Fuentes v CA

THIRD DIVISION

[G.R. No. 109849. February 26, 1997]

MAXIMINO FUENTES, petitioner, vs. THE

HON. COURT OF APPEALS,
THIRTEENTH DIVISION, AND VIRGILIO
UY, BRIGIDO SAGUINDANG, LEONCIO
CALIGANG, ET AL., respondents.

DECISION

PANGANIBAN, J.:

In deciding this appeal, the Court reiterates

the oft-stated doctrine that factual findings
of the Court of Appeals affirming those of
the trial court are binding on this Court
unless there is a clear showing that such
findings are tainted with arbitrariness,
capriciousness or palpable error.
This is a petition under Rule 45 seeking a
reversal of the Decisioni of the Court of
Appealsii promulgated on March 22, 1993,
in CA-G.R. SP No. 29910.
The Antecedent Facts
The facts of the case as gleaned from the
respondent Court of Appeals Decision are
as follows:
(Herein petitioner) Maximino Fuentes and
(herein private respondents) Virgilio Uy, et
al. are owners of adjoining parcels of land
situated in Dela Paz, Clarin, Misamis
Occidental. The (herein petitioners) land
declared in his name is identified as Lot No.
1358, Pls 707 while that of the defendant
Virgilio Uy, titled in the latters name, is
identified as Lot No. 1357.
The boundary lines of the adjoining lands
had been relocated twice by Engineer
Armelito Amores in surveys conducted
before the case for forcible entry was filed.
When the case was already filed, further
relocation surveys were conducted, this
time, by Engineer Norberto Iyog thru a court
order on the litigated portion consisting of
411 square meters which according to the
plaintiff was forcibly taken and entered into
by (herein private respondents).
In hearing the case, the MCTC of Clarin-
Tudela stated the issues to be as follows:
1. Was there an act of dispossession
effected by the defendants on the disputed
property whereby the plaintiff was
dispossessed of the disputed property? and
2. To whom did the area of 411 square
meters belong?
The trial court making a review of the
evidence on record held that the (herein
private respondents) have superior
evidence to disprove the allegations of
(herein petitioner) and on the basis of
which, it found that the (herein private
respondents) have not committed the acts
complained of by (herein petitioner), in the
main pointing to the statement of the
witness Alfredo Dantes as reflected in the
stenographic notes particularly indicated as
tsn, p. 46, proceedings of February 8, 1991,
wherein said witness appeared to have
testified that he bought the land from the
heirs of the original owner, one Gadiane,
which he improved gradually by putting up
a dike which in effect was only an
improvement of an already existing dike
and in 1976, he had entered into an
agreement with (herein private
respondents) to develop the property on a
sharing basis which finally culminated in his
selling the said area in 1980 to the (herein
private respondents).
What appeared to have impressed the trial
court most is expressed in its statement
that the (herein petitioner) should have
questioned the action of the (herein private
respondents) in improving the dike and
having it fenced, and also, why it was only
in 1987 when he tried to restrain the (herein
private respondents) when the same dike
had existed many years before. The part of
the decision in connection with said
questions of the court is herein quoted:
This court finds it strange for the (herein
petitioner) for him to question the action of
the defendant in fencing the dikes. If it
appeared to him that the dike fenced by the
defendant which is the same dike existing
when Dantes bought the property from
Gadiane really belonged to him, why did he
not question the same many years before?
Yet, all the time when Dantes, since 1970
and later the (herein private respondent) in
1976, made improvements on the dike, the
plaintiff did not make any adverse move to
restrain them. It was only in 1987 when he
made the initial move of trying to restrain
(herein private respondent) which prompted
the latter to cause a (sic) relocation surveys
which were conducted by Engr. Amores
twice.
Prescinding from the foregoing findings, the
trial court said it found nothing wrong for the
(herein private respondents) to have fenced
the dike after the relocation survey
conducted by Engr. Amores which the
(herein petitioner) had attended and further
stated that the act of fencing the dike and
cutting the nipa palms did not violate the
property rights of the (herein petitioner) for
the (herein private respondents) only acted
to assert what properly belongs to them and
on the basis of (the) Commissioners Report
more or less indicating the foregoing
circumstances, it held that there was in fact
no forcible dispossession of property and
that further, the area of 411 square meters
under dispute factually belongs to (herein
private respondent) Virgilio Uy.
The decision of the MCTC of Clarin-Tudela
was appealed by the (herein plaintiff) and
the RTC Ozamis City resolved to affirm the
decision of the MCTC deleting only the
monetary award therein granted in favor of
the (herein private respondents).
The (herein) petitioner in the case before
(the respondent Court of Appeals) has
raised two (2) purported errors of the court
below thus:
That the honorable Regional Trial Court,
Branch 15-A, Ozamiz City, gravely erred in
deciding that (herein petitioner) had no
evidence to support the allegation that
(herein private respondents) entered the
portion in question by force and
intimidation.
That the honorable Regional Trial Court
Branch 15-A, Ozamiz City, erred in
sustaining that the (herein private
respondents) did not commit any act
constituting forcible entry.iii
The Issue
Hence, petitioner Maximino Fuentes filed
the present six-page petition alleging the
same assignment of errors raised before
the Court of Appeals as follows:
1. That the Honorable Regional Trial Court,
Branch 15-A, Ozamiz City, gravely erred in
deciding that plaintiff had no evidence to
support the allegation that defendants
entered the portion in question by force and
intimidation.
2. That the Honorable Regional Trial Court,
Branch 15-A, Ozamiz City, erred in
sustaining that the defendants did not
commit any act constituting forcible entry.iv
In his Memorandum, the petitioner
consolidated these into a single issue: Who
is in actual, physical and prior possession
of the portion in question?
The Courts Ruling
The petition for review is unmeritorious.
Jurisprudence teaches us that (a)s a rule,
the jurisdiction of this Court in cases
brought to it from the Court of Appeals x x x
is limited to the review and revision of
errors of law allegedly committed by the
appellate court, as its findings of fact are
deemed conclusive. As such this Court is
not duty-bound to analyze and weigh all
over again the evidence already considered
in the proceedings below. This rule,
however, is not without exceptions.v The
findings of fact of the Court of Appeals,
which are as a general rule deemed
conclusive, may admit of review by this
Court:vi
(1) when the factual findings of the Court of
Appeals and the trial court are
contradictory;
(2) when the findings are grounded entirely
on speculation, surmises, or conjectures;
(3) when the inference made by the Court
of Appeals from its findings of fact is
manifestly mistaken, absurd, or impossible;
(4) when there is grave abuse of discretion
in the appreciation of facts;
(5) when the appellate court, in making its
findings, goes beyond the issues of the
case, and such findings are contrary to the
admissions of both appellant and appellee;
(6) when the judgment of the Court of
Appeals is premised on a misapprehension
of facts;
(7) when the Court of Appeals fails to notice
certain relevant facts which, if properly
considered, will justify a different
conclusion;
(8) when the findings of fact are themselves
conflicting;
(9) when the findings of fact are
conclusions without citation of the specific
evidence on which they are based; and
(10) when the findings of fact of the Court of
Appeals are premised on the absence of
evidence but such findings are contradicted
by the evidence on record.
After a thorough review of the case at
bench, the Court finds that the petition
raises no substantial question of law. The
question raised as to who has prior actual
possession over the contested portion of
land is patently a question of fact beyond
the pale of Rule 45 of the Rules of Court
which mandates that only questions of law
be raised in the petition.vii
Moreover, petitioner utterly failed to show
the presence of any of the previously
mentioned exceptions to justify the Courts
review of the factual findings of the Court of
Appeals. On the contrary, the factual
findings and conclusion of the Metropolitan
Circuit Trial Court, the Regional Trial Court,
and Court of Appeals in the instant case
regarding the issue raised in this petition
are consistent and backed up by the extant
evidence. Prevailing jurisprudence
uniformly holds that findings of facts of the
trial court, particularly when affirmed by the
Court of Appeals, are binding upon this
Court.viii
All in all, the petition, viewed in its entirety,
sorely fails to demonstrate any reversible
error committed by the respondent Court of
Appeals.
WHEREFORE, premises considered, the
instant petition is hereby DISMISSED for
utter lack of merit. Double costs against
petitioner.
SO ORDERED.
Narvasa, C.J., (Chairman), Davide, Jr.,
Melo, and Francisco, JJ., concur.
PNB v Sayo

FIRST DIVISION
[G.R. No. 129918. July 9, 1998]
PHILIPPINE NATIONAL BANK,
petitioner, vs. HON. MARCELINO L.
SAYO, JR., in his capacity as Presiding
Judge of the Regional Trial Court of
Manila (Branch 45), NOAHS ARK SUGAR
REFINERY, ALBERTO T. LOOYUKO,
JIMMY T. GO and WILSON T. GO,
respondents.

DECISION

DAVIDE, JR., J.:

