FBDC vs.

YLLAS LENDING CORP 2.  FBDC should have filed a separate complaint against
respondents instead of filing a motion to intervene. (The trial
November 11, 2010 ~ vbdiaz
court quoted Bayer Phils. v. Agana )

FBDC vs. YLLAS LENDING CORP

FBDC filed a MR, which was denied. Hence this petition to
review pure questions of law.
G.R. No. 158997

ISSUE: 
October 6, 2008

1. WON FBDC has no right of ownership over the subject

FACTS: FORT BONIFACIO DEVELOPMENT CORP. ( FBDC) 
properties because Section 22 of the contract of lease is void
executed a lease contract in favor of Tirreno, Inc. over a unit
for being a pledge and a pactum commissorium;
at the Bonifacio Global City in Taguig, Metro Manila. The
parties had the lease contract notarized on the day of its
2. WON the proper remedy of FBDC as third party claimant
execution. Tirreno used the leased premises for Savoia
over the subject properties is to file a separate action; and
Ristorante and La Strega Bar.

3. WON the trial court is should have required respondents to

Due to Tirreno’s alleged failure to settle its outstanding
file an indemnity bond for FBDC’s protection
obligations, FBDC entered and occupied the leased premises.
FBDC also appropriated the equipment and properties left by
4. WON FBDC can terminate the lease contract without
Tirreno pursuant to Section 22 of their Contract of Lease as
judicial intervention
partial payment for Tirreno’s outstanding obligations.

HELD: Petition granted
In 2002, Yllas Lending Corporation caused the sheriff of the
trial court to serve an alias writ of seizure against FBDC.
1.NO. Respondents, as well as the trial court, contend that
FBDC found out that in 2001, respondents filed a complaint
Section 22 constitutes a pactum commissorium, a void
for Foreclosure of Chattel Mortgage with Replevin, against
stipulation in a pledge contract. FBDC, on the other hand,
Tirreno, et al. In their complaint, Yllas alleged that they lent a
states that Section 22 is merely a dacion en pago.
sum of money to Tirreno et al and in 2000 executed a Deed of
Chattel Mortgage in favor of Yllas as security for the loan. The
Section 22 of the Lease Contract between FBDC and Terrano
Chattel Mortgage covered properties of the Tirreno’s
states:
restaurant and bar.

Section 22. Lien on the Properties of the Lessee

On the same day, FBDC served on the sheriff an affidavit of
title and third party claim.
Upon the termination of this Contract or the expiration of the
Lease Period without the rentals, charges and/or damages, if
Despite FBDC’s service upon him of an affidavit of title and
any, being fully paid or settled, the LESSOR shall have the
third party claim, the sheriff proceeded with the seizure of
right to retain possession of the properties of the LESSEE
certain items from FBDC’s premises. The sheriff delivered the
used or situated in the Leased Premises and the LESSEE
seized properties to Yllas.
hereby authorizes the LESSOR to offset the prevailing value
thereof as appraised by the LESSOR against any unpaid
FBDC questioned the propriety of the seizure and delivery of
rentals, charges and/or damages. If the LESSOR does not
the properties to respondents without an indemnity bond
want to use said properties, it may instead sell the same to
before the trial court, which decided against FBDC. It stated
third parties and apply the proceeds thereof against any
that:
unpaid rentals, charges and/or damages.

1.  Section 22 of the lease contract between FBDC and

Articles 2085 and 2093 of the Civil Code enumerate the
Tirreno is void under Article 2088 of the Civil Code.
requisites essential to a contract of pledge:
(1) the pledge is constituted to secure the fulfillment of a is allowed to file. A third party claimant under Section 16 of
principal obligation; Rule 39 (Execution, Satisfaction and Effect of Judgments)17 of
the 1997 Rules of Civil Procedure may vindicate his claim to
(2) the pledgor is the absolute owner of the thing pledged; the property in a separate action, because intervention is no
longer allowed as judgment has already been rendered. We
(3) the persons constituting the pledge have the free disposal allow FBDC’s intervention in the present case because FBDC
of their property or have legal authorization for the purpose; satisfied the requirements of Section 1, Rule 19 (Intervention)
and of the 1997 Rules of Civil Procedure, which reads as follows:

