No. 04869

entitled "North Philippine Union Mission of the Seventh Day Adventists versus Hon. Antonia Corpus-Macandog,

Presiding Judge, Branch CXX, Regional Trial Court, Caloocan City and Eternal Gardens Memorial Park Corporation,

(a) dated September 5, 1985 (Rollo, pp. 21-25) reconsidering its Decision1of February 27, 1985 (Rollo, pp. 38-48)

and ordering petitioner to deposit whatever amounts due from it under the Land Development Agreement, and (b)

dated February 13, 1986 (Rollo, p. 27) denying for lack of merit petitioner's motion for reconsideration.

Petitioner Eternal Gardens Memorial Parks Corporation and private respondent North Philippine Union Mission

Corporation of the Seventh Day Adventists (MISSION for short) are corporations duly organized and existing under

and by virtue of the laws of the Republic of the Philippines.

They executed a Land Development Agreement (Rollo, pp. 179-182) on October 6, 1976 whereby the former

undertook to introduce and construct at its own expense and responsibility necessary improvements on the property

owned by private respondent into a memorial park to be subdivided into and sold as memorial plot lots, at a

stipulated area and price per lot. Out of the proceeds from the sale, private respondent is entitled to receive 40% of

the net gross collection from the project to be remitted monthly by petitioner to private respondent through a

designated depositary trustee bank. On the same date private respondent executed in petitioner's favor a Deed of

Absolute Sale with Mortgage (Rollo, pp. 183-186) on the lots with titles involved in the land development project.

The deed was supplemented by a Sale of Real Property with Mortgage and Special Conditions dated October 28,

1978 (Rollo, pp. 189-194 The amounts totalling about P984,110.82 paid by petitioner were to be considered as part

of the 40% due private respondent under the Land Development Agreement. All went well until Maysilo Estate

asserted its claim of ownership over the parcel of land in question. Confronted with such conflicting claims, petitioner

as plaintiff filed a complaint for interpleader (Rollo, pp. 169-179) against private respondent MISSION and Maysilo

Estate, docketed as Special Court Case No. C-9556 of the then CFI of Rizal, Branch XII, Caloocan, alleging among

others, that in view of the conflicting claims of ownership of the defendants (herein private respondent and Maysilo

Estate) over the properties subject matter of the contracts, over which plaintiff corporation (herein petitioner) has noclaim of ownership except as a purchaser thereof, and to protect the interests of plaintiff corporation which has no

interest in the subject matter of the dispute and is willing to pay whoever is entitled or declared to be the owners of

said properties, the defendants should be required to interplead and litigate their several claims between themselves

(Rollo, p. 177).

An order was issued by the presiding judge2requiring defendants to interplead on October 22, 1981. MISSION filed

a motion to dismiss dated November 10, 1981 for lack of cause of action but also presented an answer dated

November 12, 1981. The motion to dismiss was denied in an Order dated January 12, 1982. The heirs of Maysilo

Estate filed their own answer dated November 11, 1981 and an amended answer dated October 20, 1983 thru the

estate's special receiver. The heirs of Pedro Banon filed an "Answer in Intervention with Special and Affirmative

Defenses" dated October 24, 1983, while Lilia B. Sevilla and husband Jose Seelin filed their "Answer in Cross-

claim" dated October 31, 1983 (Rollo, p. 30). The heirs of Sofia O'Farrel y Patino, et al. filed their Answer in

Intervention dated November 10, 1983.

However, earlier on November 21, 1982, private respondent presented a motion for the placing on judicial deposit

the amounts due and unpaid from petitioner. Acting on such motion, the trial court3denied judicial deposit in its

order dated February 13, 1984, the decretal portion of which reads:

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PREMISES CONSIDERED, all or the full amount the plaintiff, Eternal Gardens Memorial Parks

Corporation have already paid the North Philippine Union Mission Corporation of the Seventh Day

Adventist is hereby ordered to deposit the same to this Court within thirty (30) days from receipt of this

order considering that real or true owner of the subject properties in question, due hearing of this court

has yet to be undergone in order to decide as to who is the true owner which is a prejudicial question.

Hence the motion dated November 21, 1983 of the NPUM for the Eternal Gardens Corporation to

deposit the balance due and unpaid is hereby ordered denied and the opposition thereto dated

December 19, 1983 is hereby ordered granted.

The contract between the Eternal Gardens Corporation and the North Philippine Union Mission dated

October 16, 1976 is ordered and declared ineffective as of today, February 13, 1984 because the

subject matter of the sale is not existing between the contracting parties until after the question of

ownership is resolved by this court. The court will order the revival of the contract if the North Philippine

Union Mission will win.

If not, the declared winner among the intervenors will be the party to enter into a contract of sale with

the plaintiff as aforementioned. (Rollo, p. 66).

Another order dated October 26, 1984 was issued amending the February 13, 1984 order and setting aside the

order for private respondent's deposit of the amounts it had previously received from petitioner, thus:

WHEREFORE IN VIEW OF ALL THE FOREGOING CONSIDERATIONS the order of February 13,

1984, is hereby ordered amended, reconsidered and modified by this same Court as follows:

(a) The order directing the NORTH PHILIPPINE UNION MISSION CORPORATION OF

SEVENTH-DAY ADVENTISTS to deposit the amounts it received under the implementation of the

LAND DEVELOPMENT AGREEMENT which is not questioned by the plaintiff, Eternal Gardens, is

hereby ordered set aside for the reason that the titles to ownership, the North Philippine Union Mission

Corporation of Seventh Day Adventists on the lots subject matter of the aforesaid agreement is not

established invalid, and the alleged titles of intervenors are not proven yet by competent evidence;

(b) The motion to require Eternal Gardens to deposit the balance under the Land Development

Agreement is likewise hereby ordered denied considering the fact the aforesaid plaintiff had not denied

its obligations under the aforesaid contract; and

(c) The trial or hearing is hereby ordered as scheduled to proceed on November 29, 1984 and on

December 6, 1984 at 8:30 in the morning per order of this Court dated October 4, 1984 in order to

determine the alleged claims of ownership by the intervenors and all claims and allegations of eachparty to the instant" case will be considered and decided carefully by this court on just and meritorious

grounds. (Rollo, p. 39)

Said Orders were assailed twice in the Intermediate Appellate Court (Court of Appeals) and in the Supreme Court

as follows:

In G.R. No. 73569 it appeared that on January 11, 1985, MISSION filed a motion to dismiss the Interpleader and the

claims of the Maysilo Estate and the Intervenors and to order the Eternal Gardens to comply with its Land

Management with MISSION.

On January 28, 1985, the trial court passed a resolution, the dispositive portion of which reads:

WHEREFORE, premises considered, this Court, after a lengthy, careful judicious study and perusal of

all the stand of each and everyone of all the parties participating in this case, hereby orders thedismissal of the interpleader, and the interventions filed by the intervenors, heirs of Pedro Banon, heirs

of O'Farrel, heirs of Rivera, heirs of Maria del Concepcion Vidal, consolidated with the Maysilo Estate

as represented by receiver Arturo Salientes the heirs of Vicente Singson Encarnacion, and Lilia Sevilla

Seeling

This Court likewise orders the plaintiff, Eternal Gardens Memorial Parks Corporation to comply with the

Land Development Agreement dated October 6, 1978, it entered into with the North Philippine Union

Mission Corporation of the Seventh-Day Adventists. (Rollo. p. 68)

The heirs of the Maysilo Estate moved for reconsideration of the aforementioned order of dismissal, the hearing of

which was requested to be set on February, 28, 1985. However, the trial judge, on February 14, 1985 issued the

following orders:

Considering Motions for Reconsideration filed, the Court resolves that the same be GRANTED andinstead of a hearing of the said motions on February 20, 1985, at 8:30 a.m., a hearing on the merits

shall be held. (Rollo, p. 68)

In spite of the February 14, 1985 order, MISSION filed on March 6, 1985 a motion for Writ of Execution of the

resolution of January 28, 1985. This was denied on June 25, 1985. The said court further set the case for pre-trial


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and trial on July 18, 1985.