In this special civil action for certiorari,

actually the third dispute between the same
private parties to have reached this Court,ix
petitioner asks us to annul the ordersx of 15
April 1997 and 14 July 1997 issued in Civil
Case No. 90-53023 by the Regional Trial
Court, Manila, Branch 45. The first orderxi
granted private respondents motion for
execution to satisfy their warehousemans
lien against petitioner, while the second
orderxii denied, with finality, petitioners
motion for reconsideration of the first order
and urgent motion to lift garnishment, and
private respondents motion for partial
reconsideration.
The factual antecedents until the
commencement of G.R. No. 119231 were
summarized in our decision therein, as
follows:
In accordance with Act No. 2137, the
Warehouse Receipts Law, Noahs Ark
Sugar Refinery issued on several dates, the
following Warehouse Receipts (Quedans):
(a) March 1, 1989, Receipt No. 18062,
covering sugar deposited by Rosa Sy; (b)
March 7, 1989, Receipt No. 18080,
covering sugar deposited by RNS
Merchandising (Rosa Ng Sy); (c) March 21,
1989, Receipt No. 18081, covering sugar
deposited by St. Therese Merchandising;
(d) March 31, 1989, Receipt No. 18086,
covering sugar deposited by St. Therese
Merchandising; and (e) April 1, 1989,
Receipt No. 18087, covering sugar
deposited by RNS Merchandising. The
receipts are substantially in the form, and
contains the terms, prescribed for
negotiable warehouse receipts by Section 2
of the law.
Subsequently, Warehouse Receipts Nos.
18080 and 18081 were negotiated and
endorsed to Luis T. Ramos, and Receipts
Nos. 18086, 18087 and 18062 were
negotiated and endorsed to Cresencia K.
Zoleta. Ramos and Zoleta then used the
quedans as security for two loan
agreements one for P15.6 million and the
other for P23.5 million obtained by them
from the Philippine National Bank. The
aforementioned quedans were endorsed by
them to the Philippine National Bank.
Luis T. Ramos and Cresencia K. Zoleta
failed to pay their loans upon maturity on
January 9, 1990. Consequently, on March
16, 1990, the Philippine National Bank
wrote to Noahs Ark Sugar Refinery
demanding delivery of the sugar stocks
covered by the quedans endorsed to it by
Zoleta and Ramos. Noahs Ark Sugar
Refinery refused to comply with the
demand alleging ownership thereof, for
which reason the Philippine National Bank
filed with the Regional Trial Court of Manila
a verified complaint for Specific
Performance with Damages and Application
for Writ of Attachment against Noahs Ark
Sugar Refinery, Alberto T. Looyuko, Jimmy
T. Go and Wilson T. Go, the last three
being identified as the sole proprietor,
managing partner, and Executive Vice
President of Noahs Ark, respectively.
Respondent Judge Benito C. Se, Jr., [to]
whose sala the case was raffled, denied the
Application for Preliminary Attachment.
Reconsideration therefor was likewise
denied.
Noahs Ark and its co-defendants filed an
Answer with Counterclaim and Third-Party
Complaint in which they claimed that they
[were] the owners of the subject quedans
and the sugar represented therein, averring
as they did that:
9. *** In an agreement dated April 1, 1989,
defendants agreed to sell to Rosa Ng Sy of
RNS Merchandising and Teresita Ng of St.
Therese Merchandising the total volume of
sugar indicated in the quedans stored at
Noahs Ark Sugar Refinery for a total
consideration of P63,000,000.00, *** The
corresponding payments in the form of
checks issued by the vendees in favor of
defendants were subsequently dishonored
by the drawee banks by reason of payment
stopped and drawn against insufficient
funds, *** Upon proper notification to said
vendees and plaintiff in due course,
defendants refused to deliver to vendees
therein the quantity of sugar covered by the
subject quedans.
10. *** Considering that the vendees and
first endorsers of subject quedans did not
acquire ownership thereof, the subsequent
endorsers and plaintiff itself did not acquire
a better right of ownership than the original
vendees/first endorsers.
The Answer incorporated a Third-Party
Complaint by Alberto T. Looyuko, Jimmy T.
Go and Wilson T. Go, doing business under
the trade name and style Noahs Ark Sugar
Refinery against Rosa Ng Sy and Teresita
Ng, praying that the latter be ordered to
deliver or return to them the quedans
(previously endorsed to PNB and the
subject of the suit) and pay damages and
litigation expenses.
The Answer of Rosa Ng Sy and Teresita
Ng, dated September 6, 1990, one of
avoidance, is essentially to the effect that
the transaction between them, on the one
hand, and Jimmy T. Go, on the other,
concerning the quedans and the sugar
stocks covered by them was merely a
simulated one being part of the latters
complex banking schemes and financial
maneuvers, and thus, they are not
answerable in damages to him.
On January 31, 1991, the Philippine
National Bank filed a Motion for Summary
Judgment in favor of the plaintiff as against
the defendants for the reliefs prayed for in
the complaint.
On May 2, 1991, the Regional Trial Court
issued an order denying the Motion for
Summary Judgment. Thereupon, the
Philippine National Bank filed a Petition for
Certiorari with the Court of Appeals,
docketed as CA-G.R. SP No. 25938 on
December 13, 1991.
Pertinent portions of the decision of the
Court of Appeals read:
In issuing the questioned Orders, the
respondent Court ruled that questions of
law should be resolved after and not before,
the questions of fact are properly litigated.
A scrutiny of defendants affirmative
defenses does not show material questions
of fact as to the alleged nonpayment of
purchase price by the vendees/first
endorsers, and which nonpayment is not
disputed by PNB as it does not materially
affect PNBs title to the sugar stocks as
holder of the negotiable quedans.
What is determinative of the propriety of
summary judgment is not the existence of
conflicting claims from prior parties but
whether from an examination of the
pleadings, depositions, admissions and
documents on file, the defenses as to the
main issue do not tender material questions
of fact (see Garcia vs. Court of Appeals,
167 SCRA 815) or the issues thus tendered
are in fact sham, fictitious, contrived, set up
in bad faith or so unsubstantial as not to
constitute genuine issues for trial. (See
Vergara vs. Suelto, et al., 156 SCRA 753;
Mercado, et al. vs. Court of Appeals, 162
SCRA 75). [sic] The questioned Orders
themselves do not specify what material
facts are in issue. (See Sec. 4, Rule 34,
Rules of Court).
To require a trial notwithstanding pertinent
allegations of the pleadings and other facts
appearing on the record, would constitute a
waste of time and an injustice to the PNB
whose rights to relief to which it is plainly
entitled would be further delayed to its
prejudice.
In issuing the questioned Orders, We find
the respondent Court to have acted in
grave abuse of discretion which justify
holding null and void and setting aside the
Orders dated May 2 and July 4, 1990 of
respondent Court, and that a summary
judgment be rendered forthwith in favor of
the PNB against Noahs Ark Sugar Refinery,
et al., as prayed for in petitioners Motion for
Summary Judgment.
On December 13, 1991, the Court of
Appeals nullified and set aside the orders of
May 2 and July 4, 1990 of the Regional
Trial Court and ordered the trial court to
render summary judgment in favor of the
PNB. On June 18, 1992, the trial court
rendered judgment dismissing plaintiffs
complaint against private respondents for
lack of cause of action and likewise
dismissed private respondents counterclaim
against PNB and of the Third-Party
Complaint and the Third-Party Defendants
Counterclaim. On September 4, 1992, the
trial court denied PNBs Motion for
Reconsideration.
On June 9, 1992, the PNB filed an appeal
from the RTC decision with the Supreme
Court, G.R. No. 107243, by way of a
Petition for Review on Certiorari under Rule
45 of the Rules of Court. This Court
rendered judgment on September 1, 1993,
the dispositive portion of which reads:
WHEREFORE, the trial judges decision in
Civil Case No. 90-53023, dated June 18,
1992, is reversed and set aside and a new
one rendered conformably with the final and
executory decision of the Court of Appeals
in CA-G.R. SP No. 25938, ordering the
private respondents Noahs Ark Sugar
Refinery, Alberto T. Looyuko, Jimmy T. Go
and Wilson T. Go, jointly and severally:
(a) to deliver to the petitioner Philippine
National Bank, the sugar stocks covered by
the Warehouse Receipts/Quedans which
are now in the latters possession as holder
for value and in due course; or alternatively,
to pay (said) plaintiff actual damages in the
amount of P39.1 million, with legal interest
thereon from the filing of the complaint until
full payment; and
(b) to pay plaintiff Philippine National Bank
attorneys fees, litigation expenses and
judicial costs hereby fixed at the amount of
One Hundred Fifty Thousand Pesos
(P150,000.00) as well as the costs.
SO ORDERED.
On September 29, 1993, private
respondents moved for reconsideration of
this decision. A Supplemental/Second
Motion for Reconsideration with leave of
court was filed by private respondents on
November 8, 1993. We denied private
respondents motion on January 10, 1994.
Private respondents filed a Motion Seeking
Clarification of the Decision, dated
September 1, 1993. We denied this motion
in this manner:
It bears stressing that the relief granted in
this Courts decision of September 1, 1993
is precisely that set out in the final and
executory decision of the Court of Appeals
in CA-G.R. SP No. 25938, dated December
13, 1991, which was affirmed in toto by this
Court and which became unalterable upon
becoming final and executory.
Private respondents thereupon filed before
the trial court an Omnibus Motion seeking
among others the deferment of the
proceedings until private respondents
[were] heard on their claim for
warehousemans lien. On the other hand, on
August 22, 1994, the Philippine National
Bank filed a Motion for the Issuance of a
Writ of Execution and an Opposition to the
Omnibus Motion filed by private
respondents.
The trial court granted private respondents
Omnibus Motion on December 20, 1994
and set reception of evidence on their claim
for warehousemans lien. The resolution of
the PNBs Motion for Execution was ordered
deferred until the determination of private
respondents claim.
On February 21, 1995, private respondents
claim for lien was heard and evidence was
received in support thereof. The trial court
thereafter gave both parties five (5) days to
file respective memoranda.
On February 28, 1995, the Philippine
National Bank filed a Manifestation with
Urgent Motion to Nullify Court Proceedings.
In adjudication thereof, the trial court issued
the following order on March 1, 1995:
WHEREFORE, this court hereby finds that
there exists in favor of the defendants a
valid warehousemans lien under Section 27
of Republic Act 2137 and accordingly,
execution of the judgment is hereby
ordered stayed and/or precluded until the
full amount of defendants lien on the sugar
stocks covered by the five (5) quedans
subject of this action shall have been
satisfied conformably with the provisions of
Section 31 of Republic Act 2137.xiii
Unsatisfied with the trial courts order of 1
March 1995, herein petitioner filed with us
G.R. No. 119231, contending:
I
PNBS RIGHT TO A WRIT OF EXECUTION
IS SUPPORTED BY TWO FINAL AND
EXECUTORY DECISIONS: THE
DECEMBER 13, 1991 COURT OF
APPEALS [sic] DECISION IN CA-G.R. SP
NO. 25938; AND, THE NOVEMBER 9,
1992 SUPREME COURT DECISION IN
G.R. NO. 107243. RESPONDENT RTCS
MINISTERIAL AND MANDATORY DUTY
IS TO ISSUE THE WRIT OF EXECUTION
TO IMPLEMENT THE DECRETAL
PORTION OF SAID SUPREME COURT
DECISION.
II
RESPONDENT RTC IS WITHOUT
JURISDICTION TO HEAR PRIVATE
RESPONDENTS OMNIBUS MOTION. THE
CLAIMS SET FORTH IN SAID MOTION:
(1) WERE ALREADY REJECTED BY THE
SUPREME COURT IN ITS MARCH 9, 1994
RESOLUTION DENYING PRIVATE
RESPONDENTS MOTION FOR
CLARIFICATION OF DECISION IN G.R.
NO. 107243; AND (2) ARE BARRED
FOREVER BY PRIVATE RESPONDENTS
FAILURE TO INTERPOSE THEM IN
THEIR ANSWER, AND FAILURE TO
APPEAL FROM THE JUNE 18, 1992
DECISION IN CIVIL CASE NO. 90-52023.
III
RESPONDENT RTCS ONLY
JURISDICTION IS TO ISSUE THE WRIT
TO EXECUTE THE SUPREME COURT
DECISION. THUS, PNB IS ENTITLED TO:
(1) A WRIT OF CERTIORARI TO ANNUL
THE RTC RESOLUTION DATED
DECEMBER 20, 1994 AND THE ORDER
DATED FEBRUARY 7, 1995 AND ALL
PROCEEDINGS TAKEN BY THE RTC
THEREAFTER; (2) A WRIT OF
PROHIBITION TO PREVENT
RESPONDENT RTC FROM FURTHER
PROCEEDING WITH CIVIL CASE NO. 90-
53023 AND COMMITTING OTHER ACTS
VIOLATIVE OF THE SUPREME COURT
DECISION IN G.R. NO. 107243; AND (3) A
WRIT OF MANDAMUS TO COMPEL
RESPONDENT RTC TO ISSUE THE WRIT
TO EXECUTE THE SUPREME COURT
JUDGMENT IN FAVOR OF PNB.
In our decision of 18 April 1996 in G.R. No.
119231, we held against herein petitioner
as to these issues and concluded:
In view of the foregoing, the rule may be
simplified thus: While the PNB is entitled to
the stocks of sugar as the endorsee of the
quedans, delivery to it shall be effected only
upon payment of the storage fees.
Imperative is the right of the warehouseman
to demand payment of his lien at this
juncture, because, in accordance with
Section 29 of the Warehouse Receipts Law,