(4) the thing pledged is placed in the possession of the Section 1. Who may intervene. — A person who has a legal
creditor, or of a third person by common agreement. Article interest in the matter in litigation, or in the success of either
2088 of the Civil Code prohibits the creditor from of the parties, or an interest against both, or is so situated as
appropriating or disposing the things pledged, and any to be adversely affected by a distribution or other disposition
contrary stipulation is void. of property in the custody of the court or of an officer thereof
may, with leave of court, be allowed to intervene in the
Section 22, as worded, gives FBDC a means to collect action. The court shall consider whether or not the
payment from Tirreno in case of termination of the lease intervention will unduly delay or prejudice the adjudication of
contract or the expiration of the lease period and there are the rights of the original parties, and whether or not the
unpaid rentals, charges, or damages. The existence of a intervenor’s rights may be fully protected in a separate
contract of pledge, however, does not arise just because proceeding.
FBDC has means of collecting past due rent from Tirreno
other than direct payment. Although intervention is not mandatory, nothing in the Rules
proscribes intervention.
The fourth requisite, that the thing pledged is placed in
the possession of the creditor, is absent. There is non- 3.  YES. Pursuant to Section 14 of Rule 57, the sheriff is not
compliance with the fourth requisite even if Tirreno’s personal obligated to turn over to respondents the properties subject
properties are found in FBDC’s real property. Tirreno’s of this case in view of respondents’ failure to file a bond.
personal properties are in FBDC’s real property because of the
Contract of Lease, which gives Tirreno possession of the The bond in Section 14 of Rule 57 (proceedings where
personal properties. Since Section 22 is not a contract of property is claimed by third person) is different from the bond
pledge, there is no pactum commissorium. in Section 3 of the same rule (affidavit and bond).

On the other hand, Article 1245 of the Civil Code Under Section 14 of Rule 57, the purpose of the bond is to
defines dacion en pago, or dation in payment, as the indemnify the sheriff against any claim by the intervenor to
alienation of property to the creditor in satisfaction of a debt the property seized or for damages arising from such seizure,
in money. Philippine National Bank v. Pineda held that dation which the sheriff was making and for which the sheriff was
in payment requires delivery and transmission of ownership of directly responsible to the third party.
a thing owned by the debtor to the creditor as an accepted
equivalent of the performance of the obligation. There is no Section 3, Rule 57, on the other hand, refers to the
dation in payment when there is no transfer of ownership in attachment bond to assure the return of defendant’s personal
the creditor’s favor, as when the possession of the thing is property or the payment of damages to the defendant if the
merely given to the creditor by way of security. plaintiff’s action to recover possession of the same property
fails, in order to protect the plaintiff’s right of possession of
2.  NO. The Bayer ruling is inapplicable to the present case. said property, or prevent the defendant from destroying the
The third party in Bayer filed his claim during execution; in same during the pendency of the suit.
the present case, FBDC filed for intervention during the trial.
Because of the absence of the indemnity bond in the present
The timing of the filing of the third party claim is important case, FBDC may also hold the sheriff for damages for the
because the timing determines the remedies that a third party taking or keeping of the properties seized from FBDC.
4. YES. A lease contract may be terminated without judicial let alone be bound by the terms of the chattel mortgage
intervention. Consing v. Jamandre upheld the validity of a contract, simply because the mortgagee brings up an
contractually-stipulated termination clause: action for replevin.

This stipulation is in the nature of a resolutory condition, for FBDC exercised its lien to Tirreno’s properties even before
upon the exercise by the [lessor] of his right to take respondents and Tirreno executed their Deed of Chattel
possession of the leased property, the contract is deemed Mortgage. FBDC is adversely affected by the disposition of the
terminated. This kind of contractual stipulation is not illegal, properties seized by the sheriff. Moreover, FBDC’s
there being nothing in the law proscribing such kind of intervention in the present case will result in a complete
agreement. adjudication of the issues brought about by Tirreno’s creation
of multiple liens on the same properties and subsequent
xxx default in its obligations.

