G.R. No. 195450 - Development Bank of the Philippines vs. Carpio

Case Summary (G.R. No. 195450)

Petitioner and Respondents

Petitioner: Development Bank of the Philippines (DBP).
Respondents: plaintiffs (Abad, et al.) represented by Manuel L. Te; CBIC as surety; GFSME as co-defendant. The RTC, Branch 16, Davao City, and the Court of Appeals (CA) are the trial and intermediate appellate tribunals involved.

Key Dates and Procedural History (excluding decision date)

August 21, 2001: Complaint for delivery of certificates of title, damages, and attorney’s fees filed by Abad, et al. and prayer for writ of seizure.
August 24, 2001: RTC issued writ of seizure; bond for manual delivery issued by CBIC.
September 5, 2001: DBP filed omnibus motion to dismiss and to quash writ of seizure (improper venue, among others).
September 25, 2001: RTC granted DBP’s omnibus motion and dismissed the case for improper venue.
January 27, 2003: RTC ordered plaintiffs to return 228 certificates of title; DBP sought enforcement thereafter.
June 9, 2003: Petition for certiorari to nullify January 27, 2003 order was dismissed by the Court.
September–December 2003: DBP moved for writ of execution; sheriff reported non-delivery by plaintiffs.
February 3, 2004: DBP moved to call on plaintiff’s surety bond for damages; RTC denied the motion (May 17, 2004) and denied reconsideration (July 9, 2004).
DBP sought certiorari and mandamus from the CA; CA dismissed the petition; subsequent CA resolution denied reconsideration.

Applicable Law and Procedural Rules

The 1987 Constitution is the governing constitution for this decision.
Rules of Court provisions central to the decision: Rule 57, Section 20 (claim for damages on account of illegal attachment/replevin bond); Rule 60, Section 10 (in replevin cases, damages on bond to be claimed in accordance with Rule 57, Section 20); Rule 16 (grounds for motion to dismiss) and Rule 41 (effect of dismissal and appealability); Rule 42 (special civil action under Rule 65 as alternative remedy in non-appealable dismissals); and doctrines on residual jurisdiction as articulated in relevant jurisprudence cited in the decision.

Issue Presented

Whether the Court of Appeals erred in applying Section 20, Rule 57 of the Rules of Court strictly so as to deny DBP’s belated motion to call on the plaintiff’s surety bond for damages resulting from the alleged improper issuance and maintenance of the writ of seizure and replevin.

Trial Court Orders and Rulings

The RTC initially issued a writ of seizure and took possession of 228 certificates of title. Following DBP’s motion to dismiss for improper venue, the RTC dismissed the complaint (September 25, 2001). Later, the RTC ordered return of the titles (January 27, 2003). After plaintiff noncompliance with a writ of execution, DBP filed an application to call on the plaintiffs’ surety bond for damages (February 3, 2004). The RTC denied that application on May 17, 2004, reasoning it no longer had residual power to resolve the matter, and denied reconsideration on July 9, 2004.

Court of Appeals Ruling

The CA dismissed DBP’s petition for certiorari and mandamus. The CA treated the September 25, 2001 dismissal for improper venue as final and executory because DBP did not seek reconsideration of that order and concluded that Section 20, Rule 57 requires that applications for damages on a replevin bond must be filed before trial, before appeal is perfected, or before the judgment becomes executory. DBP’s application was filed after the order had ripened into finality, and thus untimely.

Petitioner’s Arguments

DBP contended it could not have anticipated the respondents’ refusal to comply with the writ of execution; therefore, claiming damages against the bond prior to such failure would have been premature. DBP argued the damages from the improper issuance or maintenance of the writ occurred only after respondents refused to return the titles despite RTC orders, and that Section 20, Rule 57 did not cover the instant situation of instantaneous dismissal for improper venue.

Surety’s and Respondents’ Positions

CBIC argued that Section 20, Rule 57 plainly requires that claims for damages on account of improper attachment must be filed before trial or before appeal is perfected or before the judgment becomes executory. CBIC highlighted that DBP’s motion to call on the bond was filed more than two years after the RTC’s order of dismissal had become final and that, under Rule 60 and Rule 57, liability should be addressed in the final judgment. Respondents (plaintiffs) did not file a comment despite opportunities and thus waived the right to file one.

Court’s Analysis — Residual Jurisdiction

The Court held that the RTC did not attain residual jurisdiction in this matter because residual jurisdiction presupposes that a trial on the merits occurred, a judgment was rendered, and an appeal perfected. Dismissal for improper venue is without prejudice and is not appealable under Section 1(h), Rule 41; therefore no appeal was available and the RTC did not proceed to a stage where residual jurisdiction could be exercised. Because the case was dismissed without prejudice and without a trial on the merits, the trial court lacked authority to entertain DBP’s post-termination application for damages under its residual powers.