the warehouseman loses his lien upon
goods by surrendering possession thereof.
In other words, the lien may be lost where
the warehouseman surrenders the
possession of the goods without requiring
payment of his lien, because a
warehousemans lien is possessory in
nature.
We, therefore, uphold and sustain the
validity of the assailed orders of public
respondent, dated December 20, 1994 and
March 1, 1995.
In fine, we fail to see any taint of abuse of
discretion on the part of the public
respondent in issuing the questioned orders
which recognized the legitimate right of
Noahs Ark, after being declared as
warehouseman, to recover storage fees
before it would release to the PNB sugar
stocks covered by the five (5) Warehouse
Receipts. Our resolution, dated March 9,
1994, did not preclude private respondents
unqualified right to establish its claim to
recover storage fees which is recognized
under Republic Act No. 2137. Neither did
the Court of Appeals decision, dated
December 13, 1991, restrict such right.
Our Resolutions reference to the decision
by the Court of Appeals, dated December
13, 1991, in CA-G.R. SP No. 25938, was
intended to guide the parties in the
subsequent disposition of the case to its
final end. We certainly did not foreclose
private respondents inherent right as
warehouseman to collect storage fees and
preservation expenses as stipulated on the
face of each of the Warehouse Receipts
and as provided for in the Warehouse
Receipts Law (R.A. 2137).xiv
Petitioners motion to reconsider the
decision in G.R. No. 119231 was denied.
After the decision in G.R. No. 119231
became final and executory, various
incidents took place before the trial court in
Civil Case No. 90-53023. The petition in
this case summarizes these as follows:
3.24 Pursuant to the abovementioned
Supreme Court Decision, private
respondents filed a Motion for Execution of
Defendants Lien as Warehouseman dated
27 November 1996. A photocopy of said
Motion for Execution is attached hereto as
Annex I.
3.25 PNB opposed said Motion on the
following grounds:
(a) The lien claimed by Noahs Ark in the
unbelievable amount of P734,341,595.06 is
illusory; and
(b) There is no legal basis for execution of
defendants lien as warehouseman unless
and until PNB compels the delivery of the
sugar stocks.
3.26 In their Reply to Opposition dated 18
January 1997, private respondents pointed
out that a lien existed in their favor, as held
by the Supreme Court. In its Rejoinder
dated 7 February 1997, PNB countered
private respondents argument, pointing out
that the dispositive portion of the court a
quos Order dated 1 March 1995 failed to
state the amount for which execution may
be granted and, thus, the same could not
be the subject of execution; and (b) private
respondents should instead file a separate
action to prove the amount of its claim as
warehouseman.
3.27 The court a quo, this time presided by
herein public respondent, Hon. Marcelino L.
Sayo Jr., granted private respondents
Motion for Execution. In its questioned
Order dated 15 April 1997 (Annex A), the
court a quo ruled in this wise:
Accordingly, the computation of accrued
storage fees and preservation charges
presented in evidence by the defendants, in
the amount of P734,341,595.06 as of
January 31, 1995 for the 86,356.41 50 kg.
bags of sugar, being in order and with
sufficient basis, the same should be
granted. This Court consequently rejects
PNBs claim of no sugar no lien, since it is
undisputed that the amount of the accrued
storage fees is substantially in excess of
the alternative award of P39.1 Million in
favor of PNB, including legal interest and
P150,000.00 in attorneys fees, which PNB
is however entitled to be credited x x x.
xxx xxx xxx
WHEREFORE, premises considered and
finding merit in the defendants motion for
execution of their claim for lien as
warehouseman, the same is hereby
GRANTED. Accordingly, let a writ of
execution issue for the amount of
P662,548,611.50, in accordance with the
above disposition.
SO ORDERED. (Emphasis supplied.)
3.28 On 23 April 1997, PNB was
immediately served with a Writ of Execution
for the amount of P662,548,611.50 in spite
of the fact that it had not yet been served
with the Order of the court a quo dated 15
April 1997. PNB thus filed an Urgent Motion
dated 23 April 1997 seeking the deferment
of the enforcement of the Writ of Execution.
A photocopy of the Writ of Execution is
attached hereto as Annex J.
3.29 Nevertheless, the Sheriff levied on
execution several properties of PNB. Firstly,
a Notice of Levy dated 24 April 1997 on a
parcel of land with an area of Ninety-Nine
Thousand Nine Hundred Ninety-Nine
(99,999) square meters, covered by
Transfer Certificate of Title No. 23205 in the
name of PNB, was served upon the
Register of Deeds of Pasay City. Secondly,
a Notice of Garnishment dated 23 April
1997 on fund deposits of PNB was served
upon the Bangko Sentral ng Pilipinas.
Photocopies of the Notice of Levy and the
Notice of Garnishment are attached hereto
as Annexes K and L, respectively.
3.30 On 28 April 1997, petitioner filed a
Motion for Reconsideration with Urgent
Prayer for Quashal of Writ of Execution
dated 15 April 1997. Petitioners Motion was
based on the following grounds:
(1) Noahs Ark is not entitled to a
warehousemans lien in the humongous
amount of P734,341,595.06 because the
same has been waived for not having been
raised earlier as either counterclaim or
defense against PNB;
(2) Assuming said lien has not been
waived, the same, not being registered, is
already barred by prescription and/or
laches;
(3) Assuming further that said lien has not
been waived nor barred, still there was no
complaint ever filed in court to effectively
commence this entirely new cause of
action;
(4) There is no evidence on record which
would support and sustain the claim of
P734,341,595.06 which is excessive,
oppressive and unconscionable;
(5) Said claim if executed would constitute
unjust enrichment to the serious prejudice
of PNB and indirectly the Philippine
Government, who innocently acquired the
sugar quedans through assignment of
credit;
(6) In all respects, the decisions of both the
Supreme Court and of the former Presiding
Judge of the trial court do not contain a
specific determination and/or computation
of warehousemans lien, thus requiring first
and foremost a fair hearing of PNBs
evidence, to include the true and standard
industry rates on sugar storage fees, which
if computed at such standard rate of thirty
centavos per kilogram per month, shall
result in the sum of about Three Hundred
Thousand Pesos only.
3.31 In its Motion for Reconsideration,
petitioner prayed for the following reliefs:
1. PNB be allowed in the meantime to
exercise its basic right to present evidence
in order to prove the above allegations
especially the true and reasonable storage
fees which may be deducted from PNBs
judgment award of P39.1 Million, which
storage fees if computed correctly in
accordance with standard sugar industry
rates, would amount to only P300
Thousand Pesos, without however waiving
or abandoning its (PNBs) legal
positions/contentions herein
abovementioned.
2. The Order dated April 15, 1997 granting
the Motion for Execution by defendant
Noahs Ark be set aside.
3. The execution proceedings already
commenced by said sheriffs be nullified at
whatever stage of accomplishment.
A photocopy of petitioners Motion for
Reconsideration with Urgent Prayer for
Quashal of Writ of Execution is attached
hereto and made integral part hereof as
Annex M.
3.32 Private respondents filed an
Opposition with Motion for Partial
Reconsideration dated 8 May 1997. Still
discontented with the excessive and
staggering amount awarded to them by the
court a quo, private respondents Motion for
Partial Reconsideration sought additional
and continuing storage fees over and above
what the court a quo had already unjustly
awarded. A photocopy of private
respondents Opposition with Motion for
Partial Reconsideration dated 8 May 1997
is attached hereto as Annex N.
3.32.1 Private respondents prayed for the
further amount of P227,375,472.00 in
storage fees from 1 February 1995 until 15
April 1997, the date of the questioned Order
granting their Motion for Execution.
3.32.2 In the same manner, private
respondents prayed for a continuing
amount of P345,424.00 as daily storage
fees after 15 April 1997 until the total
amount of the storage fees is satisfied.
3.33 On 19 May 1997, PNB filed its Reply
with Opposition (To Defendants Opposition
with Partial Motion for Reconsideration),
containing therein the following motions: (i)
Supplemental Motion for Reconsideration;
(ii) Motion to Strike out the Testimony of
Noahs Arks Accountant Last February 21,
1995; and (iii) Motion for the Issuance of a
Writ of Execution in favor of PNB. In
support of its pleading, petitioner raised the
following:
(1) Private respondents failed to pay the
appropriate docket fees either for its
principal claim or for its additional claim, as
said claims for warehousemans lien were
not at all mentioned in their answer to
petitioners Complaint;
(2) The amount awarded by the court a quo
was grossly and manifestly unreasonable,
excessive, and oppressive;
(3) It is the dispositive portion of the
decision which shall be controlling in any
execution proceeding. If no specific award
is stated in the dispositive portion, a writ of
execution supplying an amount not included
in the dispositive portion of the decision
being executed is null and void;
(4) Private respondents failed to prove the
existence of the sugar stocks in Noahs Arks
warehouses. Thus, private respondents
claims are mere paper liens which cannot
be the subject of execution;
(5) The attendant circumstances,
particularly Judge Ses Order of 1 March
1995 onwards, were tainted with fraud and
absence of due process, as PNB was not
given a fair opportunity to present its
evidence on the matter of the
warehousemans lien. Thus, all orders
prescinding thereform, including the
questioned Order dated 15 April 1997, must
perforce be set aside and the execution
proceedings against PNB be permanently
stayed.
3.34 On 6 May 1997, petitioner also filed
an Urgent Motion to Lift Garnishment of
PNB Funds with Bangko Sentral ng
Pilipinas.
3.35 On 14 July 1997, respondent Judge
issued the second Order (Annex B), the
questioned part of the dispositive portion of
which states:
WHEREFORE, premises considered, the
plaintiff Philippine National Banks subject
Motion for Reconsideration With Urgent
Prayer for Quashal of Writ of Execution
dated April 28, 1997 and undated Urgent
Motion to Lift Garnishment of PNB Funds
With Bangko Sentral ng Pilipinas filed on
May 6, 1997, together with all its related
Motions are all DENIED with finality for lack
of merit.
xxx xxx xxx
The Order of this Court dated April 15,
1997, the final Writ of Execution likewise
dated April 15, 1997 and the corresponding
Garnishment all stand firm.
SO ORDERED.xv
Aggrieved thereby, petitioners filed this
petition, alleging as grounds therefor, the
following:
A. THE COURT A QUO ACTED WITHOUT
OR IN EXCESS OF ITS JURISDICTION
OR WITH GRAVE ABUSE OF
DISCRETION WHEN IT ISSUED A WRIT
OF EXECUTION IN FAVOR OF
DEFENDANTS FOR THE AMOUNT OF
P734,341,595.06.
4.1 The court a quo had no authority to
issue a writ of execution in favor of private
respondents as there was no final and
executory judgment ripe for execution.
4.2 Public respondent judge patently
exceeded the scope of his authority in
making a determination of the amount of
storage fees due private respondents in a
mere interlocutory order resolving private
respondents Motion for Execution.
4.3 The manner in which the court a quo
awarded storage fees in favor of private
respondents and ordered the execution of
said award was arbitrary and capricious,
depriving petitioner of its inherent
substantive and procedural rights.
B. EVEN ASSUMING ARGUENDO THAT
THE COURT A QUO HAD AUTHORITY TO
GRANT PRIVATE RESPONDENTS
MOTION FOR EXECUTION, THE COURT
A QUO ACTED WITH GRAVE ABUSE OF
DISCRETION IN AWARDING THE HIGHLY
UNREASONABLE, UNCONSCIONABLE,
AND EXCESSIVE AMOUNT OF
P734,341,595.06 IN FAVOR OF PRIVATE
RESPONDENTS.
4.4 There is no basis for the court a quos
award of P734,341,595.06 representing
private respondents alleged
warehousemans lien.
4.5 PNB has sufficient evidence to show
that the astronomical amount claimed by
private respondents is very much in excess
of the industry rate for storage fees and
preservation expenses.
C. PUBLIC RESPONDENT JUDGES
GRAVE ABUSE OF DISCRETION
BECOMES MORE PATENT AFTER A
CLOSE PERUSAL OF THE QUESTIONED
ORDER DATED 14 JULY 1997.
4.6 The court a quo resolved a significant
and consequential matter entirely relying on
documents submitted by private
respondents totally disregarding clearly
contrary evidence submitted by PNB.
4.7 The court a quo misquoted and
misinterpreted the Supreme Court Decision
dated 18 April 1997.
D. THE COURT A QUO ACTED WITH
GRAVE ABUSE OF DISCRETION IN NOT
HOLDING THAT PRIVATE
RESPONDENTS HAVE LONG WAIVED
THEIR RIGHT TO CLAIM ANY
WAREHOUSEMANS LIEN.
4.8 Private respondents raised the matter of
their entitlement to a warehousemans lien
for storage fees and preservation expenses
for the first time only during the execution
proceedings of the Decision in favor of
PNB.
4.9 Private respondents claim for
warehousemans lien is in the nature of a