It was elevated on certiorari and mandamus to the Intermediate Appellate Court (Court of Appeals), docketed as

AC-G.R. Sp No. 06696 "North Philippine Union Mission of the Seventh Day Adventists, vs. Hon. Antonia Corpus-

Macandog Presiding Judge, Branch CXX, Regional Trial Court, Caloocan City, Eternal Gardens Memorial Parks

Corporation, and Heirs of Vicente Singson Encarnacion It was raffled to the Second Special Division. MISSION

assailed the February 14, 1985 and June 25, 1985 orders as violative of due process and attended by grave abuse

of discretion amounting to lack of jurisdiction. The petition was however dismissed in the decision of said Appellate

Court, promulgated on December 4, 1985, the dispositive portion of which reads:

WHEREFORE, for want of merit the petition for certiorari and mandamus under consideration cannotbe given due course and is accordingly, DISMISSED, without any pronouncement, as to costs. The

restraining order embodied in Our Resolution of July 31, 1985, is hereby lifted. (Rollo, G.R. No. 73569

p. 232)

The private respondent challenged the above decision in the Supreme Court in G.R. No. 73569. In its resolution

dated June 11, 1986, the Supreme Court denied the petition for review on certiorari for lack of merit, as follows:

G.R. No. 73569 (North Philippine Union Mission Corporation of the Seventh Day Adventists vs.

Intermediate Appellate Court, et al.) considering the allegations, issues, and arguments adduced in the

petition for review on certiorari, the Court Resolved to DENY the same for lack of merit. (Ibidp. 263)

Said resolution has become final and executory on July 16, 1986. (Ibid p. 269)

Earlier in 1983, the heirs of the late spouses Vicente Singson Encarnacion and Lucila Conde filed Civil Case No.C-11836 for quieting of title with Branch CXXII, Regional Trial Court, Caloocan City, where petitioner and private

respondent were named as defendants.

Said case is still pending in the lower Court.

In the case at bar, G.R. No. 73794, MISSION, herein private respondent filed a petition for certiorari with the then

Intermediate Appellate Court docketed as AC-G.R. No. 04869 praying that the aforementioned Orders of February

13, 1984 and October 26, 1984 of the Regional Trial Court be set aside and that an order be issued to deposit in

court or in a depositor trustee bank of any and all payments, plus interest thereon, due the private respondent

MISSION under the Land Development Agreement, said amounts deposited to be paid to whomever may be found

later to be entitled thereto, with costs. (Rollo, G.R. No. 73794 p. 38)

The Intermediate Appelate Court, acting through its First Special Cases Division

4

dismissed the petition in itsdecision on February 27, 1985 (Rollo, pp. 38-48). In its Resolution

5promulgated on September 5, 1985, the Court

however, reversed its decision, thus:

WHEREFORE, the Court reconsiders its decision of February 27, 1986, and sets aside the questioned

portions of the respondent Court's orders of February 13 and October 26, 1984. The private respondent

is hereby ordered to deposit whatever amounts are due from it under the Land Development

Agreement of October 6, 1976 with a reputable bank to be designated by the respondent court to be

the depository trustee of the said amounts to be paid to whoever shall be found entitled thereto. No

costs. (Rollo, p. 25)

Eternal Gardens moved for a reconsideration of the above decision but it was denied for lack of merit in a resolution

promulgated on February 13, 1986, which states:

The private respondent Eternal Gardens Memorial Park Corporation's Motion for Reconsideration ofthe Court's resolution promulgated September 5, 1985 requiring it "to deposit whatever amounts are

due from it under the Land Development Agreement of October 6, 1976 ...," which was strongly

opposed by the petitioner North Philippine Union Mission of the Seventh Day Adventists, is hereby

denied for lack of merit, reiterating as it does, the very same issues and arguments that were passed

upon and considered by the Court in the very same resolution sought to be reconsidered. (Rollo, p. 27)

Hence, this petition. On July 8,1987, the Third Division of this Court issued the following resolution:

... the court RESOLVED to give due course to this petition and require the parties to file memoranda.

In the meantime, to avoid possible wastage of funds, the Court RESOLVED to require the private respondent6

to DEPOSIT its accruing installments within ten (10) days from notice with a reputable commercial bank in a

savings deposit account, in the name of the Supreme Court of the Philippines, with the details to be reported or

manifested to this Court within ten (10) days from the time the deposit/deposits are made, such deposits not to

be withdrawn without authority from this Court. (Rollo, p. 162)

Petitioner's Memorandum With Prayer for the Deferment of Time to Make Deposit (Rollo, p. 218-236) was filed on

July 14, 1987. Its prayer was granted for a period of ten (10) days for the purpose, in the resolution of July 29, 1987


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(Rollo, p. 238). Private respondent filed its Opposition to Deferment of Time to Make Deposit (Rollo, pp. 239-253) on

July 24, 1987 to which petitioner filed its Reply to Opposition on August 4, 1987 (Rollo, pp. 256-267). Both were

noted by the Court in its resolution dated September 7, 1987 (Rollo, p. 270). On August 25, 1987, private

respondent filed its Rejoinder to Petitioner's Reply to Opposition (Rollo, pp. 271-292).

Petitioner filed its Supplemental Memorandum with Reply to Opposition (To Deferment of time to Make Deposit) on

August 31, 1987 (Rollo, pp. 294-313) and a Sur-rejoinder on September 1, 1987 (Rollo, pp. 304-315).

The main issues in this case are:

I

Whether or not respondent Court of Appeals abused its discretion amounting to lack of jurisdiction in

reconsidering its resolution of February 27, 1985 and in requiring instead in the resolution of

September 5, 1985, that petitioner Eternal Gardens deposit whatever amounts are due from it under

the Land Development Agreement with a reputable bank to be designated by the respondent court.

II

Whether or not the dismissal of AC-G.R. SP No. 06696 (North Philippine Union Mission of the Seventh

Day Adventists vs. Hon. Macandog, et al.) by the Second Special Cases Division of the IAC which was

affirmed by the Supreme Court in G.R. No. 73569 constitutes a basis for the dismissal of the case at

bar on the ground of res adjudicata.

I

There is no question that courts have inherent power to amend their judgments, to make them conformable to the

law applicable provided that said judgments have not yet attained finality (Villanueva v. Court of First Instance of

Oriental Mindoro, Pinamalayan Branch II, 119 SCRA 288 [1982]). In fact, motions for reconsideration are allowed to

convince the courts that their rulings are erroneous and improper Siy v. Court of Appeals, 138 SCRA 543-544

[1985]; Guerra Enterprises Co., Inc. v. CFI of Lanao del Sur (32 SCRA 317 [1970]) and in so doing, said courts are

given sufficient opportunity to correct their errors.

In the case at bar, a careful analysis of the records will show that petitioner admitted among others in its complaint in

Interpleader that it is still obligated to pay certain amounts to private respondent; that it claims no interest in such

amounts due and is willing to pay whoever is declared entitled to said amounts. Such admissions in the complaint

were reaffirmed in open court before the Court of Appeals as stated in the latter court's resolution dated September

5, 1985 in A.C. G.R. No. 04869 which states:

The private respondent (MEMORIAL) then reaffirms before the Court its original position that it is a

disinterested party with respect to the property now the subject of the interpleader case ...

In the light of the willingness, expressly made before the court, affirming the complaint filed below, that

the private respondent (MEMORIAL) will pay whatever is due on the Land Development Agreement to

the rightful owner/owners, there is no reason why the amount due on subject agreement has not been

placed in the custody of the Court. (Rollo, p. 227).

Under the circumstances, there appears to be no plausible reason for petitioner's objections to the deposit of the

amounts in litigation after having asked for the assistance of the lower court by filing a complaint for interpleader

where the deposit of aforesaid amounts is not only required by the nature of the action but is a contractual obligation

of the petitioner under the Land Development Program (Rollo, p. 252).

As correctly observed by the Court of Appeals, the essence of an interpleader, aside from the disavowal of interest

in the property in litigation on the part of the petitioner, is the deposit of the property or funds in controversy with the

court. it is a rule founded on justice and equity: "that the plaintiff may not continue to benefit from the property or

funds in litigation during the pendency of the suit at the expense of whoever will ultimately be decided as entitled

thereto." (Rollo, p. 24).

The case at bar was elevated to the Court of Appeals on certiorari with prohibitory and mandatory injunction. Said

appellate court found that more than twenty million pesos are involved; so that on interest alone for savings or time

deposit would be considerable, now accruing in favor of the Eternal Gardens. Finding that such is violative of the

very essence of the complaint for interpleader as it clearly runs against the interest of justice in this case, the Court

of Appeals cannot be faulted for finding that the lower court committed a grave abuse of discretion which requires

correction by the requirement that a deposit of said amounts should be made to a bank approved by the Court.

