Title
Rizal Commercial Banking Corp. vs. Metro Container Corp.
Case
G.R. No. 127913
Decision Date
Sep 13, 2001
A dispute over rental payments arose after a foreclosure sale, resolved by an unlawful detainer ruling, rendering the interpleader action moot.
foreclosure sale
rental payments
interpleader case

Case Summary (G.R. No. 127913)

Factual Background

On 26 September 1990, LEYCON obtained a loan of Thirty Million Pesos from RCBC, secured by a real estate mortgage on a parcel in Barrio Ugong, Valenzuela, covered by TCT No. V-17223. LEYCON defaulted. After extrajudicial foreclosure proceedings, the property was sold on 28 December 1992, with RCBC as highest bidder, and title consolidation followed with issuance of TCT No. V-332432 in favor of RCBC. Meanwhile, METROCAN was occupying the premises under lease from LEYCON and paid rentals to LEYCON until RCBC demanded rentals following consolidation of title.

Interpleader and Unlawful Detainer Actions

Because METROCAN was uncertain whether to pay rentals to LEYCON or RCBC, it filed an action for interpleader (Civil Case No. 4398-V-94) in the RTC of Valenzuela, Branch 75, on 27 May 1994, naming LEYCON and RCBC as claimants. On 26 May 1994, LEYCON had filed an unlawful detainer action (Civil Case No. 6202) against METROCAN in the MeTC of Valenzuela, Branch 82, seeking possession and rents. Separately, LEYCON had earlier filed Civil Case No. 4037-V-93 in RTC Branch 172 for nullification of the extrajudicial foreclosure sale and damages against RCBC.

Trial Court Proceedings and Interim Orders

During pre-trial in the interpleader case, the trial court ordered dismissal insofar as METROCAN and LEYCON were concerned on 04 July 1995 in view of an amicable settlement by which METROCAN paid back rentals to LEYCON. The MeTC rendered judgment on 31 October 1995 in the unlawful detainer case, directing METROCAN to pay LEYCON "whatever rentals due on the subject premises," and that decision became final and executory. METROCAN and LEYCON thereafter moved to dismiss the interpleader as moot and academic; the RTC denied those motions on 12 March 1996 and denied reconsideration on 24 June 1996.

Court of Appeals Relief

METROCAN sought relief from the Court of Appeals by a petition for certiorari and prohibition, praying for injunctions to prevent the RTC from compelling continuation of the interpleader. In its Decision of 18 October 1996, the Court of Appeals granted the petition, set aside the RTC's 12 March 1996 and 24 June 1996 orders, and ordered dismissal of Civil Case No. 4398-V-94. The Court of Appeals denied RCBC's motion for reconsideration in its 08 January 1997 Resolution.

Issues Presented on Review

RCBC raised principally two questions: whether the MeTC judgment in the unlawful detainer case could render the interpleader action moot and academic; and whether METROCAN, having filed the interpleader and after answers were filed, could unilaterally cause its dismissal and thus deprive the claimants of their right to litigate their competing claims.

Parties' Contentions

RCBC argued that the MeTC ejectment judgment did not affect the ownership dispute and therefore could not moot the interpleader, and that a party who initiates an interpleader may not unilaterally cause dismissal after answers have been filed because defendants should be given full opportunity to litigate. METROCAN and LEYCON maintained that the settlement between them and the final MeTC judgment rendered the interpleader unnecessary and moot because the conflicting claim respecting payment of rentals had been resolved against METROCAN, leaving no need for the protective remedy of interpleader.

Supreme Court's Ruling

The Supreme Court denied the petition for review and affirmed the Decision of the Court of Appeals promulgated on 18 October 1996 and its Resolution of 08 January 1997. The Court concluded that dismissal of the interpleader was proper under the circumstances and that RCBC was not entitled to the relief it sought.

Legal Basis and Reasoning

The Court applied Section 1, Rule 63 of the Revised Rules of Court and the jurisprudence interpreting entitlements of the plaintiff-in-interpleader. The Court observed that an action of interpleader exists to protect a person against double vexation, not to avoid double liability, and that its indispensable requisites include that conflicting claims upon the same subject matter are or may be made against the stakeholder who claims no interest. The MeTC unlaw ful detainer action, the Court noted, was limited to physical possession and the obligation to pay rentals. Citing Lagrosa v. Court of Appeals, 312 SCRA 298 (1999), Arcal v. Court of Appeals, 285 SCRA 34 (1998), and Carreon v. Court of Appeals, 291 SCRA 78 (1998), the Court concluded that the MeTC judgment, although not binding on RCBC, bound METROCAN and commanded payment to LEYCON, thereby resolving the conflicting claims insofar as the rental payments were concerned. The Court relied also on the principle articulated in Wack Wack Golf and Country Club, Inc. v. Won, 70 SCRA 165 (1976), and on Lim v. Continental Development Corporation, 69 SCRA 349 (1976) as citing Beltran v. People's Homesite and Housing Corporation, 29 SCRA 145 (1969), to emphasize the protective and not adjudicatory purpose of interpleader. Because judicial fiat already required METROCAN to pay LEYCON, the Court held there remained no reason for METROCAN to pursue the interpleader; the plaintiff-in-interpleader could not be compelled to continue a suit that had become moot for it. The Court further noted that RCBC retained other remedies to assert ownership, notably its pending action for nullification of the foreclosure sale (Civil Case No. 4037

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