compulsory counterclaim which should
have been included in private respondents
answer to the Complaint. Private
respondents failed to include said claim in
their answer either as a counterclaim or as
an alternative defense to PNBs Complaint.
4.10 Private respondents claim is likewise
lost by virtue of a specific provision of the
Warehouse Receipts Law and barred by
prescription and laches.
E. PUBLIC RESPONDENT JUDGE
ACTED WITH GRAVE ABUSE OF
DISCRETION IN REFUSING TO LIFT THE
ORDER OF GARNISHMENT OF THE
FUNDS OF PNB WITH THE BANGKO
SENTRAL NG PILIPINAS.
4.11 Public respondent judge failed to
consider PNBs arguments in support of its
Urgent Motion to Lift Garnishment.xvi
In arguing its cause, petitioner explained
that this Courts decision in G.R. No.
119231 merely affirmed the trial courts
resolutions of 20 December 1994 and 1
March 1995. The earlier resolution set
private respondents reception of evidence
for hearing to prove their warehousemans
lien and, pending determination thereof,
deferred petitioners motion for execution of
the summary judgment rendered in
petitioners favor in G.R. No. 107243. The
subsequent resolution recognized the
existence of a valid warehousemans lien
without, however, specifying the amount,
and required its full satisfaction by petitioner
prior to the execution of the judgment in
G.R. No. 107243.
Under said circumstances, petitioner
reiterated that neither this Courts decision
nor the trial courts resolutions specified any
amount for the warehousemans lien, either
in the bodies or dispositive portions thereof.
Petitioner therefore questioned the
propriety of the computation of the
warehousemans lien in the assailed order
of 15 April 1997.
Petitioner further characterized as highly
irregular the trial courts final determination
of such lien in a mere interlocutory order
without explanation, as such should or
could have been done only by way of a
judgment on the merits. Petitioner likewise
reasoned that a writ of execution was
proper only to implement a final and
executory decision, which was not present
in the instant case. Petitioner then cited the
cases of Edward v. Arce, where we ruled
that the only portion of the decision which
could be the subject of execution was that
decreed in the dispositive part,xvii and Ex-
Bataan Veterans Security Agency, Inc. v.
National Labor Relations Commission,xviii
where we held that a writ of execution
should conform to the dispositive portion to
be executed, otherwise, execution becomes
void if in excess of and beyond the original
judgment.
Petitioner likewise emphasized that the
hearing of 21 February 1995 was marred by
procedural infirmities, narrating that the trial
court proceeded with the hearing
notwithstanding the urgent motion for
postponement of petitioners counsel of
record, who attended a previously
scheduled hearing in Pampanga. However,
petitioners lawyer-representative was sent
to confirm the allegations in said motion. To
petitioners dismay, instead of granting a
postponement, the trial court allowed the
continuance of the hearing on the basis that
there was nothing sensitive about [the
presentation of private respondents
evidence].xix At the same hearing, the trial
court admitted all the documentary
evidence offered by private respondents
and ordered the filing of the parties
respective memoranda. Hence, petitioner
was virtually deprived of its right to cross-
examine the witness, comment on or object
to the offer of evidence and present
countervailing evidence. In fact, to date,
petitioners urgent motion to nullify the court
proceedings remains unresolved.
To stress its point, petitioner underscores
the conflicting views of Judge Benito C. Se,
Jr., who heard and tried almost the entire
proceedings, and his successor, Judge
Marcelino L. Sayo, Jr., who issued the
assailed orders. In the resolutionxx of 1
March 1995, Judge Se found private
respondents claim for warehouse lien in the
amount of P734,341,595.06 unacceptable,
thus:
In connection with [private respondents]
claim for payment of warehousing fees and
expenses, this Court cannot accept [private
respondents] pretense that they are entitled
to storage fees and preservation expenses
in the amount of P734,341,595.06 as
shown in their Exhibits 1 to 11. There
would, however, appear to be legal basis
for their claim for fees and expenses
covered during the period from the time of
the issuance of the five (5) quedans until
demand for their delivery was made by
[petitioner] prior to the institution of the
present action. [Petitioner] should not be
made to shoulder the warehousing fees and
expenses after the demand was made.
xxxxxi
Since it was deprived of a fair opportunity to
present its evidence on the
warehousemans lien due Noahs Ark,
petitioner submitted the following
documents: (1) an affidavit of petitioners
credit investigatorxxii and his reportxxiii
indicating that Noahs Ark only had 1,490
50kg. bags, and not 86,356.41 50kg. bags,
of sugar in its warehouse; (2) Noahs Arks
reportsxxiv for 1990-94 showing that it did
not have sufficient sugar stock to cover the
quantity specified in the subject quedans;
(3) Circular Letter No. 18 (s. 1987-88)xxv of
the Sugar Regulatory Administration
requiring sugar mill companies to submit
reports at weeks end to prevent the
issuance of warehouse receipts not
covered by actual inventory; and (4) an
affidavit of petitioners assistant vice
presidentxxvi alleging that Noahs Arks daily
storage fee of P4/bag exceeded the
prevailing industry rate.
Petitioner, moreover, laid stress on the fact
that in the questioned order of 14 July
1997, the trial court relied solely on the
Annual Synopsis of Production &
Performance Date/Annual Compendium of
Performance by Philippine Sugar Refineries
from 1989 to 1994, in disregard of Noahs
Arks certified reports that it did not have
sufficient sugar stock to cover the quantity
specified in the subject quedans. Between
the two, petitioner urged, the latter should
have been accorded greater evidentiary
weight.
Petitioner then argued that the trial courts
second assailed order of 14 July 1997
misinterpreted our decision in G.R. No.
119231 by ruling that the Refining Contract
under which the subject sugar stock was
produced bound the parties. According to
petitioner, the Refining Contract never
existed, it having been denied by Rosa Ng
Sy; thus, the trial court could not have
properly based its computation of the
warehousemans lien on the Refining
Contract. Petitioner maintained that a
separate trial was necessary to settle the
issue of the warehousemans lien due
Noahs Ark, if at all proper.
Petitioner further asserted that Noahs Ark
could no longer recover its lien, having
raised the issue for the first time only during
the execution proceedings of this Courts
decision in G.R. No. 107243. As said claim
was a separate cause of action which
should have been raised in private
respondents answer with counterclaim to
petitioners complaint, private respondents
failure to raise said claim should have been
deemed a waiver thereof.
Petitioner likewise insisted that under
Section 29xxvii of the Warehouse Receipts
Law, private respondents were barred from
claiming the warehousemans lien due to
their refusal to deliver the goods upon
petitioners demand. Petitioner further raised
that private respondents failed to timely
assert their claim within the five-year
prescriptive period, citing Article 1149xxviii of
the New Civil Code.
Finally, petitioner questioned the trial courts
refusal to lift the garnishment order
considering that the levy on its real
property, with an estimated market value of
P6,000,000,000, was sufficient to satisfy
the judgment award; and contended that
the garnishment was contrary to Section
103xxix of the Bangko Sentral ng Pilipinas
Law (Republic Act No. 7653).
On 8 August 1997, we required
respondents to comment on the petition
and issued a temporary restraining order
enjoining the trial court from implementing
its orders of 15 April and 14 July 1997.
In their comment, private respondents first
sought the lifting of the temporary
restraining order, claiming that petitioner
could no longer seek a stay of the
execution of this Courts decision in G.R.
No. 119231 which had become final and
executory; and the petition raised factual
issues which had long been resolved in the
decision in G.R. No. 119231, thereby
rendering the instant petition moot and
academic. They underscored that CA-G.R.
No. SP No. 25938, G.R. No. 107243 and
G.R. No. 119231 all sustained their claim
for a warehousemans lien, while the
storage fees stipulated in the Refining
Contract had the approval of the Sugar
Regulatory Authority. Likewise, under the
Warehouse Receipts Law, full payment of
their lien was a pre-requisite to their
obligation to release and deliver the sugar
stock to petitioner.
Anent the trial courts jurisdiction to
determine the warehousemans lien, private
respondents maintained that such had
already been established. Accordingly, the
resolution of 1 March 1995 declared that
they were entitled to a warehousemans
lien, for which reason, the execution of the
judgment in favor of petitioner was stayed
until the latters full payment of the lien. This
resolution was then affirmed by this Court in
our decision in G.R. No. 119231. Even
assuming the trial court erred, the error
could only have been in the wisdom of its
findings and not of jurisdiction, in which
case, the proper remedy of petitioner
should have been an appeal and certiorari
did not lie.
Private respondents also raised the issue of
res judicata as a bar to the instant petition,
i.e., the March resolution was already final
and unappealable, having been resolved in
G.R. No. 119231, and the orders assailed
here were issued merely to implement said
resolution.
Private respondents then debunked the
claim that petitioner was denied due
process. In that February hearing, petitioner
was represented by counsel who failed to
object to the presentation and offer of their
evidence consisting of the five quedans,
Refining Contracts with petitioner and other
quedan holders, and the computation
resulting in the amount of P734,341,595.06,
among other documents. Private
respondents even attached a copy of the
transcript of stenographic notesxxx to their
comment. In refuting petitioners argument
that no writ of execution could issue in
absence of a specific amount in the
dispositive portion of this Courts decision in
G.R. No. 119231, private respondents
argued that any ambiguity in the decision
could be resolved by referring to the entire
record of the case,xxxi even after the
decision had become final.
Private respondents next alleged that the
award of P734,341,595.06 to satisfy their
warehousemans lien was in accordance
with the stipulations provided in the
quedans and the corresponding Refining
Contracts, and that the validity of said
documents had been recognized by this
Court in our decision in G.R. No. 119231.
Private respondents then questioned
petitioners failure to oppose or rebut the
evidence they presented and bewailed its
belated attempts to present contrary
evidence through its pleadings.
Nonetheless, said evidence was even
considered by the trial court when petitioner
sought a reconsideration of the first
assailed order of 15 April 1997, thus further
precluding any claim of denial of due
process.
Private respondents next pointed to the fact
that they consistently claimed that they had
not been paid for storing the sugar stock,
which prompted them to file criminal
charges of estafa and violation of Batas
Pambansa (BP) Blg. 22 against Rosa Ng
Sy and Teresita Ng. In fact, Sy was
eventually convicted of two counts of
violation of BP Blg. 22. Private
respondents, moreover, incurred, and
continue to incur, expenses for the storage
and preservation of the sugar stock; and
denied having waived their warehousemans
lien, an issue already raised and rejected
by this Court in G.R. No. 119231.
Private respondents further claimed that the
garnishment order was proper, only that it
was rendered ineffective. In a letterxxxii
received by the sheriff from the Bangko
Sentral ng Pilipinas, it was stated that the
garnishment could not be enforced since
petitioners deposits with the Bangko Sentral
ng Pilipinas consisted solely of legal
reserves which were exempt from
garnishment. Petitioner therefore suffered
no damage from said garnishment. Private
respondents likewise deemed immaterial
petitioners argument that the writ of
execution issued against its real property in
Pasay City was sufficient, considering its
prevailing market value of P6,000,000,000
was in excess of the warehousemans lien;
and invoked Rule 39 of the 1997 Rules of
Civil Procedure, which provided that the
sheriff must levy on all the property of the
judgment debtor, excluding those exempt
from execution, in the execution of a money
judgment.
Finally, private respondents accused
petitioner of coming to court with unclean
hands, specifically citing its
misrepresentation that the award of the
warehousemans lien would result in the
collapse of its business. This claim, private
respondents asserted, was contradicted by
petitioners 1996 Audited Financial
Statement indicating that petitioners assets
amounted to billions of pesos, and its 1996
Annual Report to its stockholders where