Judicial permission to cancel the agreement was not, Ching v. CA, 423 SCRA 356, February 23, 2004
therefore necessary because of the express stipulation in the FACTS: The Philippine Blooming Mills Company, Inc. (PBMCI)
contract of [lease] that the [lessor], in case of failure of the obtained a loan of P9,000,000 from the Allied Banking
[lessee] to comply with the terms and conditions thereof, can Corporation (ABC). As an added security for the said loan,
take-over the possession of the leased premises, thereby Alfredo Ching, together with Emilio Tadeo and Chung Kiat
cancelling the contract of sub-lease. Resort to judicial action Hua, executed a continuing guaranty with the ABC binding
is necessary only in the absence of a special provision them to jointly and severally guarantee the payment of all the
granting the power of cancellation.14 PBMCI obligations owing to the ABC. The PBMCI defaulted in
the payment of all its loans.
A lease contract may contain a forfeiture clause. In the same
manner, we allow FBDC’s forfeiture of Tirreno’s properties in Hence, the ABC filed a complaint for sum of money with
the leased premises. By agreement between FBDC and prayer for a writ of preliminary attachment. Citing as one of
Tirreno, the properties are answerable for any unpaid rent or the grounds for the writ was the fraud defendants employed
charges at any termination of the lease. Such agreement is in incurring the obligations by representing themselves as
not contrary to law, morals, good customs, or public policy. having the financial capacity to pay the loan when in fact they
Forfeiture of the properties is the only security that FBDC may did not have such capacity. In the meantime, on July 26,
apply in case of Tirreno’s default in its obligations. 1983, the deputy sheriff of the trial court levied on
attachment the 100,000 common shares of Citycorp stocks in
NOTES: the name of Alfredo Ching.

1. A chattel mortgagee, unlike a pledgee, need not be in, nor On November 16, 1993, Encarnacion T. Ching, assisted by her
entitled to, the possession of the property, unless and until husband Alfredo Ching, filed a Motion to Set Aside the levy on
the mortgagor defaults and the mortgagee thereupon seeks attachment. She alleged inter alia that the 100,000 shares of
to foreclose thereon. Since the mortgagee’s right of stocks levied on by the sheriff were acquired by her and her
possession is conditioned upon the actual default which itself husband during their marriage out of conjugal funds after the
may be controverted, the inclusion of other parties, like the Citycorp Investment Philippines was established in 1974. She,
debtor or the mortgagor himself, may be required in order to likewise, alleged that being the wife of Alfredo Ching, she was
allow a full and conclusive determination of the case. When a third-party claimant entitled to file a motion for the release
the mortgagee seeks a replevin in order to effect the eventual of the properties. She attached therewith a copy of her
foreclosure of the mortgage, it is not only the existence of, marriage contract with Alfredo Ching.
but also the mortgagor’s default on, the chattel mortgage
that, among other things, can properly uphold the right to ISSUE: WON 100,000 shares of stocks may be levied on by
replevy the property. The burden to establish a valid the sheriff to answer for the loans guaranteed by petitioner
justification for that action lies with the plaintiff [- Alfredo Ching
mortgagee]. An adverse possessor, who is not the
mortgagor, cannot just be deprived of his possession, HELD: No. 
RATIO: The CA erred in holding that by executing a daughter, filed with RTC for Collection of Sum of
continuing guaranty and suretyship agreement with the Money and Damages with Prayer for Preliminary
private respondent for the payment of the PBMCI loans, the Attachment. She also attached to her complaint an
petitioner-husband was in the exercise of his profession, affidavit executed by Sy that petitioners were guilty
pursuing a legitimate business. of fraud in entering into the purchase agreement for
they never intended to pay the contract price, and
The shares of stocks are, thus, presumed to be the conjugal that, based on reliable information, they were about
partnership property of the petitioners. The private to move or dispose of their properties to defraud
respondent failed to adduce evidence that the petitioner- their creditors.
husband acquired the stocks with his exclusive money.  The RTC ordered for the properties of petitioners to
be levied and attached consisting of one parcel of
The appellate court erred in concluding that the conjugal land and four units of motor vehicle. Petitioners filed
partnership is liable for the said account of PBMCI. an Answer with counterclaim, Urgent Motion to
Article 121 provides: The conjugal partnership shall be liable Dissolve writ of Preliminary Attachment, and Claim
for: (1) All debts and obligations contracted by the husband against Surety Bond. The RTC, then, discharged from
for the benefit of the conjugal partnership, and those attachment the Toyota Ford Fierra, jeep, and
contracted by the wife, also for the same purpose, in the delivery van on humanitarian grounds. The CA later
cases where she may legally bind the partnership. on lifted the RTC Order of Attachment on the ground
that the complaint and affidavit only contain general
For the conjugal partnership to be liable for a liability that averments and failed to states particularly how fraud
should appertain to the husband alone, there must be a was committed by petitioners. The Motion for
showing that some advantages accrued to the spouses. Reconsideration was likewise denied. The SC also
denied Te’s Petition for Review on Certiorari for
having been filed late and for failure to show that a
In this case, the private respondent failed to prove that the reversible error was committed by the CA.
conjugal partnership of the petitioners was benefited by the  The RTC, however, apparently not informed of SCs
petitioner-husband’s act of executing a continuing guaranty decision, ruled in favor of herein respondents. On
and suretyship agreement with the private respondent for and their appeal with CA, Spouses Yu questioned only
in behalf of PBMCI. The contract of loan was between the that portion of the July 20, 1994 Decision where the
private respondent and the PBMCI, solely for the benefit of RTC declined to rule on their counterclaim for
the latter. No presumption can be inferred from the fact that damages. However, Spouses Yu did not dispute the
when the petitioner-husband entered into an accommodation specific monetary awards granted to respondent Te;
agreement or a contract of surety, the conjugal partnership and therefore, the same have become final and
would thereby be benefited. The private respondent was executory. The CA, while affirming RTCs decision in
burdened to establish that such benefit redounded to the toto, made a ruling on the counterclaim of Spouses
conjugal partnership. Yu by declaring that the latter had failed to adduce
sufficient evidence of their entitlement to damages.
SPOUSES YU vs NGO YET TE Hence, this petition.