(Rollo, p.-25)

Petitioner would now compound the issue by its obvious turn-about, presently claiming in its memorandum that

there is a novation of contract so that the amounts due under the Land Development Agreement were allegedly

extinguished, and the requirement to make a deposit of said amounts in a depositary bank should be held in

abeyance until after the conflicting claims of ownership now on trial before Branch CXXII RTC-Caloocan City, has

finally been resolved.


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All these notwithstanding, the need for the deposit in question has been established, riot only in the lower courts and

in the Court of Appeals but also in the Supreme Court where such deposit was required in "the resolution of July 8,

1987 to avoid wastage of funds.

II

The claim that this case should be barred by res judicata is even more untenable.

The requisite of res judicata are: (1) the presence of a final former judgment; (2) the former judgment was rendered

by a court having jurisdiction over the subject matter and the parties; (3) the former judgment is a judgment on the

merits; and (4) there is between the first and the second action identity of parties, of subject matter, and of causes ofactionArguson v. Miclat 135 SCRA 678 [1985]; Carandang v. Venturanza, 133 SCRA 344 [1984]).

There is no argument against the rule that parties should not be permitted to litigate the same issue more than once

and when a right or fact has been judicially tried and determined by a court of competent jurisdiction, so long as it

remains unreversed, it should be conclusive upon the parties and those in privity with them in law or estate (Sy Kao

v. Court of Appeals, 132 SCRA 302 [1984]).

But a careful review of the records shows that there is no judgment on the merits in G.R. No. 73569 and in the case

at bar, G.R. No. 73794; both of which deal on mere incidents arising therefrom.

In G.R. No 73569, the issue raised is the propriety of the grant of the motion for reconsideration without a hearing

thereon and the denial of the motion for execution, while in the case at bar, what is assailed is the propriety of the

order of respondent appellant court that petitioner Eternal Gardens should deposit whatever amounts are due from it

under the Land Development Agreement with a reputable bank to be designated by the Court. In fact, there is apending trial on the merits in the trial court which the petitioner insists is a prejudicial question which should first be

resolved. Moreover, while there may be Identity of parties and of subject matter, the Land Development Contract,

there is no Identity of issues as clearly shown by the petitions filed.

PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit; (b) this case (together with all the claims

of the intervenors on the merits) is REMANDED to the lower court for further proceedings; and (c) the resolution of

the Third Division of this Court of July 8, 1987 requiring the deposit by the petitioner (see footnote No. 6) of the

amounts contested in a depositary bank STANDS (the Motion for Reconsideration thereof being hereby DENIED for

reasons already discussed) until after the decision on the merits shall have become final and executory.

SO ORDERED.

Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.

Footnotes

1 Penned by Justice Nathaniel P. De Pano, Jr. concluded in by Justices Isidro C. Borromeo and

Carolina C. Grio-Aquino.

2 Judge Fernando A. Cruz.

3 Regional Trial Court, Caloocan City, Branch CXX, presided over by Judge Antonia Corpus-

Macandog.

4 Justice de Pano, Jr. penned the Decision which was concurred in by Justices Borromeo and Grio-

Aquino.

5 Penned by Justice Nathaniel P. de Pano, Jr. and concurred in by Justices Isidro C. Borromeo, Luis A.

Javellana.

6 Should be "Petitioner," see Petitioner's Memorandum, dated July 13, 1987, Rollo p. 218.

The Lawphil Project - Arellano Law Foundation


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Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. L-23851 March 26, 1976

WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff-appellant,

vs.

LEE E. WON alias RAMON LEE and BIENVENIDO A. TAN, defendants-appellees.

Leonardo Abola for appellant.

Alfonso V. Agcaoli & Ramon A. Barcelona for appellee Lee E. Won.

Bienvenido A. Tan in his own behalf.

CASTRO, C.J.:

This is an appeal from the order of the Court of First Instance of Rizal, in civil case 7656, dismissing the plaintiff-

appellant's complaint of interpleader upon the grounds of failure to state a cause of action and res judicata.

In its amended and supplemental complaint of October 23, 1963, the Wack Wack Golf & Country Club, Inc., a

non-stock, civic and athletic corporation duly organized under the laws of the Philippines, with principal office in

Mandaluyong, Rizal (hereinafter referred to as the Corporation), alleged, for its first cause of action, that the

defendant Lee E. Won claims ownership of its membership fee certificate 201, by virtue of the decision rendered in

civil case 26044 of the CFI of Manila, entitled "Lee E. Won alias Ramon Lee vs. Wack Wack Golf & Country Club,

Inc." and also by virtue of membership fee certificate 201-serial no. 1478 issued on October 17, 1963 by PoncianoB. Jacinto, deputy clerk of court of the said CFI of Manila, for and in behalf of the president and the secretary of the

Corporation and of the People's Bank & Trust Company as transfer agent of the said Corporation, pursuant to the

order of September 23, 1963 in the said case; that the defendant Bienvenido A. Tan, on the other hand, claims to be

lawful owner of its aforesaid membership fee certificate 201 by virtue of membership fee certificate 201-serial no.

1199 issued to him on July 24, 1950 pursuant to an assignment made in his favor by "Swan, Culbertson and Fritz,"

the original owner and holder of membership fee certificate 201; that under its articles of incorporation and by-laws

the Corporation is authorized to issue a maximum of 400 membership fee certificates to persons duly elected or

admitted to proprietary membership, all of which have been issued as early as December 1939; that it claims no

interest whatsoever in the said membership fee certificate 201; that it has no means of determining who of the two

defendants is the lawful owner thereof; that it is without power to issue two separate certificates for the same

membership fee certificate 201, or to issue another membership fee certificate to the defendant Lee, without

violating its articles of incorporation and by-laws; and that the membership fee certificate 201-serial no. 1199 held by

the defendant Tan and the membership fee certificate 201-serial No. 1478 issued to the defendant Lee proceed fromthe same membership fee certificate 201, originally issued in the name of "Swan, Culbertson and Fritz".

For its second cause of action. it alleged that the membership fee certificate 201-serial no. 1478 issued by the

deputy clerk of court of court of the CFI of Manila in behalf of the Corporation is null and void because issued in

violation of its by-laws, which require the surrender and cancellation of the outstanding membership fee certificate

201 before issuance may be made to the transferee of a new certificate duly signed by its president and secretary,

aside from the fact that the decision of the CFI of Manila in civil case 26044 is not binding upon the defendant Tan,

holder of membership fee certificate 201-serial no. 1199; that Tan is made a party because of his refusal to join it in

this action or bring a separate action to protect his rights despite the fact that he has a legal and beneficial interest in

the subject matter of this litigation; and that he is made a part so that complete relief may be accorded herein.

The Corporation prayed that (a) an order be issued requiring Lee and Tan to interplead and litigate their conflicting

claims; and (b) judgment. be rendered, after hearing, declaring who of the two is the lawful owner of membership

fee certificate 201, and ordering the surrender and cancellation of membership fee certificate 201-serial no. 1478issued in the name of Lee.

In separate motions the defendants moved to dismiss the complaint upon the grounds of res judicata, failure of the

complaint to state a cause of action, and bar by prescription. 1 These motions were duly opposed by the

Corporation. Finding the grounds of bar by prior judgment and failure to state a cause of action well taken, the trial

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court dismissed the complaint, with costs against the Corporation.

In this appeal, the Corporation contends that the court a quo erred (1) in finding that the allegations in its amended

and supplemental complaint do not constitute a valid ground for an action of interpleader, and in holding that "the

principal motive for the present action is to reopen the Manila Case and collaterally attack the decision of the said

Court"; (2) in finding that the decision in civil case 26044 of the CFI of Manila constitutes res judicataand bars its

present action; and (3) in dismissing its action instead of compelling the appellees to interplead and litigate between

themselves their respective claims.

The Corporations position may be stated elsewise as follows: The trial court erred in dismissing the complaint,

instead of compelling the appellees to interplead because there actually are conflicting claims between the latterwith respect to the ownership of membership fee certificate 201, and, as there is not Identity of parties, of subject-

matter, and of cause of action, between civil case 26044 of the CFI of Manila and the present action, the complaint

should not have been dismissed upon the ground of res judicata.