petitioner declared that the pending legal
actions arising from their normal course of
business will not materially affect the
Groups financial position.xxxiii
In reply, petitioner advocated that resort to
the remedy of certiorari was proper since
the assailed orders were interlocutory, and
not a final judgment or decision. Further,
that it was virtually deprived of its
constitutional right to due process was a
valid issue to raise in the instant petition;
and not even the doctrine of res judicata
could bar this petition as the element of a
final and executory judgment was lacking.
Petitioner likewise disputed the claim that
the resolution of 1 March 1995 was final
and executory, otherwise private
respondents would not have filed an
opposition and motion for partial
reconsiderationxxxiv two years later.
Petitioner also contended that the issues
raised in this petition were not resolved in
G.R. No. 119231, as what was resolved
there was private respondents mere
entitlement to a warehousemans lien,
without specifying a corresponding amount.
In the instant petition, the issues pertained
to the amount and enforceability of said lien
based on the arbitrary manner the amount
was determined by the trial court.
Petitioner further argued that the refining
contracts private respondents invoked
could not bind the former since it was not a
party thereto. In fact, said contracts were
not even attached to the quedans when
negotiated; and that their validity was
repudiated by a supposed party thereto,
Rosa Ng Sy, who claimed that the contract
was simulated, thus void pursuant to Article
1345 of the New Civil Code. Should the
refining contracts in turn be declared void,
petitioner advocated that any determination
by the court of the existence and amount of
the warehousemans lien due should be
arrived at using the test of reasonableness.
Petitioner likewise noted that the other
refining contractsxxxv presented by private
respondents to show similar storage fees
were executed between the years 1996 and
1997, several years after 1989. Thus,
petitioner concluded, private respondents
could not claim that the more recent and
increased rates where those which
prevailed in 1989.
Finally, petitioner asserted that in the event
that this Court should uphold the trial courts
determination of the amount of the
warehousemans lien, petitioner should be
allowed to exercise its option as a judgment
obligor to specify which of its properties
may be levied upon, citing Section 9(b),
Rule 39 of the 1997 Rules of Civil
Procedure. Petitioner claimed to have been
deprived of this option when the trial court
issued the garnishment and levy orders.
The petition was set for oral argument on
24 November 1997 where the parties
addressed the following issues we
formulated for them to discuss:
(1) Is this special civil action the appropriate
remedy?
(2) Has the trial court the authority to issue
a writ of execution on Noahs Arks claims for
storage fees considering that this Court in
G.R. No. 119231 merely sustained the trial
courts order of 20 December 1994 granting
the Noahs Ark Omnibus Motion and setting
the reception of evidence on its claims for
storage fees, and of 1 March 1995 finding
that there existed in favor of Noahs Ark a
warehousemans lien under Section 27 of
R.A. No. 2137 and directing that the
execution of the judgment in favor of PNB
be stayed and/or precluded until the full
amount of Noahs Arks lien is satisfied
conformably with Section 31 of R.A. No.
2137?
(3) Is [petitioner] liable for storage fees (a)
from the issuance of the quedans in 1989 to
Rosa Sy, St. Therese Merchandising and
RNS Merchandising, up to their assignment
by endorsees Ramos and Zoleta to
[petitioner] for their loan; or (b) after
[petitioner] has filed an action for specific
performance and damages (Civil Case No.
90-53023) against Noahs Ark for the latters
failure to comply with [petitioners] demand
for the delivery of the sugar?
(4) Did respondent Judge commit grave
abuse of discretion as charged?xxxvi
In our resolution of 24 November 1997, we
summarized the positions of the parties on
these issues, thus:
Expectedly, counsel for petitioner submitted
that certiorari under Rule 65 of the Rules of
Court is the proper remedy and not an
ordinary appeal, contending, among others,
that the order of execution was not final. On
the other hand, counsel for respondents
maintained that petitioner PNB disregarded
the hierarchy of courts as it bypassed the
Court of Appeals when it filed the instant
petition before this Court.
On the second issue, counsel for petitioner
submitted that the trial court had no
authority to issue the writ of execution or if it
had, it denied PNB due process when it
held PNB liable for the astronomical
amount of P734,341,595.06 as
warehousemans lien or storage fees.
Counsel for respondent, on the other hand,
contended that the trial courts authority to
issue the questioned writ of execution is
derived from the decision in G.R. No.
119231 which decision allegedly provided
for ample or sufficient parameters for the
computation of the storage fees.
On the third issue, counsel for petitioner
while presupposing that PNB may be held
to answer for storage fees, contended that
the same should start from the time the
endorsees of the sugar quedans defaulted
in their payments, i.e., 1990 because before
that, respondent Noahs Arks claim was that
it was the owner of the sugar covered by
the quedans. On the other hand,
respondents counsel pointed out that PNBs
liability should start from the issuance of the
quedans in 1989.
The arguments on the fourth issue, hinge
on the parties arguments for or against the
first three issues. Counsel for petitioner
stressed that the trial court indeed
committed a grave abuse of discretion,
while respondents counsel insisted that no
grave abuse of discretion was committed by
the trial court.xxxvii
Private respondents likewise admitted that
during the pendency of the case, they failed
to avail of their options as a
warehouseman. Concretely, they could
have enforced their lien through the
foreclosure of the goods or the filing of an
ordinary civil action. Instead, they sought to
execute this Courts judgment in G.R. No.
119231. They eventually agreed that
petitioners liability for the warehousemans
lien should be reckoned from the time it
stepped into the shoes of the original
depositors.xxxviii
In our resolution of 24 November 1997, we
required the parties to simultaneously
submit their respective memoranda within
30 days or, in the alternative, a compromise
agreement should a settlement be
achieved. Notwithstanding efforts exerted
by the parties, no mutually acceptable
solution was reached.
In their respective memoranda, the parties
reiterated or otherwise buttressed the
arguments raised in their previous
pleadings and during the oral arguments on
24 November 1997, especially on the
formulated issues.
The petition is meritorious.
We shall take up the formulated issues in
seriatim.
A. This Special Civil Action is an
Appropriate Remedy.
A careful perusal of the first assailed order
shows that the trial court not only granted
the motion for execution, but also
appreciated the evidence in the
determination of the warehousemans lien;
formulated its computation of the lien; and
adopted an offsetting of the parties claims.
Ineluctably, the order as in the nature of a
final order for it left nothing else to be
resolved thereafter. Hence, petitioners
remedy was to appeal therefrom.xxxix
Nevertheless, petitioner was not precluded
from availing of the extraordinary remedy of
certiorari under Rule 65 of the Rules of
Court. It is well-settled that the availability of
an appeal does not foreclose recourse to
the extraordinary remedies of certiorari or
prohibition where appeal is not adequate, or
equally beneficial, speedy and sufficient.xl
Petitioner assailed the challenged orders as
having been issued without or in excess of
jurisdiction or with grave abuse of discretion
and alleged that it had no other plain,
speedy and adequate remedy in the
ordinary course of law. As hereafter shown,
these claims were not unfounded, thus the
propriety of this special civil action is
beyond question.
This Court has original jurisdiction,
concurrent with that of Regional Trial
Courts and the Court of Appeals, over
petitions for certiorari, prohibition,
mandamus, quo warranto and habeas
corpus,xli and we entertain direct resort to
us in cases where special and important
reasons or exceptional and compelling
circumstances justify the same.xlii These
reasons and circumstances are present
here.
B. Under the Special Circumstances in This
Case, Private Respondents May Enforce
Their Warehousemans Lien in Civil Case
No. 90-53023.
The remedies available to a
warehouseman, such as private
respondents, to enforce his
warehousemans lien are:
(1)To refuse to deliver the goods until his
lien is satisfied, pursuant to Section 31 of
the Warehouse Receipt Law;
(2) To sell the goods and apply the
proceeds thereof to the value of the lien
pursuant to Sections 33 and 34 of the
Warehouse Receipts Law; and
(3) By other means allowed by law to a
creditor against his debtor, for the collection
from the depositor of all charges and
advances which the depositor expressly or
impliedly contracted with the
warehouseman to pay under Section 32 of
the Warehouse Receipt Law; or such other
remedies allowed by law for the
enforcement of a lien against personal
property under Section 35 of said law. The
third remedy is sought judicially by suing for
the unpaid charges.xliii
Initially, private respondents availed of the
first remedy. However, when petitioner
moved to execute the judgment in G.R. No.
107243 before the trial court, private
respondents, in turn, moved to have the
warehouse charges and fees due them
determined and thereafter sought to collect
these from petitioners. While the most
appropriate remedy for private respondents
was an action for collection, in G.R. No.
119231, we already recognized their right to
have such charges and fees determined in
Civil Case No. 90-53023. The import of our
holding in G.R. No. 119231 was that private
respondents were likewise entitled to a
judgment on their warehouse charges and
fees, and the eventual satisfaction thereof,
thereby avoiding having to file another
action to recover these charges and fees,
which would only have further delayed the
resolution of the respective claims of the
parties, and as a corollary thereto, the
indefinite deferment of the execution of the
judgment in G.R. No. 107243. Thus we
note that petitioner, in fact, already
acquiesced to the scheduled dates
previously set for the hearing on private
respondents warehousemans charges.
However, as will be shown below, it would
be premature to execute the order fixing the
warehousemans charges and fees.
C. Petitioner is Liable for Storage Fees.
We confirmed petitioners liability for storage
fees in G.R. No. 119231. However,
petitioners status as to the quedans must
first be clearly defined and delineated to be
able to determine the extent of its liability.
Petitioner insisted, both in its petition and
during the oral arguments on 24 November
1997, that it was a mere pledgee as the
quedans were used to secure two loans it
granted.xliv In our decision in G.R. No.
107243, we upheld this contention of
petitioner, thus:
Zoleta and Ramos then used the quedans
as security for loans obtained by them from
the Philippine National Bank (PNB) as
security for loans obtained by them in the
amounts of P23.5 million and P15.6 million,
respectively. These quedans they indorsed
to the bank.xlv
As such, Martinez v. Philippine National
Bankxlvi becomes relevant:
In conclusion, we hold that where a
warehouse receipt or quedan is transferred
or endorsed to a creditor only to secure the
payment of a loan or debt, the transferee or
endorsee does not automatically become
the owner of the goods covered by the
warehouse receipt or quedan but he merely
retains the right to keep and with the
consent of the owner to sell them so as to
satisfy the obligation from the proceeds of
the sale, this for the simple reason that the
transaction involved is not a sale but only a
mortgage or pledge, and that if the property
covered by the quedans or warehouse
receipts is lost without the fault or
negligence of the mortgagee or pledgee or
the transferee or endorsee of the
warehouse receipt or quedan, then said
goods are to be regarded as lost on
account of the real owner, mortgagor or
pledgor.
The indorsement and delivery of the
warehouse receipts (quedans) by Ramos
and Zoleta to petitioner was not to convey
title to or ownership of the goods but to
secure (by way of pledge) the loans granted
to Ramos and Zoleta by petitioner. The
indorsement of the warehouse receipts
(quedans), to perfect the pledge,xlvii merely
constituted a symbolical or constructive
delivery of the possession of the thing thus
encumbered.xlviii
The creditor, in a contract of real security,
like pledge, cannot appropriate without
foreclosure the things given by way of
pledge.xlix Any stipulation to the contrary,
termed pactum commissorio, is null and
void.l The law requires foreclosure in order
to allow a transfer of title of the good given
by way of security from its pledgor,li and
before any such foreclosure, the pledgor,
not the pledgee, is the owner of the goods.