Facts: Issue: Whether or not the appellate court erred in refusing to

award actual, moral and exemplary damages after it was
 Spouses Gregorio and Josefa Yu purchased from Ngo established by final judgment that the writ of attachment was
Yet Te bars of detergent soap worth P594,240.00 procured with no true ground for its issuance.
and issued to the latter three postdated checks as
payment. However, upon presentment of the checks Ruling:
at maturity, said checks were returned dishonored
and stamped “ACCOUNT CLOSED”. Respondent  NO.
demanded payment from petitioners, but they did  The SC also made mention on the contention of
not heed her demands. Respondent, through her respondent Te that regardless of the evidence
 presented by Spouses Yu, their counterclaim was counterclaim for damages. To merit an award of
correctly dismissed for failure to comply with the actual damages arising from a wrongful
procedure laid down in Section 20 of Rule 57. Te attachment, the attachment defendant must prove,
contends that as Visayan Surety was not notified of with the best evidence obtainable, the fact of loss or
the counterclaim, no judgment thereon could be injury suffered and the amount thereof. Such loss or
validly rendered. The Court said that such argument injury must be of the kind which is not only capable
was not only flawed as it is also specious. The of proof but must actually be proved with a
Visayan Surety, which issued the attachment bond, reasonable degree of certainty. As to its amount, the
was notified of the pre-trial conference to apprise it same must be measurable based on specific facts,
of a pending claim against its attachment bond. and not on guesswork or speculation. In particular, if
Visayan Surety received the notice on July 12, 1993 the claim for actual damages covers unrealized
as shown by a registry return receipt attached to the profits, the amount of unrealized profits must be
records. Moreover, even if it were true that Visayan established and supported by independent evidence
Surety was left in the proceedings a quo, such of the mean income of the business undertaking
omission is not fatal to the cause of Spouses Yu. In interrupted by the illegal seizure.
Malayan Insurance Company, Inc. v. Salas, we held  The SC also affirmed CAs finding that spouses Yu
that "x x x if the surety was not given notice when failed to prove their counterclaim of actual damages
the claim for damages against the principal in the by relying mainly on submission of used and unused
replevin bond was heard, then as a matter of ticket stubs and ticket sales for five (5) days. Thus,
procedural due process the surety is entitled to be Spouses Yu cannot complain that they were
heard when the judgment for damages against the unreasonably deprived of the use of the passenger
principal is sought to be enforced against the bus by reason of the subsequent wrongful
surety’s replevin bond." This remedy is applicable for attachment issued in Civil Case No. 4061-V-93. Nor
the procedures governing claims for damages on an can they also attribute to the wrongful attachment
attachment bond and on a replevin bond are the their failure to earn income or profit from the
same. operation of the passenger bus. The submitted basis
 Spouses Yu contended that they are entitled to their is too speculative and conjectural. No reports
counterclaim for damages as a matter of right after regarding the average actual profits and other
Te wrongfully caused the attachment of the evidence of profitability necessary to prove the
properties as it suggested that Te acted with malice. amount of actual damages were presented.
The SC ruled that the counterclaim disputed therein  As to moral and exemplary damages, to merit an
was not for moral damages and therefore, there was award thereof, it must be shown that the wrongful
no need to prove malice. In Lazatin v. Twaño, the attachment was obtained by the attachment plaintiff
Court laid down the rule that where there is wrongful with malice or bad faith, such as by appending a
attachment, the attachment defendant may recover false affidavit to his application. The SC did not grant