On the other hand, the appellees argue that the trial court properly dismissed the complaint, because, having the

effect of reopening civil case 26044, the present action is barred by res judicata.

Although res judicataor bar by a prior judgment was the principal ground availed of by the appellees in moving for

the dismissal of the complaint and upon which the trial court actually dismissed the complaint, the determinative

issue, as can be gleaned from the pleadings of the parties, relates to the propriety and timeliness of the remedy of

interpleader.

The action of interpleader, under section 120 of the Code of Civil Procedure,

2

is a remedy whereby a person whohas personal property in his possession, or an obligation to render wholly or partially, without claiming any right to

either, comes to court and asks that the persons who claim the said personal property or who consider themselves

entitled to demand compliance with the obligation, be required to litigate among themselves in order to determine

finally who is entitled to tone or the one thing. The remedy is afforded to protect a person not against double liability

but against double vexation in respect of one liability.3The procedure under the Rules of Court

4is the same as

that under the Code of Civil Procedure,5

except that under the former the remedy of interpleader is available

regardless of the nature of the subject-matter of the controversy, whereas under the latter an interpleader suit is

proper only if the subject-matter of the controversy is personal property or relates to the performance of an

obligation.

There is no question that the subject matter of the present controversy, i.e., the membership fee certificate 201, is

proper for an interpleader suit. What is here disputed is the propriety and timeliness of the remedy in the light of the

facts and circumstances obtaining.

A stakeholder6should use reasonable diligence to hale the contending claimants to court.

7He need not await

actual institution of independent suits against him before filing a bill of interpleader.8He should file an action of

interpleader within a reasonable time after a dispute has arisen without waiting to be sued by either of the

contending claimants.9

Otherwise, he may be barred by laches10

or undue delay.11

But where he acts with

reasonable diligence in view of the environmental circumstances, the remedy is not barred.12

Has the Corporation in this case acted with diligence, in view of all the circumstances, such that it may properly

invoke the remedy of interpleader? We do not think so. It was aware of the conflicting claims of the appellees with

respect to the membership fee certificate 201 long before it filed the present interpleader suit. It had been

recognizing Tan as the lawful owner thereof. It was sued by Lee who also claimed the same membership fee

certificate. Yet it did not interplead Tan. It preferred to proceed with the litigation (civil case 26044) and to defend

itself therein. As a matter of fact, final judgment was rendered against it and said judgment has already been

executed. It is not therefore too late for it to invoke the remedy of interpleader.

It has been held that a stakeholder's action of interpleader is too late when filed after judgment has been rendered

against him in favor of one of the contending claimants,13

especially where he had notice of the conflicting claims

prior to the rendition of the judgment and neglected the opportunity to implead the adverse claimants in the suit

where judgment was entered. This must be so, because once judgment is obtained against him by one claimant he

becomes liable to the latter.14

In once case,15

it was declared:

The record here discloses that long before the rendition of the judgment in favor of relators against the

Hanover Fire Insurance Company the latter had notice of the adverse claim of South to the proceeds of

the policy. No reason is shown why the Insurance Company did not implead South in the former suit

and have the conflicting claims there determined. The Insurance Company elected not to do so and

that suit proceeded to a final judgment in favor of relators. The Company thereby became

independently liable to relators. It was then too late for such company to invoke the remedy of

interpleader

The Corporation has not shown any justifiable reason why it did not file an application for interpleader in civil case


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26044 to compel the appellees herein to litigate between themselves their conflicting claims of ownership. It was

only after adverse final judgment was rendered against it that the remedy of interpleader was invoked by it. By then

it was too late, because to he entitled to this remedy the applicant must be able to show that lie has not been made

independently liable to any of the claimants. And since the Corporation is already liable to Lee under a final

judgment, the present interpleader suit is clearly improper and unavailing.

It is the general rule that before a person will be deemed to be in a position to ask for an order of

intrepleader, he must be prepared to show, among other prerequisites, that he has not become

independently liable to any of the claimants. 25 Tex. Jur. p. 52, Sec. 3; 30 Am. Jur. p. 218, Section 8.

It is also the general rule that a bill of interpleader comes too late when it is filed after judgment has beenrendered in favor of one of the claimants of the fund, this being especially true when the holder of the funds

had notice of the conflicting claims prior to the rendition of the judgment and had an opportunity to implead the

adverse claimants in the suit in which the judgment was rendered. United Procedures Pipe Line Co. v. Britton,

Tex. Civ. App. 264 S.W. 176; Nash v. McCullum, Tex. Civ. 74 S.W. 2d 1046; 30 Am. Jur. p. 223, Sec. 11; 25

Tex. Jur. p. 56, Sec. 5; 108 A.L.R., note 5, p. 275.16

Indeed, if a stakeholder defends a suit filed by one of the adverse claimants and allows said suit to proceed to final

judgment against him, he cannot later on have that part of the litigation repeated in an interpleader suit. In the case

at hand, the Corporation allowed civil case 26044 to proceed to final judgment. And it offered no satisfactory

explanation for its failure to implead Tan in the same litigation. In this factual situation, it is clear that this interpleader

suit cannot prosper because it was filed much too late.

If a stakeholder defends a suit by one claimant and allows it to proceed so far as a judgment against him

without filing a bill of interpleader, it then becomes too late for him to do so. Union Bank v. Kerr, 2 Md. Ch. 460;

Home Life Ins. Co. v. Gaulk, 86 Md. 385, 390, 38 A. 901; Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. It is

one o the main offices of a bill of interpleader to restrain a separate proceeding at law by claimant so as to

avoid the resulting partial judgment; and if the stakeholder acquiesces in one claimant's trying out his claim and

establishing it at law, he cannot then have that part of the litigation repeated in an interpleader suit. 4

Pomeroy's Eq. Juris. No. 162; Mitfor's Eq. Pleading (Tyler's Ed.) 147 and 236; Langdell's Summary of Eq.

Pleading, No. 162' De Zouche v. Garrizon, 140 Pa. 430, 21 A/450.17

It is the general rule that a bill of interpleader comes too late when application therefore is delayed until

after judgment has been rendered in favor of one of the claimants of the fund, and that this is especially

true where the holder of the fund had notice of the conflicting claims prior to the rendition of such

judgment and an opportunity to implead the adverse claimants in the suit in which such judgment was

rendered. (See notes and cases cited 36 Am. Dec. 703, Am. St. Rep. 598, also 5 Pomeroy's Eq. Juris.

Sec. 41.)

The evidence in the opinion of the majority shows beyond dispute that the appellant permitted the Parker

county suit to proceed to judgment in favor of Britton with full notice of the adverse claims of the defendants in

the present suit other than the assignees of the judgment (the bank and Mrs. Pabb) and no excuse is shown

why he did not implead them in the suit.18

To now permit the Corporation to bring Lee to court after the latter's successful establishment of his rights in civil

case 26044 to the membership fee certificate 201, is to increase instead of to diminish the number of suits, which is

one of the purposes of an action of interpleader, with the possibility that the latter would lose the benefits of the

favorable judgment. This cannot be done because having elected to take its chances of success in said civil case

26044, with full knowledge of all the fact, the Corporation must submit to the consequences of defeat.

The act providing for the proceeding has nothing to say touching the right of one, after contesting a

claim of one of the claimants to final judgment unsuccessfully, to involve the successful litigant inlitigation anew by bringing an interpleader action. The question seems to be one of first impression

here, but, in other jurisdictions, from which the substance of the act was apparently taken, the rule

prevails that the action cannot be resorted to after an unsuccessful trial against one of the claimants.

It is well settled, both by reasons and authority, that one who asks the interposition of a court of equity

to compel others, claiming property in his hands, to interplead, must do so before putting them to the

test of trials at law. Yarborough v. Thompson, 3 Smedes & M. 291 (41 Am. Dec. 626); Gornish v.

Tanner, 1 You. & Jer. 333; Haseltine v. Brickery, 16 Grat. (Va.) 116. The remedy by interpleader is

afforded to protect the party from the annoyance and hazard of two or more actions touching the same

property or demand; but one who, with knowledge of all the facts, neglects to avail himself of the relief,

or elects to take the chances for success in the actions at law, ought to submit to the consequences of

defeat. To permit an unsuccessful defendant to compel the successful plaintiffs to interplead, is to

increase instead of to diminish the number of suits; to put upon the shoulders of others the burdenwhich he asks may be taken from his own. ....'