In Philippine National Bank v. Atendido,lii we
said:
The delivery of the palay being merely by
way of security, it follows that by the nature
of the transaction its ownership remains
with the pledgor subject only to foreclosure
in case of non-fulfillment of the obligation.
By this we mean that if the obligation is not
paid upon maturity the most that the
pledgee can do is to sell the property and
apply the proceeds to the payment of the
obligation and to return the balance, if any,
to the pledgor (Art. 1872, Old Civil Code
[Art. 2112, New Civil Code]). This is the
essence of this contract, for, according to
law, a pledgee cannot become the owner
of, nor appropriate to himself, the thing
given in pledge (Article 1859, Old Civil
Code [Art. 2088, New Civil Code]) The fact
that the warehouse receipt covering palay
was delivered, endorsed in blank, to the
bank does not alter the situation, the
purpose of such endorsement being merely
to transfer the juridical possession of the
property to the pledgees and to forestall
any possible disposition thereof on the part
of the pledgor. This is true notwithstanding
the provisions of the Warehouse Receipt
Law.
The warehouseman, nevertheless, is
entitled to the warehousemans lien that
attaches to the goods invokable against
anyone who claims a right of possession
thereon.
The next issue to resolve is the duration of
time the right of petitioner over the goods
may be held subject to the warehousemans
lien.
Sections 8, 29 and 31 of the Warehouse
Receipts Law now come to fore. They
provide, as follows:
SECTION 8. Obligation of warehousemen
to deliver. A warehouseman, in the absence
of some lawful excuse provided by this Act,
is bound to deliver the goods upon a
demand made either by the holder of a
receipt for the goods or by the depositor, if
such demand is accompanied with:
(a) An offer to satisfy warehousemans lien;
(b) An offer to surrender the receipt, if
negotiable, with such indorsements as
would be necessary for the negotiation of
the receipt; and
(c) A readiness and willingness to sign,
when the goods are delivered, an
acknowledgment that they have been
delivered, if such signature is requested by
the warehouseman.
In case the warehouseman refuses or fails
to deliver the goods in compliance with a
demand by the holder or depositor so
accompanied, the burden shall be upon the
warehouseman to establish the existence of
a lawful excuse for such refusal.
SECTION 29. How the lien may be lost. A
warehouseman loses his lien upon goods;
(a) By surrendering possession thereof, or
(b) By refusing to deliver the goods when a
demand is made with which he is bound to
comply under the provisions of this Act.
SECTION 31. Warehouseman need not
deliver until lien is satisfied. A
warehouseman having a lien valid against
the person demanding the goods may
refuse to deliver the goods to him until the
lien is satisfied.
Simply put, where a valid demand by the
lawful holder of the quedans for the delivery
of the goods is refused by the
warehouseman, despite the absence of a
lawful excuse provided by the statute itself,
the warehousemans lien is thereafter
concomitantly lost. As to what the law
deems a valid demand, Section 8
enumerates what must accompany a
demand; while as regards the reasons
which a warehouseman may invoke to
legally refuse to effect delivery of the goods
covered by the quedans, these are:
(1) That the holder of the receipt does not
satisfy the conditions prescribed in Section
8 of the Act. (See Sec. 8, Act No. 2137)
(2) That the warehouseman has legal title in
himself on the goods, such title or right
being derived directly or indirectly from a
transfer made by the depositor at the time
of or subsequent to the deposit for storage,
or from the warehousemans lien. (Sec. 16,
Act No. 2137)
(3) That the warehouseman has legally set
up the title or right of third persons as lawful
defense for non-delivery of the goods as
follows:
(a) Where the warehouseman has been
requested, by or on behalf of the person
lawfully entitled to a right of property of or
possession in the goods, not to make such
delivery (Sec. 10, Act No. 2137), in which
case, the warehouseman may, either as a
defense to an action brought against him
for nondelivery of the goods, or as an
original suit, whichever is appropriate,
require all known claimants to interplead
(Sec. 17, Act No. 2137);
(b) Where the warehouseman had
information that the delivery about to be
made was to one not lawfully entitled to the
possession of the goods (Sec. 10, Act No.
2137), in which case, the warehouseman
shall be excused from liability for refusing to
deliver the goods, either to the depositor or
person claiming under him or to the
adverse claimant, until the warehouseman
has had a reasonable time to ascertain the
validity of the adverse claims or to bring
legal proceedings to compel all claimants to
interplead (Sec. 18, Act No. 2137); and
(c) Where the goods have already been
lawfully sold to third persons to satisfy a
warehousemans lien, or have been lawfully
sold or disposed of because of their
perishable or hazardous nature. (Sec. 36,
Act No. 2137).
(4) That the warehouseman having a lien
valid against the person demanding the
goods refuses to deliver the goods to him
until the lien is satisfied. (Sec. 31, Act No.
2137)
(5) That the failure was not due to any fault
on the part of the warehouseman, as by
showing that, prior to demand for delivery
and refusal, the goods were stolen or
destroyed by fire, flood, etc., without any
negligence on his part, unless he has
contracted so as to be liable in such case,
or that the goods have been taken by the
mistake of a third person without the
knowledge or implied assent of the
warehouseman, or some other justifiable
ground for non-delivery. (67 C.J. 532)liii
Regrettably, the factual settings do not
sufficiently indicate whether the demand to
obtain possession of the goods complied
with Section 8 of the law. The presumption,
nevertheless, would be that the law was
complied with, rather than breached, by
petitioner. Upon the other hand, it would
appear that the refusal of private
respondents to deliver the goods was not
anchored on a valid excuse, i.e., non-
satisfaction of the warehousemans lien over
the goods, but on an adverse claim of
ownership. Private respondents justified
their refusal to deliver the goods, as stated
in their Answer with Counterclaim and
Third-Party Complaint in Civil Case No. 90-
53023, by claiming that they are still the
legal owners of the subject quedans and
the quantity of sugar represented therein.
Under the circumstances, this hardly
qualified as a valid, legal excuse. The loss
of the warehousemans lien, however, does
not necessarily mean the extinguishment of
the obligation to pay the warehousing fees
and charges which continues to be a
personal liability of the owners, i.e., the
pledgors, not the pledgee, in this case. But
even as to the owners-pledgors, the
warehouseman fees and charges have
ceased to accrue from the date of the
rejection by Noahs Ark to heed the lawful
demand by petitioner for the release of the
goods.
The finality of our denial in G.R. No. 119231
of petitioners petition to nullify the trial
courts order of 01 March 1995 confirms the
warehousemans lien; however, such lien,
nevertheless, should be confined to the
fees and charges as of the date in March
1990 when Noahs Ark refused to heed
PNBs demand for delivery of the sugar
stocks and in no event beyond the value of
the credit in favor of the pledgee (since it is
basic that, in foreclosures, the buyer does
not assume the obligations of the pledgor to
his other creditors even while such buyer
acquires title over the goods less any
existing preferred lien thereover).liv The
foreclosure of the thing pledged, it might
incidentally be mentioned, results in the full
satisfaction of the loan liabilities to the
pledgee of the pledgors.lv
D. Respondent Judge Committed Grave
Abuse of Discretion.
We hold that the trial court deprived
petitioner of due process in rendering the
challenged order of 15 April 1996 without
giving petitioner an opportunity to present
its evidence. During the final hearing of the
case, private respondents commenced and
concluded their presentation of evidence as
to the matter of the existence of and
amount owing due to their warehousemans
lien. Their exhibits were duly marked and
offered, and the trial court thereafter ruled,
to wit:
Court: Order.
With the admission of Exhibits 1 to 11,
inclusive of submarkings, as part of the
testimony of Benigno Bautista, the
defendant [private respondents] is given
five (5) days from today to file its
memorandum. Likewise, plaintiff [petitioner]
is given five (5) days, from receipt of
defendants [private respondents]
memorandum, to file its comment thereto.
Thereafter the same shall be deemed
submitted for decision.
SO ORDERED.lvi
Nowhere in the transcript of stenographic
notes, however, does it show that petitioner
was afforded an opportunity to comment
on, much less, object to, private
respondents offer of exhibits, or even
present its evidence on the matter in
dispute. In fact, petitioner immediately
moved to nullify the proceedings conducted
during that hearing, but its motion was
ignored and never resolved by the trial
court. Moreover, it cannot be said that
petitioners filing of subsequent pleadings,
where it attached its affidavits and
documents to contest the warehousemans
lien, was sufficient to fully satisfy the
requirements of due process. The
subsequent pleadings were filed only to
show that petitioner had evidence to refute
the claims of private respondents or that the
latter were not entitled thereto, but could
not have adequately substituted for a full-
blown opportunity to present its evidence,
given the exorbitant amounts involved.
This, when coupled with the fact that the
motion to postpone the hearing filed by
petitioners counsel was not unreasonable,
leads us to conclude that petitioners right to
fully present its case was rendered
nugatory. It is thus evident to us that there
was undue and unwarranted haste on the
part of respondent court to rule in favor of
private respondents. We do not hesitate to
say that any tilt of the scales of justice, no
matter how slight, evokes suspicion and
erodes a litigants faith and hope in seeking
recourse before courts of law.
Likewise do we refuse to give credence to
private respondents allegation that the
parties agreed that petitioners presentation
of evidence would be submitted on the
basis of affidavits,lvii without, however,
specifying any order or written agreement
to that effect.
It is interesting to note that among the
evidence petitioner wanted to present were
reports obtained from Noahs Ark, disclosing
that the latter failed to maintain a sufficient
inventory to satisfy the sugar stock covered
by the subject quedans. This was a serious
allegation, and on that score alone, the trial
court should have allowed a hearing on the
matter, especially in light of the magnitude
of the claims sought. If it turns out to be true
that the stock of sugar Noahs Ark had in
possession was below the quantities
specified in the quedans, then petitioner
should not be made to pay for storage and
preservation expenses for non-existent
goods.
It was likewise grave abuse of discretion on
the part of respondent court to order
immediate execution of the 15 April 1997
order. We ruled earlier that said order was
in the nature of a final order fixing the
amount of the warehousemans charges
and fees, and petitioners net liability, after
the set-off of the money judgment in its
favor in G.R. No. 107243. Section 1 of Rule
39 of the Rules of Court explicitly provides
that execution shall issue as a matter of
right, on motion, upon a judgment or order
that disposes of the action or proceeding
upon the expiration of the period to appeal
therefrom if no appeal has been duly
perfected. Execution pending appeal is,
however, allowed in Section 2 thereof, but
only on motion with due notice to the
adverse party, more importantly, only upon
good reasons shown in a special order.
Here, there is no showing that a motion for
execution pending appeal was filed and that
a special order was issued by respondent
court. Verily, the immediate execution only
served to further strengthen our perception
of undue and unwarranted haste on the part
of respondent court in resolving the issue of
the warehousemans lien in favor of private
respondents.
In light of the above, we need not rule
anymore on the fourth formulated issue.
WHEREFORE, the petition is GRANTED.
The challenged orders of 15 April and 14
July 1997, including the notices of levy and
garnishment, of the Regional Trial Court of
Manila, Branch 45, in Civil Case No. 90-
53023 are REVERSED and SET ASIDE,
and said court is DIRECTED to conduct
further proceedings in said case:
(1) to allow petitioner to present its
evidence on the matter of the
warehousemans lien;
(2) to compute the petitioners
warehousemans lien in light of the
foregoing observations; and
(3) to determine whether, for the relevant
period, Noahs Ark maintained a sufficient
inventory to cover the volume of sugar
specified in the quedans.
Costs against private respondents.
SO ORDERED.
Bellosillo, Vitug, Panganiban, and
Quisumbing, JJ., concur.
Tan V. CA

