Case Summary (G.R. No. 247787)
Factual Background
Marañon sued the Cuencas for collection and sought a writ of preliminary attachment. The RTC authorized issuance of the writ conditioned on a P1,000,000 bond. Marañon obtained an attachment bond (SICI Bond No. 68427 JCL (4) No. 02370) from Stronghold Insurance for P1,000,000 and the writ issued. The sheriff levied equipment, supplies and other personal property located in Arc Cuisine, Inc.’s leased commissary/office. Later events showed the levied properties missing from their safekeeping location; the Cuencas and Tayactac claimed damages for loss of the attached property and sought relief against the bond and Marañon.
Procedural History
The Cuencas and Tayactac moved to dismiss and to quash the writ on grounds that the dispute involved intra‑corporate matters within SEC jurisdiction. The RTC denied the motion; the Court of Appeals granted certiorari, annulled the RTC orders and dismissed the amended complaint for lack of jurisdiction (June 16, 1999), but later remanded for resolution of the Cuencas’ and Tayactac’s claim for damages stemming from enforcement of the writ (December 27, 1999). After further proceedings, the RTC held Marañon and Stronghold jointly and solidarily liable for P1,000,000 (bond amount) plus moral damages, exemplary damages, attorney’s fees and costs (April 28, 2003). Stronghold appealed to the CA, which affirmed (January 31, 2006). Stronghold then sought review by the Supreme Court.
Issues Presented on Review
Stronghold assigned errors claiming (1) the Cuencas et al. were not owners of the properties attached and therefore not proper parties to claim damages; (2) any damages were caused by sheriff negligence and procedural failures; (3) Stronghold’s liability was contractually limited to the bond amount and it was entitled to indemnity from Marañon under an indemnity agreement. The Cuencas and Tayactac contended Stronghold was estopped from raising issues not raised earlier and maintained that Stronghold’s contractual and statutory obligations to respond on the bond made it liable for damages beyond the bond amount.
Governing Legal Principles
The Court emphasized the constitutional limitation of judicial power to actual controversies (Section 1, Article VIII, 1987 Constitution) and the Rules of Court requirement that actions be prosecuted in the name of the real party in interest (Section 2, Rule 3). A “real party in interest” is the person who stands to be benefited or injured by the judgment or who is entitled to the avails of the suit; the requirement prevents actions by persons without any right, title or interest and ensures that judgments resolve actual controversies and afford res judicata protection. The Court reiterated the separate legal personality of corporations (Corporation Code, Section 2) and cited precedents establishing that injuries to corporate assets are injuries to the corporation, not to shareholders individually, who hold proportionate (aliquot) interests but not title to specific corporate property. The Court relied on prior decisions (including Asset Privatization Trust v. Court of Appeals and Evangelista v. Santos) holding that stockholders cannot directly claim corporate damages for their own benefit because that would amount to appropriation of corporate assets before dissolution and liquidation.
Court’s Analysis and Application to the Facts
The Supreme Court found no dispute that the levied properties belonged to Arc Cuisine, Inc., a juridical person distinct from the Cuencas and Tayactac. The damages arising from the levy therefore accrued to the corporation, not to its stockholders. Because Arc Cuisine, Inc. was not joined in the action—neither as plaintiff nor as intervenor
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Case Caption, Source and Decision
- Citation: 705 Phil. 441, First Division, G.R. No. 173297, March 06, 2013.
- Parties: Stronghold Insurance Company, Inc. (petitioner) v. Tomas Cuenca, Marcelina Cuenca, Milagros Cuenca, Bramie T. Tayactac, and Manuel D. Marañon, Jr. (respondents).
- Opinion: Decision penned by Justice Bersamin; concurred in by Justices Sereno (C.J.), Leonardo-De Castro, Villarama, Jr., and Reyes.
- Procedural posture at Supreme Court: Petition for review on certiorari by Stronghold Insurance from the Court of Appeals decision in CA-G.R. CV No. 79145 (January 31, 2006) which affirmed an April 28, 2003 Regional Trial Court judgment. The Supreme Court granted the petition, reversed and set aside the Court of Appeals decision, and made no pronouncement on costs.
Factual Background (Antecedents)
- Origin of suit: On January 19, 1998, Manuel D. Marañon, Jr. filed Civil Case No. 98-023 in the Regional Trial Court (RTC), Parañaque City, for collection of a sum of money and damages, and applied for issuance of a writ of preliminary attachment.
- RTC condition for issuance: On January 26, 1998 the RTC granted the application conditioned upon posting of a bond in the amount of ₱1,000,000.00 executed in favor of the Cuencas.
- Complaint amended: Less than a month after initial filing Marañon amended the complaint to implead Bramie T. Tayactac as defendant.
- Posting of bond: On February 11, 1998 Marañon posted SICI Bond No. 68427 JCL (4) No. 02370 in the amount of ₱1,000,000.00 issued by Stronghold Insurance.