It is urged, however, that the American Surety Company of New York was not in position to file an interpleader

until it had tested the claim of relatrix to final judgment, and that, failing to meet with success, it promptly filed

the interpleader. The reason why, it urges, it was not in such position until then is that had it succeeded before


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this court in sustaining its construction of the bond and the law governing the bond, it would not have been

called upon to file an interpleader, since there would have been sufficient funds in its hands to have satisfied all

lawful claimants. It may be observed, however, that the surety company was acquainted with all of the facts,

and hence that it simply took its chances of meeting with success by its own construction of the bond and the

law. Having failed to sustain it, it cannot now force relatrix into litigation anew with others, involving most likely a

repetition of what has been decided, or force her to accept a pro rata part of a fund, which is far from benefits

of the judgment.19

Besides, a successful litigant cannot later be impleaded by his defeated adversary in an interpleader suit and

compelled to prove his claim anew against other adverse claimants, as that would in effect be a collateral attack

upon the judgment.

The jurisprudence of this state and the common law states is well-settled that a claimant who has been

put to test of a trial by a surety, and has establish his claim, may not be impleaded later by the surety in

an interpleader suit, and compelled to prove his claim again with other adverse claimants. American

Surety Company of New York v. Brim, 175 La. 959, 144 So. 727; American Surety Company of New

York v. Brim (In Re Lyong Lumber Company), 176 La. 867, 147 So. 18; Dugas v. N.Y. Casualty Co.,

181 La. 322, 159 So. 572; 15 Ruling Case Law, 228; 33 Corpus Juris, 477; 4 Pomeroy's Jurisprudence,

1023; Royal Neighbors of America v. Lowary (D.C.) 46 F2d 565; Brackett v. Graves, 30 App. Div. 162,

51 N.Y.S. 895; De Zouche v. Garrison, 140 Pa. 430, 21 A. 450, 451; Manufacturer's Finance Co. v. W.I.

Jones Co. 141 Ga., 519, 81 S.E. 1033; Hancock Mutual Life Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383.

There can be no doubt that relator's claim has been finally and definitely established, because that matter was

passed upon by three courts in definitive judgments. The only remaining item is the value of the use of the land

during the time that relator occupied it. The case was remanded solely and only for the purpose of determining

the amount of that credit. In all other aspects the judgment is final.20

It is generally held by the cases it is the office of interpleader to protect a party, not against double

liability, but against double vexation on account of one liability. Gonia v. O'Brien, 223 Mass. 177, 111

N.E. 787. And so it is said that it is too late for the remedy of interpleader if the party seeking this relef

has contested the claim of one of the parties and suffered judgment to be taken.

In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576. 578, it was said: 'It is the general rule that a

bill of interpleader comes too late when application therefor is delayed until after judgment has been

rendered in favor of one of the claimants of the fund, and this is especially true where the holder of the

fund had notice of the conflicting claims prior to the rendition of such judgment and an opportunity to

implead the adverse claimants in the suit in which such judgment was rendered. See notes and cases

cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5 Pomeroy's Equity Jurisprudence No. 41.'

The principle thus stated has been recognized in many cases in other jurisdictions, among which may

be citedAmerican Surety Co. v. O'Brien, 223 Mass. 177, 111 N.E. 787; Phillips v. Taylor, 148 Md. 157,

129 A. 18; Moore v. Hill, 59 Ga. 760, 761; Yearborough v. Thompson, 3 Smedes & M. (11 Miss.) 291,

41 Am. Dec. 626. See, also, 33 C.J. p. 447, No. 30; Nash v. McCullum, (Tex. Civ. App.) 74 S.W. 2d

1042, 1047.

It would seem that this rule should logically follow since, after the recovery of judgment, the interpleading of the

judgment creditor is in effect a collateral attack upon the judgment.21

In fine, the instant interpleader suit cannot prosper because the Corporation had already been made independently

liable in civil case 26044 and, therefore, its present application for interpleader would in effect be a collateral attack

upon the final judgment in the said civil case; the appellee Lee had already established his rights to membership fee

certificate 201 in the aforesaid civil case and, therefore, this interpleader suit would compel him to establish his

rights anew, and thereby increase instead of diminish litigations, which is one of the purposes of an interpleader suit,

with the possiblity that the benefits of the final judgment in the said civil case might eventually be taken away from

him; and because the Corporation allowed itself to be sued to final judgment in the said case, its action of

interpleader was filed inexcusably late, for which reason it is barred by laches or unreasonable delay.

ACCORDINGLY, the order of May 28, 1964, dismissing the complaint, is affirmed, at appellant's cost.

Teehankee, Makasiar, Antonio, Esguerra, Muoz Palma, Aquino and Concepcion, Jr., JJ., concur.

Barredo and Martin, JJ., took no part.

Fernando, J., is on leave.

Footnotes

1 Only Tan interposed the ground of prescription.


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2 Now Section 1, Rule 63, and formerly Sec. 1, Rule 14, of the Rules of Court.

3 Alvarez, et al. v. Commonwealth of the Philippines, 65 Phil. 202, 311-312.

4 Section 1 of Rule 63 of the Revised Rules of Court provides:

"Interpleader when proper. Whenever conflicting claims upon the same subject-matter are or may be

made against a person, who claims no interest whatsoever in the subject-matter, or an interest which in

whole or in part is not disputed by the claimants, he may bring an action against the conflicting

claimants to compel them to interplead and litigate their several claims among themselves."

5 Section 120 of the Code of Civil Procedure reads:

Interpleading. Whenever conflicting claims are or may be made upon a person for or relating to

personal property, or the performance of an obligation or any portion thereof, so that he may be made

subject to several actions by different persons, unless the court intervenes, such person may bring an

action against the conflicting claimants, disclaiming personal interest in the controversy, to compel

them to interplead with one another and thereupon proceed to determine the rights of the several

parties to the interpleading to the personal property or the performance of the obligation in controversy

and shall determine the rights of all parties in interest."

6 As here used the term "stakeholder" means a person entrusted with the custody of property or money

that is subject of litigation or of contention between rival claimants in which the holder claims no right or

property interest.

7 Royal Neighbors of America v. Lowary, 46 F. 2d 565.

8 State of Texas v. State of Florida, 59 S. Ct. 563, 306 U.S. 389, 83 L.ed. 817, 121 A.L.R. 1179.

9 Dennis v. Equitable Life Assurance Soc., 88 S.W. 2nd 76.

10 U.S. Land & Investment Co. v. Buessey, 7 N.Y.S. 495.

11 Milton Warehouse Co. v. Basche Sage Hardware Co., 34 P 2d 338.

12 Connecticut General Life Ins. Co. v. Yaw, 53 F.2d 684.

13 Troy v. Troy, 16 P. 2d 290.

14 Yarborough v. Thompson, 41 Am. Dec. 626.

15 Nash, et al. v. McCullum, etc., et al., 74 S.W. 2d 1046, 1047.

16 Farmers State Bank of Meridian v. National Fire Ins. Co. of Hartford, Connecticut, et al., 169 S.W. 2d

545, 549.

17 Phillips, et al. v. Taylor, et al., 129 A. 18, 20.

18 United Producer's Pipe Line Company v. Britton, et al., 264 S.W. 576, 578.

19 American Surety Co. of New York v. Brim, 144 So. 727, 729-730.

20 Victor v. Lewis, et al., 161 So. 597, 598.

21 Benjamin v. Ernst, 83 Wash. 59, 79.



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Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 136409 March 14, 2008

SUBHASH C. PASRICHA and JOSEPHINE A. PASRICHA,Petitioners,vs.DON LUIS DISON REALTY, INC.,Respondent.

D E C I S I O N

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision 1ofthe Court of Appeals (CA) dated May 26, 1998 and its Resolution

2dated December 10, 1998 in CA-G.R. SP No.

37739 dismissing the petition filed by petitioners Josephine and Subhash Pasricha.