THIRD DIVISION

[G.R. No. 108634. July 17, 1997]

ANTONIO P. TAN, petitioner, vs. THE

COURT OF APPEALS and DPG
DEVELOPMENT and MANAGEMENT
CORP., respondents.

DECISION

FRANCISCO, J.:

Petitioner Antonio P. Tan was the lessee of

a piece of property located at 3658 Ramon
Magsaysay Boulevard, Sampaloc, Manila
when on April 21, 1986, respondent DPG
Development and Management Corporation
(DPG for brevity) acquired ownership
thereof by purchase from one Manuel J.
Gonzales. Subsequently, DPG filed with the
Metropolitan Trial Court of Manila on April
13, 1989 an ejectment suit for nonpayment
of rentals against Vermont Packaging, Inc.
which was managed by petitioner.
During the pendency of said suit, petitioner,
on January 24, 1990, filed Civil Case No.
90-51767 against the Register of Deeds of
Manila and DPG for cancellation/annulment
of TCT No. 169146 issued in the name of
DPG. In a nutshell, this complaint
challenges the validity of TCT No. 169146
which, according to petitioner, emanated
from TCT No. 165501 that covered parcels
of land outside of Manila.
DPG received summons and the copy of
the complaint on February 6, 1990. More
than a month later or on March 22, 1990,
DPGs then counsel, Atty. Abundio Bello,
filed a motion for extension of time to file its
answer to the complaint. The motion was
granted. However, instead of filing the
answer within the extended period, Atty.
Bello filed a second motion for more time to
file answer. The court granted the motion
but only for fifteen (15) days from April 25,
1990.
As DPG still failed to file its answer,
petitioner filed a motion to declare the
former in default. On May 22, 1990, the trial
court granted the motion and accordingly
declared DPG in default. Petitioner
thereafter presented evidence.
On October 5, 1990, the trial court rendered
a decision in Civil Case No. 90-51767
favoring petitioner, the dispositive portion of
which reads:
WHEREFORE, it is hereby ordered that
TCT No. 169146 registered in the name of
defendant DPG Development &
Management Corporation be cancelled with
the consequential effect that the land
reverts to the government disposable to
qualified applicants. It is further ordered that
the Bureau of Lands consider the
application of the plaintiff for the purchase
of the area occupied by him pursuant to the
recommendation of the land investigator on
the matter.
Attorneys fees in the amount of P5,000.00.
Cost of suit. lviii
DPG received a copy of the trial courts
decision on October 25, 1990. Nine (9)
days later or on November 3, 1990, Atty.
Benjamin S. Formoso filed a notice of
appearance as new counsel for DPG. On
the same day, said counsel filed a motion
for new trial and to admit answer with
counterclaim.
Petitioner filed a comment thereon with an
omnibus motion to strike out DPGs motion
for new trial, coupled with a prayer for the
issuance of a writ of execution.
On November 23, 1990, the trial court
issued an Order denying, in effect, the
motion for new trial, the entirety of which
reads:
ORDER
Today is the consideration of the Motion for
New Trial and Motion to Admit Answer of
DPG Dev. & Mgt. Corp. filed by Atty.
Benjamin Formoso. The plaintiff opposed
the Motion for New Trial on the following
grounds:
1) Defendant is represented by counsel of
record in the person of Atty. Abundio Bello
and that there is no substitution of counsel
by the mere filing of Notice of Appearance
by Atty. Benjamin Formoso;
2) Defendant did not even file the requisite
motion to lift order of default to regain its
standing or personality before the Court
and that the mere filing of motion by the
alleged new counsel did not automatically
suspend the running of the period; and
3) That the decision in the above-entitled
case had not become final and executory.
The records will show that Atty. Abundio
Bello filed a Withdrawal of Apperance (sic)
on November 5, 1990 after the defendant
DPG Dev. & Mgt. Corp. had already been
furnished with a copy of the decision by this
Court, and that the Notice of Appearance of
Atty. Benjamin Formoso on November 2,
1990 was actually ahead of the withdrawal
of appearance by Atty. Abundio Bello on
November 5, 1990. Such being the case,
the appearance of new counsel Atty.
Benjamin Formoso, granting that he is the
authorized counsel for the defendant, did
not actually stop the running of the period
within which to appeal the adverse decision
of the court.
The Decision of the Court dated October 5,
1990 had already become final and
executory, and the Motion for New Trial
need not be acted upon by the Court.
WHEREFORE, let there be issued a Writ
og (sic) Execution in the above-entitled
case, the same to be implemented by
Branch Sheriff Ramon G. Enriquez of this
Court.
SO ORDERED.
DPG questioned this Order through a
petition for certiorari before public
respondent Court of Appeals (CA) claiming
that the trial court gravely abused its
discretion and exceeded its jurisdiction in
failing to take action on and/or in denying its
motion for new trial and to admit answer,
and in granting petitioners omnibus motion
to strike out said motion for new trial and
prayer for the issuance of a writ of
execution.
In its Decision of October 23, 1992
disposing of DPGs petition for certiorari,lix
the CA ruled for DPG, the dispositive
portion of which reads:
WHEREFORE, the petition is hereby
GRANTED. As prayed for, the ORDER of
the respondent judge issued on November
23, 1990, is hereby ANNULLED and SET
ASIDE.
As a consequence,
(1) The writ of execution and alias writ of
execution that have been issued are
likewise declared null and void;
(2) Petitioners motion for new trial and for
admission of answer that the order of
November 23, 1990 has, in effect, denied is
considered GRANTED;
(3) Petitioners Answer to the private
respondents complaint in Civil Case No. 90-
51767 is, accordingly, considered
ADMITTED; and
(4) The DECISION of respondent judge in
said case is hereby VACATED, and
respondent judge is hereby ordered to
conduct a new trial in said civil case.
Conformably to Section 5 of Rule 37
however, the recorded evidence taken upon
the former trial so far as the same is
material and competent to establish the
issues, shall be used at the new trial
without retaking the same.
SO ORDERED.
Hence, this petition, with the following
principal arguments raised by petitioner in
support thereof:
1) the CA should not have entertained
DPGs petition for certiorari considering that
no motion for reconsideration of the trial
courts October 5, 1990 Decision was first
filed by DPG and that the proper remedy is
an appeal;
2) the filing of the motion for new trial did
not interrupt the finality of the trial courts
Decision inasmuch as there was no valid
substitution between DPGs previous
counsel on record Atty. Bello and new
counsel Atty. Formoso who filed the said
motion for new trial.
The petition must fail.
On the first argument, as a rule, the special
civil action of certiorari will not lie unless a
motion for reconsideration is first filed
before the respondent court to allow it an
opportunity to correct its errors.lx However,
this rule admits of certain recognized
exceptions such as (a) where the order is a
patent nullity,lxi as where the Court a quo
had no jurisdiction;lxii (b) where the
questions raised in the certiorari proceeding
have been duly raised and passed upon by
the lower court,lxiii or are the same as those
raised and passed upon in the lower
court;lxiv (c) where there is an urgent
necessity for the resolution of the question
and any further delay would prejudice the
interests of the Governmentlxv or of the
petitionerlxvi or the subject matter of the
action is perishable;lxvii (d) where, under the
circumstances, a motion for reconsideration
would be useless;lxviii (e) where petitioner
was deprived of due process and there is
extreme urgency for relief;lxix (f) where, in a
criminal case, relief from an order of arrest
is urgent and the granting of such relief by
the trial Court is improbable;lxx (g) where the
proceedings in the lower court are a nullity
for lack of due process;lxxi (h) where the
proceedings was ex parte or in which the
petitioner had no opportunity to object;lxxii
and (i) where the issue raised is one purely
of law or where public interest is
involved.lxxiii It is exceptive circumstance (b)
that justified DPGs non-filing of a motion for
reconsideration, inasmuch as DPGs petition
for certiorari before the CA involved a
similar issue or question passed upon by
the trial court in its November 23, 1990
Order, i.e., the propriety of the motion for
new trial filed by DPGs new counsel (Atty.
Formoso).
It must also be stressed that what is
determinative of the propriety of certiorari is
the danger of failure of justice without the
writ, not the mere absence of all other legal
remedies.lxxiv Thus, even when appeal is
available and is the proper remedy, a writ of
certiorari has been allowed when the orders
of the lower court were issued either in
excess of or without jurisdiction.lxxv
Certiorari may also be availed of where an
appeal would be slow, inadequate and
insufficientlxxvi and that to strictly observe
the general rule would result in a
miscarriage of justice.lxxvii This is especially
true when the petition, such as DPGs
certiorari petition before the CA, appears to
be meritorious and the trial judge indeed
seems to have committed grave abuse of
discretion.
This brings us to the second argument
which touches on the heart of the matter.
There is no question that the remedy
against a judgment by default is a motion
for new trial under Rule 37 of the Rules of
Court which should be filed within the
period for perfecting an appeal, and that the
timely filing thereof interrupts the 15-day
reglementary period. The CA has thus
correctly observed that:
It is settled in Our jurisprudence that a
motion for new trial is the appropriate
remedy when the defendant discovers that
he has been declared in default and that a
judgment has already been rendered, which
has not, however, become final and
executory as yet. (Leyte vs. Cusi, Jr., 152
SCRA 496; Tiburcio vs. Castro, 161 SCRA
583; Dolos vs. Court of Appeals, 188 SCRA
413; Circle Finance Corp vs. Court of
Appeals, 196 SCRA 166). It is not required
that the defendant file first a motion to life
the order of default to regain his standing.
The filing of a motion for new trial suspends
the reglementary period for the attainment
by the decision of finality. (Rule 41, Section
3; PCIBank vs. Ortiz, 150 SCRA 383) for
If a new trial be granted, x x x the judgment
shall be vacated, and the action shall stand
for trial de novo, x x x. (Rule 37, Section
5)lxxviii
There is also no dispute that a motion for
new trial (and to admit answer with
counterclaim) was filed on behalf of DPG
within the 15-day appeal period, i.e., on
November 3, 1990 or just nine (9) days
from DPGs receipt (on October 25, 1990) of
a copy of the trial courts October 5, 1990
Decision. Petitioner insists on the
correctness of the trial courts finding
(contained in its November 23, 1990 Order
earlier quoted in this Decision) that the
motion for new trial filed by DPGs new
counsel Atty. Formoso did not interrupt the
finality of the trial courts October 5, 1990
Decision since there was no proper
substitution of DPGs original counsel of
record Atty. Bello by Atty. Formoso, it
appearing that Atty. Formosos notice of
appearance did not contain Atty. Bellos
written consent to the substitution and that
said notice of appearance even preceded
Atty. Bellos notice of withdrawal as DPGs
counsel. And so petitioner argues that the
CA erred in reversing the trial court and in
allowing a new trial to be conducted.
Petitioners and the trial courts position,
indeed, cannot be sustained. Atty.
Formosos appearance as second attorney,
which bears the conformity of DPG, does
not authorize the presumption that the
authority of the first attorney (Atty. Bello)
has been withdrawn, because a party may
have two or more lawyers working in
collaboration as his counsel in a given
litigation.lxxix Certainly, DPG cannot be
denied the prerogative to employ additional
counsel to protect his rights. Even granting
that Atty. Formosos appearance was really
intended to be a substitution and that there
was lack of strict observance of the
requisites thereof, to wit:
a) upon written application;
b) with written consent of the client;
c) upon written consent of the attorney to
be substituted; and
d) in case the consent of attorney to be
substituted cannot be obtained, there must
be at least a proof of notice that the motion
for substitution has been served upon him
in the manner prescribed by the rules
(Section 26, Rule 138, Rules of Court),lxxx
the attendant circumstances here are
compelling enough to validate the
substitution.
Note that DPG was declared in default (and
was thus denied opportunity to present
evidence and participate in the trial) by
reason of Atty. Bellos negligence. Said
counsel failed to file an answer despite
being given by the trial court two (2)
extensions of time to file it. True, the
general rule is that the client is bound by
the mistakes of counsel. But this is not a
hard and fast rule. In De Guzman v.
Sandiganbayanlxxxi for instance, this Court,
ever mindful of the supremacy of
substantive rights over technicalities and
invoking its power to suspend the rules,
relieved petitioner De Guzman from the
costly importunings of his previous lawyers
who filed a demurrer to evidence despite
leave for that purpose having been denied
by the trial court. We thus said:
x x x. Under the circumstances, higher
interests of justice and equity demand that
petitioner be not penalized for the costly
importunings of his previous lawyers based
on the same principles why this Court had,
on many occasions where it granted new
trial, excused parties from the negligence or
mistakes of counsel. To cling to the general
rule in this case is only to condone rather
than rectify a serious injustice to petitioners
whose only fault was to repose his faith and
entrust his innocence to his previous
lawyers.
xxx xxx xxx
Let us not forget that the rules of procedure
should be viewed as mere tools designed to
facilitate the attainment of justice. Their
strict and rigid application, which would
result in technicalities that tend to frustrate
rather than promote substantial justice,
must always be avoided. Even the Rules of
Court envision this liberality.
xxx xxx xxx
The Rules of Court was conceived and
promulgated to set forth guidelines in the
dispensation of justice but not to bind and
chain the hand that dispenses it, for
otherwise, courts will be mere slaves to or
robots of technical rules, shorn of judicial
discretion. That is precisely why courts in
rendering real justice have always been, as
they in fact ought to be, conscientiously
guided by the norm that when on the
balance, technicalities take a backseat
against substantive rights, and not the other
way around. Truly then, technicalities, in the
appropriate language of Justice Makalintal,
should give way to the realities of the
situation.lxxxii (Underscoring ours)
Being similarly situated, DPG should also
benefit from the liberal application of the
rules specifically pertaining to substitution
of counsels.
Of course, it would have been different if
the appearance of a new counsel was, for
instance, occasioned by the death of the
original counsel of record. In which case, all
the requirements of a proper substitution
must be met, one of which is a verified
proof of the death of such attorney. The
party seeking substitution, therefore, cannot
escape the effects of new counsels error in
failing to furnish the required proof of death,
as such negligence does not result in
deprivation of due process to said party.
Finally, and as correctly ruled by the CA,
DPG is entitled to a new trial it prays for
inasmuch as negligence or incompetency of
counsel is a well-recognized ground for new
trial.lxxxiii This would rectify the serious error
committed by DPGs former counsel Atty.
Bello, give the DPG the opportunity to
present its evidence with the assistance of
a hopefully more vigilant counsel (Atty.
Formoso), and thus level the playing field.
WHEREFORE, premises considered, the
instant petition is hereby DENIED. The
assailed Decision of the Court of Appeals
dated October 23, 1992 is AFFIRMED in
toto. Let this case be REMANDED to the
court of origin for further proceedings.
SO ORDERED.
Narvasa, C.J., (Chairman), Davide, Jr.,
Melo, and Panganiban, JJ., concur.