- Issuance and service of writ: The RTC issued the writ of preliminary attachment on February 13, 1998 (two days after bond posting). The sheriff served the writ, summons and complaint copies on the Cuencas the same day; Tayactac was served on February 16, 1998.
- Levy on corporate properties: On February 16 and 17, 1998 the sheriff levied upon equipment, supplies, materials and various other personal property belonging to Arc Cuisine, Inc., located in the leased corporate office-cum-commissary/kitchen of the corporation.
- Sheriff’s follow-up and safekeeping: On February 19, 1998 the sheriff submitted his report and filed an ex parte motion to transfer the levied properties to a safe place. The RTC granted this ex parte motion on February 23, 1998.
- Motion to quash/dismiss by defendants: On February 25, 1998 the Cuencas and Tayactac filed a Motion to Dismiss and to Quash Writ of Preliminary Attachment asserting (1) the action involved intra-corporate matters falling within the original and exclusive jurisdiction of the Securities and Exchange Commission (SEC), and (2) another action was pending in the SEC and a criminal complaint was pending in the Office of the City Prosecutor of Parañaque City.
- Opposition and RTC rulings: Marañon opposed (filed March 5, 1998). The RTC denied the Motion to Dismiss and to Quash on August 10, 1998 and denied reconsideration on September 16, 1998.
- Court of Appeals (first petition): The Cuencas and Tayactac filed a petition for certiorari and prohibition with the Court of Appeals (C.A.-G.R. SP No. 49288) on October 14, 1998, challenging the RTC’s August 10 and September 16, 1998 orders as grave abuse of discretion amounting to lack or excess of jurisdiction.
- CA’s first disposition (June 16, 1999): The Court of Appeals granted the petition, annulled and set aside the challenged RTC orders, and dismissed the amended complaint in Civil Case No. 98-023 for lack of jurisdiction.
- CA remand for damages (December 27, 1999): Despite dismissal of the complaint for lack of jurisdiction, the Court of Appeals remanded to the RTC for hearing and resolution of the Cuencas’ and Tayactac’s claim for damages sustained from enforcement of the writ of preliminary attachment.
- Sheriff’s report re: missing property (February 17, 2000): The sheriff reported that the properties previously recommended for safekeeping by Marañon at a warehouse were gone; the warehouse was tenanted by a new lessee and the properties were missing; information suggested the properties were seen at Contias Pastry & Bake Shop owned by Marañon in BF Homes, Parañaque.
- Motion for delivery and damages: On April 6, 2000 the Cuencas and Tayactac filed a Motion to Require Sheriff to Deliver Attached Properties and to Set Case for Hearing, praying (1) immediate delivery of the attached properties; (2) Stronghold Insurance be directed to pay damages in accordance with the surety bond of ₱1,000,000.00; (3) Marañon be held personally liable considering insufficiency of the bond; (4) award of ₱1,721,557.20 as actual damages (value of lost attached properties) because the claimants would turn that amount over to Arc Cuisine, Inc.; and (5) awards of ₱200,000.00 moral damages, ₱100,000.00 exemplary damages, and ₱100,000.00 attorney’s fees.
- Pleadings by parties: Stronghold Insurance filed answer and opposition (April 13, 2000). The Cuencas and Tayactac filed reply (May 5, 2000). Marañon filed comment/opposition (May 25, 2000) asserting 50% ownership interest in Arc Cuisine, Inc. and claiming only ₱100,000.00 should be returned to the Cuencas and Tayactac as his share.
- RTC order to surrender: On June 5, 2000 the RTC commanded Marañon to surrender all attached properties to the RTC via the sheriff within 10 days and directed the Cuencas and Tayactac to submit affidavits supporting their damages claim.
- Manifestation and compliance: On June 6, 2000 the Cuencas and Tayactac submitted their Manifestation and Compliance.
Trial Court (RTC) Ruling (April 28, 2003)
- Judgment: After trial, the RTC held Marañon and Stronghold Insurance jointly and solidarily liable to the Cuencas and Tayactac for damages arising from the unlawful and wrongful issuance of the writ of attachment.
- Monetary awards ordered:
- ₱1,000,000.00 representing the amount of the bond;
- ₱100,000.00 as moral damages;
- ₱50,000.00 as exemplary damages;
- ₱100,000.00 as attorney’s fees;
- Costs of suit.
- RTC’s factual and legal basis (as stated in judgment): The defendants (Cuencas and Tayactac) were found by preponderance to be entitled to damages because of the unlawful and wrongful issuance of the writ of attachment.
Court of Appeals Ruling and Appeal (CA-G.R. CV No. 79145)
- Appellant: Only Stronghold Insurance appealed to the Court of Appeals.
- Assigned errors by Stronghold Insurance to the RTC:
- Error I: Lower court erred in ordering surety-appellant to pay ₱1,000,000.00 (bond amount) and other damages to the defendants.
- Error II: Lower court erred in not taking into account the indemnity agreement executed by Manuel D. Marañon, Jr. in favor of Stronghold which bound him to indemnify Stronghold of whatever amount it may be held liable for on account of the attachment bond.
- CA disposition (January 31, 2006):