The facts of the case, as culled from the records, are as follows:

Respondent Don Luis Dison Realty, Inc. and petitioners executed two Contracts of Lease3whereby the former, as

lessor, agreed to lease to the latter Units 22, 24, 32, 33, 34, 35, 36, 37 and 38 of the San Luis Building, located at1006 M.Y. Orosa cor. T.M. Kalaw Streets, Ermita, Manila. Petitioners, in turn, agreed to pay monthly rentals, asfollows:

For Rooms 32/35:

From March 1, 1991 to August 31, 1991 P5,000.00/P10,000.00

From September 1, 1991 to February 29, 1992 P5,500.00/P11,000.00

From March 1, 1992 to February 28, 1993 P6,050.00/P12,100.00








For Rooms 22 and 24:

Effective July 1, 1992 P10,000.00 with an increment of 10% every two years.5

For Rooms 33 and 34:

Effective April 1, 1992 P5,000.00 with an increment of 10% every two years.6

For Rooms 36, 37 and 38:

Effective when tenants vacate said premises P10,000.00 with an increment of 10% every two years.7

Petitioners were, likewise, required to pay for the cost of electric consumption, water bills and the use of telephone

cables.8

. No. 136409 http://www.lawphil.net/judjuris/juri2008/mar2008/gr_136409_2008.html

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The lease of Rooms 36, 37 and 38 did not materialize leaving only Rooms 22, 24, 32, 33, 34 and 35 as subjects of

the lease contracts.9

While the contracts were in effect, petitioners dealt with Francis Pacheco (Pacheco), then

General Manager of private respondent. Thereafter, Pacheco was replaced by Roswinda Bautista (Ms. Bautista).10

Petitioners religiously paid the monthly rentals until May 1992.11

After that, however, despite repeated demands,petitioners continuously refused to pay the stipulated rent. Consequently, respondent was constrained to refer thematter to its lawyer who, in turn, made a final demand on petitioners for the payment of the accrued rentals

amounting to P916,585.58.12

Because petitioners still refused to comply, a complaint for ejectment was filed by

private respondent through its representative, Ms. Bautista, before the Metropolitan Trial Court (MeTC) of Manila.13

The case was raffled to Branch XIX and was docketed as Civil Case No. 143058-CV.

Petitioners admitted their failure to pay the stipulated rent for the leased premises starting July until November 1992,but claimed that such refusal was justified because of the internal squabble in respondent company as to the person

authorized to receive payment.14

To further justify their non-payment of rent, petitioners alleged that they wereprevented from using the units (rooms) subject matter of the lease contract, except Room 35. Petitioners eventuallypaid their monthly rent for December 1992 in the amount of P30,000.00, and claimed that respondent waived itsright to collect the rents for the months of July to November 1992 since petitioners were prevented from using

Rooms 22, 24, 32, 33, and 34.15

However, they again withheld payment of rents starting January 1993 because of

respondents refusal to turn over Rooms 36, 37 and 38.16

To show good faith and willingness to pay the rents,petitioners alleged that they prepared the check vouchers for their monthly rentals from January 1993 to January

1994.17

Petitioners further averred in their Amended Answer18

that the complaint for ejectment was prematurely

filed, as the controversy was not referred to the barangay for conciliation.

For failure of the parties to reach an amicable settlement, the pre-trial conference was terminated. Thereafter, theysubmitted their respective position papers.

On November 24, 1994, the MeTC rendered a Decision dismissing the complaint for ejectment.19

It consideredpetitioners non-payment of rentals as unjustified. The court held that mere willingness to pay the rent did notamount to payment of the obligation; petitioners should have deposited their payment in the name of respondentcompany. On the matter of possession of the subject premises, the court did not give credence to petitioners claimthat private respondent failed to turn over possession of the premises. The court, however, dismissed the complaintbecause of Ms. Bautistas alleged lack of authority to sue on behalf of the corporation.

Deciding the case on appeal, the Regional Trial Court (RTC) of Manila, Branch 1, in Civil Case No. 94-72515,reversed and set aside the MeTC Decision in this wise:

WHEREFORE, the appealed decision is hereby reversed and set aside and another one is rendered orderingdefendants-appellees and all persons claiming rights under them, as follows:

(1) to vacate the leased premised (sic) and restore possession thereof to plaintiff-appellant;

(2) to pay plaintiff-appellant the sum of P967,915.80 representing the accrued rents in arrears as ofNovember 1993, and the rents on the leased premises for the succeeding months in the amounts stated inparagraph 5 of the complaint until fully paid; and

(3) to pay an additional sum equivalent to 25% of the rent accounts as and for attorneys fees plus the costsof this suit.

SO ORDERED.

20

The court adopted the MeTCs finding on petitioners unjustified refusal to pay the rent, which is a valid ground forejectment. It, however, faulted the MeTC in dismissing the case on the ground of lack of capacity to sue. Instead, itupheld Ms. Bautistas authority to represent respondent notwithstanding the absence of a board resolution to that

effect, since her authority was implied from her power as a general manager/treasurer of the company.21

Aggrieved, petitioners elevated the matter to the Court of Appeals in a petit ion for review on certiorari.22

On March

18, 1998, petitioners filed an Omnibus Motion23

to cite Ms. Bautista for contempt; to strike down the MeTC and RTCDecisions as legal nullities; and to conduct hearings and ocular inspections or delegate the reception of evidence.

Without resolving the aforesaid motion, on May 26, 1998, the CA affirmed24

the RTC Decision but deleted the award

of attorneys fees.25

Petitioners moved for the reconsideration of the aforesaid decision.26Thereafter, they filed several motions askingthe Honorable Justice Ruben T. Reyes to inhibit from further proceeding with the case allegedly because of his close

association with Ms. Bautistas uncle-in-law.27

In a Resolution28

dated December 10, 1998, the CA denied the motions for lack of merit. The appellate court


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considered said motions as repetitive of their previous arguments, irrelevant and obviously dilatory.29

As to themotion for inhibition of the Honorable Justice Reyes, the same was denied, as the appellate court justice stressed

that the decision and the resolution were not affected by extraneous matters.30

Lastly, the appellate court grantedrespondents motion for execution and directed the RTC to issue a new writ of execution of its decision, with the

exception of the award of attorneys fees which the CA deleted.31

Petitioners now come before this Court in this petition for review on certiorari raising the following issues:

I.

Whether this ejectment suit should be dismissed and whether petitioners are entitled to damages for theunauthorized and malicious filing by Rosario (sic) Bautista of this ejectment case, it being clear that[Roswinda] whether as general manager or by virtue of her subsequent designation by the Board ofDirectors as the corporations attorney-in-fact had no legal capacity to institute the ejectment suit,independently of whether Director Pacanas Order setting aside the SEC revocation Order is a mere scrap ofpaper.

II.

Whether the RTCs and the Honorable Court of Appeals failure and refusal to resolve the most fundamentalfactual issues in the instant ejectment case render said decisions void on their face by reason of the completeabdication by the RTC and the Honorable Justice Ruben Reyes of their constitutional duty not only to clearlyand distinctly state the facts and the law on which a decision is based but also to resolve the decisive factual

issues in any given case.

III.

Whether the (1) failure and refusal of Honorable Justice Ruben Reyes to inhibit himself, despite his admission by reason of his silence of petitioners accusation that the said Justice enjoyed a $7,000.00 scholarshipgrant courtesy of the uncle-in-law of respondent "corporations" purported general manager and (2), worse,his act of ruling against the petitioners and in favor of the respondent "corporation" constitute an

unconstitutional deprivation of petitioners property without due process of law.32

In addition to Ms. Bautistas lack of capacity to sue, petitioners insist that respondent company has no standing to

sue as a juridical person in view of the suspension and eventual revocation of its certificate of registration.33

Theylikewise question the factual findings of the court on the bases of their ejectment from the subject premises.

Specifically, they fault the appellate court for not finding that: 1) their non-payment of rentals was justified; 2) theywere deprived of possession of all the units subject of the lease contract except Room 35; and 3) respondentviolated the terms of the contract by its continued refusal to turn over possession of Rooms 36, 37 and 38.Petitioners further prayed that a Temporary Restraining Order (TRO) be issued enjoining the CA from enforcing its

Resolution directing the issuance of a Writ of Execution. Thus, in a Resolution34

dated January 18, 1999, this Courtdirected the parties to maintain the status quo effective immediately until further orders.

The petition lacks merit.