i
Rollo, pp. 23-28.
ii
Thirteenth Division, composed of J. Cezar D. Francisco, Ponente, JJ. Pedro A. Ramirez, chairman, and
Angelina S. Gutierrez, concurring.
iii
Rollo, pp. 24-26.
iv
Ibid., p. 4.
v
Gaw vs. Intermediate Appellate Court, 220 SCRA 405, 413, March 24, 1993; citing Morales vs. Court of
Appeals, 197 SCRA 391, May 23, 1991, and Navarra vs. Court of Appeals, 204 SCRA 850,
December 17, 1991.
vi
Reyes vs. Court of Appeals, G.R. No. 110207, p. 8, July 11, 1996, Vda. de Alcantara vs. Court of Appeals,
252 SCRA 457, 468, January 29, 1996, Quebral vs. Court of Appeals, 252 SCRA 353, 368, January
25, 1996 (citing Calde vs. Court of Appeals, 233 SCRA 376, June 27, 1994. See also Cayabyab
vs. The Honorable Intermediate Appellate Court, 232 SCRA 1, April 28, 1994), Engineering &
Machinery Corporation vs. Court of Appeals, 252 SCRA 156, 163, January 24, 1996, Chua Tiong
Tay vs. Court of Appeals, 243 SCRA 183, 186, March 31, 1995, Dee vs. Court of Appeals, 238
SCRA 254, 263, November 21, 1994, and Asia Brewery, Inc. vs. Court of Appeals, 224 SCRA 437,
443.
vii
Paragraph 2, Section 2, Rule 45, Rules of Court.
viii
Juan Castillo and Maria Masangya-Castillo, et al. vs. Court of Appeals, et al., G.R. No. 106472, p. 9,
August 7, 1996.
ix
The first was G.R. No. 107243, 1 September 1993, entitled Philippine National Bank v. Noahs Ark Sugar
Refinery, Alberto Looyuko, Jimmy T. Go and Wilson T. Go, 226 SCRA 36 [1993]; while the second was
G.R. No. 119231, 18 April 1996, entitled Philippine National Bank v. Hon. Pres. Judge Benito C. Se, Jr.,
RTC, Branch 45, Manila; Noahs Ark Sugar Refinery; Alberto T. Looyuko, Jimmy T. Go and Wilson T. Go,
256 SCRA 380 [1996].
x Per Judge Marcelino L. Sayo, Jr.
xi Annex A of Petition; Rollo, 57-63.
xii Annex B of Petition; Rollo, 64-68.
xiii Supra note 2 at 384-389.
xiv Id., at 394-395.
xv Rollo, 22-27.
xvi Rollo, 28-29.
xvii 98 Phil. 688, 692 [1956].
xviii 250 SCRA 418, 427 [1995].
xix TSN, 21 February 1995, 4.
xx Rollo, 88-92.
xxi Resolution, p. 2; Rollo, 89.
xxii Annex O of Petition; Rollo, 169-170.
xxiii Annex P of Petition; Rollo, 171.
xxiv Annexes R - R-16; Rollo, 174-190.
xxv Annex Q of Petition; Rollo, 172.
xxvi Annexes S and T of Petition; Rollo, 191, 192-195.
xxvii
Section 29. How the lien may be lost. - A warehouseman loses his lien upon goods: (a) By surrendering
possession thereof, or (b) By refusing to deliver the goods when a demand is made with which he is bound
to comply under the provisions of this Act.
xxviii
Article 1149. All other actions whose periods are not fixed in this Code or in other laws must be brought
within five years from the time the right of action accrues.
xxix
Section 103. Exemption from Attachment and Other Purposes. - Deposits maintained by banks with the
Bangko Sentral as part of their reserve requirements shall be exempt from attachment, garnishments, or
any other order or process of any court, government agency or any other administrative body issued to
satisfy the claim of a party other than the Government, or its political subdivisions or instrumentalities.
xxx Annex 11 of Comment; Rollo, 290-314.
xxxi
Citing Filinvest Credit Corp. v. Court of Appeals, 226 SCRA 257 [1993]; and Republic v. de los Angeles,
41 SCRA 422 [1977].
xxxii Annex 21 of Comment; Rollo, 395-396.
xxxiii Philippine National Bank, 1996 Annual Report, 19; Annex 1 of Comment; Rollo, 279.
xxxiv Annex N of Petition; Rollo, 144-168.
xxxv Annexes 16 -19 of Comment; Rollo, 377-393.
xxxvi Rollo, 438-439.
xxxvii Rollo, 438-439.
xxxviii TSN, 24 November 1997, 106-107.
xxxix See Meneses v. Court of Appeals, 237 SCRA 484, 492 [1994].
xl
Gavieres v. Falcis, 193 SCRA 649, 657-658 [1991] citing PNB v. Puno, 170 SCRA 229 [1989]; Echauz v.
Court of Appeals, 199 SCRA 381, 386-387 [1991], citing Jaca v. Davao Lumber Co., 113 SCRA 107 [1982];
Hualam Construction and Development Corp. v. Court of Appeals, 214 SCRA 612, 628 [1992]; Ruiz v.
Court of Appeals, 220 SCRA 490, 500 [1993]; Rodriguez v. Court of Appeals, 245 SCRA 150, 152 [1995].
xli Sec. 5(1), Article VIII of the Constitution, in relation to Secs. 9(1) and 21(1) of B.P. Blg. 129.
xlii
People v. Cuaresma, 172 SCRA 415, 423-424 [1989]; Defensor-Santiago v. Vasquez, 217 SCRA 633,
651-652 [1993]; Manalo v. Gloria, 236 SCRA 130, 138-139 [1994].
xliii
See 3 Teodorico C. Martin, Commentaries and Jurisprudence on the Philippine Commercial Laws 581-
587 (1989 ed.) (hereinafter 3 Martin).
xliv Petition, 8; TSN, 24 November 1997, 26.
xlv 226 SCRA 36, 39 [1993].
xlvi
93 Phil. 765, 770-771 [1953]. See also Philippine National Bank v. Atendido, 94 Phil. 254, 258 [1954];
and Warner, Barnes, & Co. Ltd. v. Flores, 1 SCRA 881, 885-886 [1961].
xlvii Art. 2095, New Civil Code.
xlviii First Camden National Bank & Trust Co. v. J.R. Watkins Co., D.C. Pa 36 F. Supp. P. 416.
xlix
Lao v. Court of Appeals, G.R. No. 115307, 8 July 1997; Development Bank of the Philippines v. Court of
Appeals, G.R. No. 118342, 5 January 1998.
l Art. 2088, Civil Code.
li Art. 2112, Civil Code.
lii 94 Phil. 254, 257-258 [1954].
liii 3 Martin, at 553-554.
liv
The rules on concurrence and preference of credits under the Civil Code would be inapplicable until there
arises a judicial settlement of the property of an insolvent in favor of all creditors.
lv
Article 2115, Civil Code provides: The sale of the things pledged shall extinguish the principal obligation,
whether or not the proceeds of the sale are equal to the amount of the principal obligation, interest and
expenses in a proper case. If the amount of the sale is more than the said amount, the debtor shall not be
entitled to the excess, unless it is otherwise agreed. If the price of the sale is less, neither shall the creditor
be entitled to recover the deficiency, notwithstanding any stipulation to the contrary.(n)
lvi TSN, 21 February 1995, 25.
lvii TSN, 24 November 1997, 64.