Case Summary (G.R. No. L-23851)
Factual Background
The Corporation is a non-stock civic and athletic corporation authorized to issue a maximum of four hundred membership fee certificates, all issued as early as December 30, 1939. The membership fee certificate at issue was originally issued in the name of "Swan, Culbertson and Fritz" as membership fee certificate 201. Bienvenido A. Tan held membership fee certificate 201-serial no. 1199, issued July 24, 1950 pursuant to an assignment in his favor. Lee E. Won claimed entitlement to the same membership fee certificate by virtue of the decision in civil case 26044 in the Court of First Instance of Manila and by virtue of membership fee certificate 201-serial no. 1478, issued October 17, 1963 by the deputy clerk of court pursuant to the CFI Manila order of September 23, 1963. The Corporation alleged no proprietary interest in the certificate and alleged inability to determine which defendant was the lawful owner; it also alleged that the deputy clerk's issuance of serial no. 1478 contravened its by-laws because the outstanding certificate was not surrendered and cancelled before issuance to the transferee.
Trial Court Proceedings
The Corporation filed an amended and supplemental complaint seeking an order compelling the defendants to interplead and a declaration of the lawful owner of membership fee certificate 201 together with cancellation of certificate 201-serial no. 1478. The defendants filed separate motions to dismiss on grounds of res judicata, failure to state a cause of action, and prescription (the latter by Tan). The Court of First Instance of Rizal found the grounds of bar by prior judgment and failure to state a cause of action well taken and dismissed the complaint with costs against the Corporation.
The Parties' Contentions
The Corporation appealed and contended that its allegations presented a valid ground for an action of interpleader, that civil case 26044 of the CFI of Manila did not produce identity of parties, subject-matter, or cause of action so as to bar the present action by res judicata, and that the trial court should have compelled the appellees to interplead. The appellees maintained that the trial court correctly dismissed the complaint because the present suit effectively sought to reopen civil case 26044 and was barred by res judicata; they principally relied on the bar of a prior judgment and asserted that the interpleader remedy was untimely.
Legal Issue
The determinative issue concerned the propriety and timeliness of the remedy of interpleader under the circumstances: whether the Corporation, having been sued and having suffered final judgment against it in favor of one claimant, could thereafter invoke interpleader to compel that successful claimant to litigate his title anew against other claimants, or whether such an application was barred by the prior judgment and by laches.
Ruling of the Court
The Court affirmed the trial court's order of May 28, 1964 dismissing the Corporation's complaint, with costs against the appellant. The opinion was delivered by Castro, C.J., and the opinion noted concurrence by Justices Teehankee, Makasiar, Antonio, Esguerra, Munoz Palma, Aquino, and Concepcion, Jr.; Justices Barredo and Martin took no part; Justice Fernando was on official leave.
Legal Basis and Reasoning
The Court reviewed the nature and purpose of the interpleader remedy as set forth in Section 1, Rule 63, Revised Rules of Court and in Section 120, Code of Civil Procedure: the remedy protects a stakeholder not against double liability but against double vexation by requiring rival claimants to litigate among themselves. The Court emphasized the stakeholder's duty to exercise reasonable diligence to bring contending claimants into court and that an interpleader suit must be filed within a reasonable time after a dispute arises; failure to do so may give rise to laches or undue delay. The Court found that the Corporation had notice of the conflicting claims before the rendition of final judgment in civil case 26044 and had, in fact, defended that suit rather than implead Tan. Because the Corporation allowed the Manila litigation to proceed to final judgment against it and failed to implead the adverse claimant in that suit, the Corporation had become independently liable to the successful claimant. The Court applied established authority stating that an interpleader comes too late when filed after judgment has been rendered in favor of one of the claimants, especially where the stakeholder had prior notice and opportunity to implead the other claimant. The Court cited decisions to the same effect, including Royal Neighbors of America v. Lowary, United Producers Pipe Line Company v. Britton, and American Surety Company of New York v. Brim, to support the proposition that a successful litigant may not be impleaded later by a def
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Case Syllabus (G.R. No. L-23851)
Parties and Procedural Posture
- The plaintiff-appellant was WACK WACK GOLF & COUNTRY CLUB, INC..
- The defendants-appellees were LEE E. WON alias RAMON LEE and BIENVENIDO A. TAN.
- The appeal arose from an order of the Court of First Instance of Rizal in civil case 7656 dismissing the plaintiff-appellant's complaint.
- The Supreme Court heard the appeal En Banc with Chief Justice Castro delivering the decision.
Key Factual Allegations
- The controversy involved ownership of membership fee certificate 201 originally issued in the name of "Swan, Culbertson and Fritz".
- The appellant alleged that membership fee certificate 201-serial no. 1199 had been issued to Bienvenido A. Tan on July 24, 1950 by assignment.
- The appellant alleged that membership fee certificate 201-serial no. 1478 had been issued to Lee E. Won on October 17, 1963 by the deputy clerk of court of the CFI of Manila pursuant to an order in civil case 26044.
- The appellant alleged that it claimed no interest in the certificate but could not determine which defendant was the lawful owner and could not lawfully issue two certificates for the same membership.
- The appellant alleged that the certificate issued by the deputy clerk was void for failure to comply with the Corporation's by-laws requiring surrender and cancellation of the outstanding certificate.
Procedural History
- The appellant filed an amended and supplemental complaint on October 23, 1963 seeking an order to compel interpleader and a declaration of lawful ownership.
- The appellees moved to dismiss the complaint on grounds of res judicata, failure to state a cause of action, and prescription, with prescription urged only by Bienvenido A. Tan.
- The trial court dismissed the complaint on the grounds of prior judgment and failure to state a cause of action and assessed costs against the appellant.
- The appealed order of May 28, 1964 dismissing the complaint was the subject of this appeal.
Issues Presented
- Whether the appellant's allegations constituted a proper basis for an action of interpleader.
- Whether the decision in civil case 26044 of the CFI of Manila operated as res judicata and barred the interpleader action.
- Whether the appellant acted with the requisite diligence to invoke the remedy of interpleader and whether its claim was barred by laches or undue delay.
Parties' Contentions
- The appellant contended that there were conflicting claims to the certificate and that no identity of parties, subject-matter, or cause of action