We uphold the capacity of respondent company to institute the ejectment case. Although the Securities andExchange Commission (SEC) suspended and eventually revoked respondents certificate of registration onFebruary 16, 1995, records show that it instituted the action for ejectment on December 15, 1993. Accordingly, when

the case was commenced, its registration was not yet revoked.35

Besides, as correctly held by the appellate court,

the SEC later set aside its earlier orders of suspension and revocation of respondents certificate, rendering the

issue moot and academic.36

We likewise affirm Ms. Bautistas capacity to sue on behalf of the company despite lack of proof of authority to sorepresent it. A corporation has no powers except those expressly conferred on it by the Corporation Code and thosethat are implied from or are incidental to its existence. In turn, a corporation exercises said powers through its boardof directors and/or its duly authorized officers and agents. Physical acts, like the signing of documents, can beperformed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the

board of directors.37

Thus, any person suing on behalf of the corporation should present proof of such authority.Although Ms. Bautista initially failed to show that she had the capacity to sign the verification and institute theejectment case on behalf of the company, when confronted with such question, she immediately presented the

Secretarys Certificate38

confirming her authority to represent the company.

There is ample jurisprudence holding that subsequent and substantial compliance may call for the relaxation of the

rules of procedure in the interest of justice.39

In Novelty Phils., Inc. v. Court of Appeals,40

the Court faulted theappellate court for dismissing a petition solely on petitioners failure to timely submit proof of authority to sue on

behalf of the corporation. In Pfizer, Inc. v. Galan,41

we upheld the sufficiency of a petition verified by an employment


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specialist despite the total absence of a board resolution authorizing her to act for and on behalf of the corporation.

Lastly, in China Banking Corporation v. Mondragon International Philippines, Inc,42

we relaxed the rules ofprocedure because the corporation ratified the managers status as an authorized signatory. In all of the abovecases, we brushed aside technicalities in the interest of justice. This is not to say that we disregard the requirementof prior authority to act in the name of a corporation. The relaxation of the rules applies only to highly meritoriouscases, and when there is substantial compliance. While it is true that rules of procedure are intended to promoterather than frustrate the ends of justice, and while the swift unclogging of court dockets is a laudable objective, we

should not insist on strict adherence to the rules at the expense of substantial justice.43

Technical and proceduralrules are intended to help secure, not suppress, the cause of justice; and a deviation from the rigid enforcement of

the rules may be allowed to attain that prime objective, for, after all, the dispensation of justice is the core reason for

the existence of courts.44

As to the denial of the motion to inhibit Justice Reyes, we find the same to be in order. First, the motion to inhibitcame after the appellate court rendered the assailed decision, that is, after Justice Reyes had already rendered hisopinion on the merits of the case. It is settled that a motion to inhibit shall be denied if filed after a member of thecourt had already given an opinion on the merits of the case, the rationale being that "a litigant cannot be permittedto speculate on the action of the court x x x (only to) raise an objection of this sort after the decision has been

rendered."45

Second, it is settled that mere suspicion that a judge is partial to one of the parties is not enough; thereshould be evidence to substantiate the suspicion. Bias and prejudice cannot be presumed, especially when weighedagainst a judges sacred pledge under his oath of office to administer justice without regard for any person and to doright equally to the poor and the rich. There must be a showing of bias and prejudice stemming from an extrajudicialsource, resulting in an opinion on the merits based on something other than what the judge learned from his

participation in the case.46We would like to reiterate, at this point, the policy of the Court not to tolerate acts oflitigants who, for just about any conceivable reason, seek to disqualify a judge (or justice) for their own purpose,

under a plea of bias, hostility, prejudice or prejudgment.47

We now come to the more substantive issue of whether or not the petitioners may be validly ejected from the leasedpremises.

Unlawful detainer cases are summary in nature. In such cases, the elements to be proved and resolved are the fact

of lease and the expiration or violation of its terms.48

Specifically, the essential requisites of unlawful detainer are: 1)the fact of lease by virtue of a contract, express or implied; 2) the expiration or termination of the possessors right tohold possession; 3) withholding by the lessee of possession of the land or building after the expiration or terminationof the right to possess; 4) letter of demand upon lessee to pay the rental or comply with the terms of the lease and

vacate the premises; and 5) the filing of the action within one year from the date of the last demand received by thedefendant.

49

It is undisputed that petitioners and respondent entered into two separate contracts of lease involving nine (9) roomsof the San Luis Building. Records, likewise, show that respondent repeatedly demanded that petitioners vacate thepremises, but the latter refused to heed the demand; thus, they remained in possession of the premises. The onlycontentious issue is whether there was indeed a violation of the terms of the contract: on the part of petitioners,whether they failed to pay the stipulated rent without justifiable cause; while on the part of respondent, whether itprevented petitioners from occupying the leased premises except Room 35.

This issue involves questions of fact, the resolution of which requires the evaluation of the evidence presented. TheMeTC, the RTC and the CA all found that petitioners failed to perform their obligation to pay the stipulated rent. It issettled doctrine that in a civil case, the conclusions of fact of the trial court, especially when affirmed by the Court of

Appeals, are final and conclusive, and cannot be reviewed on appeal by the Supreme Court.

50

Albeit the rule admitsof exceptions, not one of them obtains in this case.

51

To settle this issue once and for all, we deem it proper to assess the array of factual findings supporting the courtsconclusion.

The evidence of petitioners non-payment of the stipulated rent is overwhelming. Petitioners, however, claim thatsuch non-payment is justified by the following: 1) the refusal of respondent to allow petitioners to use the leasedproperties, except room 35; 2) respondents refusal to turn over Rooms 36, 37 and 38; and 3) respondents refusalto accept payment tendered by petitioners.

Petitioners justifications are belied by the evidence on record. As correctly held by the CA, petitionerscommunications to respondent prior to the filing of the complaint never mentioned their alleged inability to use the

rooms.

52

What they pointed out in their letters is that they did not know to whom payment should be made, whetherto Ms. Bautista or to Pacheco.

53 In their July 26 and October 30, 1993 letters, petitioners only questioned the

method of computing their electric billings without, however, raising a complaint about their failure to use the

rooms.54

Although petitioners stated in their December 30, 1993 letter that respondent failed to fulfill its part of the

contract,55

nowhere did they specifically refer to their inability to use the leased rooms. Besides, at that time, they


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were already in default on their rentals for more than a year.

If it were true that they were allowed to use only one of the nine (9) rooms subject of the contract of lease, andconsidering that the rooms were intended for a business purpose, we cannot understand why they did notspecifically assert their right. If we believe petitioners contention that they had been prevented from using the roomsfor more than a year before the complaint for ejectment was filed, they should have demanded specific performancefrom the lessor and commenced an action in court. With the execution of the contract, petitioners were already in aposition to exercise their right to the use and enjoyment of the property according to the terms of the lease

contract.56

As borne out by the records, the fact is that respondent turned over to petitioners the keys to the leased

premises and petitioners, in fact, renovated the rooms. Thus, they were placed in possession of the premises andthey had the right to the use and enjoyment of the same. They, likewise, had the right to resist any act of intrusioninto their peaceful possession of the property, even as against the lessor itself. Yet, they did not lift a finger to protecttheir right if, indeed, there was a violation of the contract by the lessor.

What was, instead, clearly established by the evidence was petitioners non-payment of rentals because ostensiblythey did not know to whom payment should be made. However, this did not justify their failure to pay, because ifsuch were the case, they were not without any remedy. They should have availed of the provisions of the Civil Codeof the Philippines on the consignation of payment and of the Rules of Court on interpleader.

Article 1256 of the Civil Code provides:

Article 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, thedebtor shall be released from responsibility by the consignation of the thing or sum due.

Consignation alone shall produce the same effect in the following cases:

x x x x

(4) When two or more persons claim the same right to collect;

x x x x.

Consignation shall be made by depositing the things due at the disposal of a judicial authority, before whom the

tender of payment shall be proved in a proper case, and the announcement of the consignation in other cases.57

In the instant case, consignation alone would have produced the effect of payment of the rentals. The rationale forconsignation is to avoid the performance of an obligation becoming more onerous to the debtor by reason of causes

not imputable to him.58Petitioners claim that they made a written tender of payment and actually prepared vouchersfor their monthly rentals. But that was insufficient to constitute a valid tender of payment. Even assuming that it wasvalid tender, still, it would not constitute payment for want of consignation of the amount. Well-settled is the rule that

tender of payment must be accompanied by consignation in order that the effects of payment may be produced.59

Moreover, Section 1, Rule 62 of the Rules of Court provides:

Section 1. When interpleader proper. Whenever conflicting claims upon the same subject matter are or may bemade against a person who claims no interest whatever in the subject matter, or an interest which in whole or in partis not disputed by the claimants, he may bring an action against the conflicting claimants to compel them tointerplead and litigate their several claims among themselves.