Court’s Analysis — Application of Section 20, Rule 57

The Court reaffirmed the strict procedural requisites of Section 20, Rule 57 and its application via Rule 60, Section 10 to replevin bonds: (1) a favorable judgment to the defendant in the main action; (2) filing of the application for damages in the same action before trial or before appeal is perfected or before the judgment becomes executory; (3) due notice to the attaching party and its surety; and (4) adjudication and inclusion of damages in the final judgment. DBP’s application was filed after the term

Case Syllabus (G.R. No. 195450)

Procedural History

Petition for review on certiorari filed in the Supreme Court seeking reversal of the Court of Appeals' July 9, 2008 Decision and January 21, 2011 Resolution in CA-G.R. SP No. 85719, which dismissed petitioner DBP's petition for certiorari and mandamus praying for the annulment of the RTC’s May 17, 2004 and July 9, 2004 Orders in Civil Case No. 28,721-01.
August 21, 2001: Complaint for delivery of certificates of title, damages, and attorneys’ fees filed by Dabay Abad, Hatab Abad, Omar Abas, Hanapi Abdullah, Rojea Ab Abdullah, Abdullah Abedin, Alex Abedin, et al., represented by attorney-in-fact Manuel L. Te, against DBP and GFSME before RTC, Branch 16, Davao City.
August 24, 2001: RTC issued Writ of Seizure accompanying Plaintiffs’ Bond for Manual Delivery of Personal Property issued by Country Bankers Insurance Corporation (CBIC).
September 5, 2001: DBP filed Omnibus Motion to Dismiss Complaint and to Quash Writ of Seizure on grounds including improper venue; plaintiffs opposed and later filed supplemental opposition attaching Delivery Receipt showing sheriff took possession of 228 certificates of title from GFSME.
September 25, 2001: RTC granted DBP’s omnibus motion and dismissed the case for improper venue (Order became final and executory; DBP did not move for reconsideration of this Order).
December 20, 2001: DBP and GFSME filed Joint Motion to Order Plaintiffs to Return Titles; after opposition, RTC on January 27, 2003 ordered plaintiffs to return 228 certificates of title.
Petition for certiorari and prohibition to the Court (by Abad, et al.) to nullify January 27, 2003 Order was dismissed by the Court on June 9, 2003.
September 18, 2003: DBP filed Motion for Writ of Execution; December 16, 2003: RTC issued the writ; sheriff's return indicated plaintiffs failed to deliver the titles.
February 3, 2004: DBP filed Motion/Application to Call on Plaintiffs’ Surety Bond (seek release of CBIC bond) for damages due to failure to return 228 titles.
May 17, 2004 RTC Order denied DBP’s motion explaining the matter was no longer within its residual power; July 9, 2004 RTC Order denied reconsideration.
DBP filed petition for certiorari and mandamus to the Court of Appeals; July 9, 2008 CA Decision dismissed the petition; January 21, 2011 CA Resolution denied reconsideration.
February 1, 2017: Supreme Court decision denying the petition and affirming the CA in toto (G.R. No. 195450).

Factual Background

Plaintiffs (Abad, et al.) alleged their certificates of title were submitted to DBP for safekeeping pursuant to loan agreements with DBP.
DBP allegedly turned over the same certificates of title to GFSME because DBP called on GFSME’s guarantee when the loan became due and demandable, pursuant to guarantee agreement between DBP and GFSME.
Plaintiffs sought issuance of writ of seizure for delivery of certificates of title they claimed DBP and GFSME unlawfully detained; the writ was issued and secured by a bond issued by CBIC.
Delivery Receipt attached to plaintiffs’ opposition indicated sheriff took possession of 228 certificates of title from GFSME.
After dismissal for improper venue, RTC later ordered plaintiffs to return 228 certificates of title, but sheriff’s writ of execution returned non-delivery by plaintiffs.
DBP thereafter sought to call on plaintiffs’ surety bond (CBIC) to answer for damages caused by plaintiffs’ failure to return titles.

Issue Presented

Whether the Court of Appeals erred in its application of Section 20, Rule 57 of the 1997 Rules of Civil Procedure in dismissing DBP’s petition and upholding the RTC’s denial of DBP’s Motion to Call on Plaintiffs’ Surety Bond.

Petitioner’s (DBP) Contentions

DBP argued it could not have anticipated that plaintiffs would refuse to abide by the writ of execution; thus, it was premature to claim damages against the bond before such failure materialized.
DBP contended Section 20, Rule 57 was inapplicable because the damages resulting from the allegedly improper issuance of the writ of seizure occurred only after plaintiffs’ refusal to return the titles despite the RTC’s order.
DBP asserted it could not resort to the surety prior to recovering the titles; filing for damages against the bond before such refusal would have been premature.

Respondent CBIC’s Contentions and Other Respondents

CBIC asserted Section 20, Rule 57 requires the application for damages on account of improper, irregular or excessive attachment to be filed before trial, before appeal is perfected, or before the judgment becomes executory; DBP’s motion was filed more than two years after the RTC’s September 25, 2001 Order became final and executory.
CBIC argued under Section 10, Rule 60 the surety’s liability must be included in the final judgment; because there was no judgment as to who was entitled to possession of the certificates of title, the RTC properly denied the motion to