Otherwise stated, an action for interpleader is proper when the lessee does not know to whom payment of rentals

should be made due to conflicting claims on the property (or on the right to collect).60

The remedy is afforded not toprotect a person against double liability but to protect him against double vexation in respect of one liability.

61

Notably, instead of availing of the above remedies, petitioners opted to refrain from making payments.

Neither can petitioners validly invoke the non-delivery of Rooms 36, 37 and 38 as a justification for non-payment ofrentals. Although the two contracts embraced the lease of nine (9) rooms, the terms of the contracts - with theirparticular reference to specific rooms and the monthly rental for each - easily raise the inference that the partiesintended the lease of each room separate from that of the others. lavvphilThere is nothing in the contract which would leadto the conclusion that the lease of one or more rooms was to be made dependent upon the lease of all the nine (9)rooms. Accordingly, the use of each room by the lessee gave rise to the corresponding obligation to pay the monthlyrental for the same. Notably, respondent demanded payment of rentals only for the rooms actually delivered to, andused by, petitioners.

It may also be mentioned that the contract specifically provides that the lease of Rooms 36, 37 and 38 was to takeeffect only when the tenants thereof would vacate the premises. Absent a clear showing that the previous tenantshad vacated the premises, respondent had no obligation to deliver possession of the subject rooms to petitioners.Thus, petitioners cannot use the non-delivery of Rooms 36, 37 and 38 as an excuse for their failure to pay therentals due on the other rooms they occupied.1av vphil


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In light of the foregoing disquisition, respondent has every right to exercise his right to eject the erring lessees. Theparties contracts of lease contain identical provisions, to wit:

In case of default by the LESSEE in the payment of rental on the fifth (5th) day of each month, the amount owingshall as penalty bear interest at the rate of FOUR percent (4%) per month, to be paid, without prejudice to the right

of the LESSOR to terminate his contract, enter the premises, and/or eject the LESSEE as hereinafter set forth;62

Moreover, Article 167363

of the Civil Code gives the lessor the right to judicially eject the lessees in case ofnon-payment of the monthly rentals. A contract of lease is a consensual, bilateral, onerous and commutative

contract by which the owner temporarily grants the use of his property to another, who undertakes to pay the renttherefor.

64For failure to pay the rent, petitioners have no right to remain in the leased premises.

WHEREFORE, premises considered, the petition is DENIED and the Status Quo Order dated January 18, 1999 ishereby LIFTED. The Decision of the Court of Appeals dated May 26, 1998 and its Resolution dated December 10,1998 in CA-G.R. SP No. 37739 are AFFIRMED.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGOAssociate Justice

Chairperson

LEONARDO A. QUISUMBING*

Associate Justice

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

MINITA V. CHICO-NAZARIO

Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the

writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO

Associate JusticeChairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that theconclusions in the above Decision were reached in consultation before the case was assigned to the writer of theopinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

Footnotes

*Additional member in lieu of Justice Reyes, who took no part.

1Penned by Associate Justice Ruben T. Reyes, with Associate Justices Quirino D. Abad Santos, Jr. and Eloy

R. Bello, Jr., concurring; rollo, pp. 44-62.

2Rollo, pp. 63-72.

3The first Contract of Lease covers Rooms 32 and 35, id. at 1034-1042; the second Contract of Lease covers

Rooms 22, 24, 33, 34, 36, 37 and 38, id. at 1043-1050.

4Rollo, pp. 1034-1036.

5Id. at 1043-1044.


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6Id.

7Id.

8Id. at 1037 and 1045.

9Records, p. 8.

10Rollo, p. 901.

11Records, p. 3.

12Demand letter dated November 2, 1993, through private respondents counsel Feria, Feria, Lugtu and Lao;

records, p. 36.

13Records, pp. 2-5.

14Id. at 10.

15Id. at 11.

16

Id. at 14.

17Id. at 13.

18Id. at 110-117.

19Penned by Judge Ernesto A. Reyes; records, pp. 261-266.

20Rollo, pp. 302-303.

21Record, p. 367.

22The petitioners adopted a wrong mode of appeal. Notwithstanding the procedural defect, the CA still took

cognizance of the case and decided the same on the merits; CA rollo, pp. 1-42.

23Rollo, pp. 346-376.

24The fallo reads:

WHEREFORE, the appealed decision is hereby AFFIRMED with the modification that the award ofattorneys fees is deleted.

SO ORDERED (Rollo, pp. 61-62).

25Supra note 1.

26Rollo, pp. 73-116

27Id. at 377-386.

28Id. at 63-72. The fallo reads:

ACCORDINGLY, petitioners motion for reconsideration, omnibus motions, motion to inhibit, motion forcontempt and related motions are hereby DENIED for utter lack of merit.

Private respondents motion for execution is GRANTED. In the interest of justice, the Regional TrialCourt, Branch I, Manila is directed to issue a new writ of execution of its judgment which we affirmed,except as to attorneys fees which we deleted. For this purpose, the original records elevated to Us areordered remanded to the RTC.

SO ORDERED.

29Rollo, p. 71.

30Id. at 70-71.


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31Id. at 72.

32Id. at 19-20.

33Id. at 978.

34Id. at 520-521.

35Id. at 1358.

36Id. at 69.

37BA Savings Bank v. Sia, 391 Phil. 370, 377 (2000).

38Records, p. 100.

39Wack Wack Golf and Country Club v. National Labor Relations Commission, G.R. No. 149793, April 15,

2005, 456 SCRA 280, 294.

40458 Phil. 36 (2003).

41

410 Phil. 483 (2001).

42G.R. No. 164798, November 17, 2005, 475 SCRA 332.

43Wack Wack Golf and Country Club v. National Labor Relations Commission, supra note 39, at 294.

44General Milling Corp. v. National Labor Relations Commission, 442 Phil. 425, 428 (2002).

45Chavez v. Public Estates Authority, 451 Phil. 1, 41 (2003); Limpin, Jr. v. Intermediate Appellate Court, No.

L-70987, May 5, 1988, 161 SCRA 83, 97-98.

46Soriano v. Judge Angeles, 393 Phil. 769, 779 (2000); People v. Court of Appeals, 369 Phil. 150, 157

(1999).

47People v. Serrano, G.R. No. 44712, October 28, 1991, 203 SCRA 171, 186.

48Ocampo v. Tirona, G.R. No. 147812, April 6, 2005, 455 SCRA 62, 72; Manuel v. Court of Appeals, G.R.

No. 95469, July 25, 1991, 199 SCRA 603, 608.

49Dela Cruz v. Court of Appeals, G.R. No. 139442, December 6, 2006, 510 SCRA 103, 115-116.

50Vda. de Gualberto v. Go, G.R. No. 139843, July 21, 2005, 463 SCRA 671, 682; Ocampo v. Ocampo, G.R.

No. 150707, April 14, 2004, 427 SCRA 545, 563; Alvarez v. Court of Appeals, 455 Phil. 864, 875 (2003).

51Vda. De Gualberto v. Go, supra, at 682.

52Rollo, p. 54.

53Id. at 1051.

54Id. at 1053-1056.

55Id. at 1058.

56Aguilar v. Court of Appeals, 390 Phil. 621, 641 (2000).

57Civil Code, Art. 1258.

58Eternal Gardens Memorial Park Corp. v. Court of Appeals, 347 Phil. 232, 264 (1997).

59State Investment House, Inc. v. Court of Appeals, G.R. No. 90676, June 19, 1991, 198 SCRA 390, 399.

60Ocampo v. Tirona, supra note 48, at 76.


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61Id.

62Rollo, pp. 1036 and 1044.

63The lessor may judicially eject the lessee for any of the following causes:

(1) When the period agreed upon, or that which is fixed for the duration of leases under articles 1682and 1687, has expired;

(2) Lack of payment of the price stipulated;

(3) Violation of any of the conditions agreed upon in the contract;

(4) When the lessee devotes the thing leased to any use or service not stipulated which causes thedeterioration thereof; or if he does not observe the requirement in No. 2 of Article 1657, as regards theuse thereof.

The ejectment of tenants of agricultural lands is governed by special laws.

64Aguilar v. Court of Appeals, supra note 56, at 640.



Documents

REM2 R62 Interpleader Cases Dela Pena