actual damages even without proof that the moral and exemplary damages. Based on the
attachment plaintiff acted in bad faith in obtaining foregoing testimony, it is not difficult to understand
the attachment. However, if it is alleged and why Te concluded that Spouses Yu never intended to
established that the attachment was not merely pay their obligation for they had available funds in
wrongful but also malicious, the attachment their bank but chose to transfer said funds instead of
defendant may recover moral damages and cover the checks they issued.
exemplary damages as well. Either way, the  Petitioners were, however, awarded temperate or
wrongfulness of the attachment does not warrant the moderate damages of P50,000 for pecuniary loss
automatic award of damages to the attachment when their properties were wrongfully seized.
defendant; the latter must first discharge the burden
of proving the nature and extent of the loss or injury CARLOS VS. SANDOVAL
incurred by reason of the wrongful attachment. G.R. No. 179922. December 16, 2008.
 The Court also held that petitioners are not relieved JUAN DE DIOS CARLOS, petitioner, vs.
of the burden of proving the basis of their FELICIDAD SANDOVAL, also known as FELICIDAD S. VDA. DE
CARLOS or FELICIDAD SANDOVAL CARLOS or FELICIDAD The First Division of the Six Parcels of Land
SANDOVAL VDA. DE CARLOS, and TEOFILO CARLOS  Spouses Felix B. Carlos and Felipa Elemia died intestate.
II, respondents. They left six parcels of land to their two sons, Teofilo
Carlos and Juan De Dios Carlos (petitioner of this case).
TOPICS AS PER OUTLINE  The first three parcels of land (Parcel Nos. 1, 2, and 3)
V. Marriage and Personal Relations between Spouses > G. were transferred to the name Teofilo while his dad was
Void Marriages > 2. Who Can Invoke Nullity still alive to avoid inheritance taxes.
V. Marriage and Personal Relations between Spouses > G.  Parcel No. 4 was registered in the name of Juan de Dios
Void Marriages > 4. Procedure in Actions for Declaration of Carlos.
Nullity > d. > A.M. No. 02-11-10-SC. March 4, 2003  When Teofilo died intestate in May 13, 1992, Lots 5 and 6
were immediately registered in the name of Teofilo’s
GENERAL FAQs wife, Felicidad and his son, Teofilo II (respondents of this
1. What is A.M. No. 02-11-10-SC? case).
Also known as the "Rule on Declaration of Absolute Nullity of
Void Marriages and Annulment of Voidable Marriages”, it is, as The Second Division of the Six Parcels of Land
the title suggests, a new Rule of the Supreme Court which  Sometime in 1994, Juan de Dios Carlos sued the Felicidad
shall govern petitions for declaration of absolute nullity of and Teofilo II (for reasons not stated in the case).
void marriages and annulment of voidable marriages under  On August 17, 1994, however, the parties signed an
the Family Code of the Philippines. The Rule which was dated approval of a compromise agreement acknowledging
on March 04, 2003 took effect on March 15, 2003 following its their respective shares in the proceeds from the sale of a
publication in a newspaper of general circulation not later portion of the first parcel of land.
than March 7, 2003.  On September 17, 1994, the parties executed a deed of
extrajudicial partition, dividing the rest of the first parcel
2. Who can invoke nullity? of land.
Under the new Rule, a petition for declaration of absolute  The second parcel of land was also divided in a
nullity of void marriage may be filed solely by the husband or supplemental compromise agreement executed on
wife. Exceptions: (1) Nullity of marriage cases commenced August 17, 1994.
before the effectivity of A.M. No. 02-11-10-SC; and (2)  Two more contracts were signed dividing the third and
Marriages celebrated during the effectivity of the Civil Code. fourth parcels of land.
 The fifth and sixth parcels were never divided after Juan
IMPORTANT CONCEPTS de Dios Carlo commenced a civil action against Felicidad
Confession of judgment—a legal term that refers to a type and Teofilo II.
of contract (or a clause with such a provision) in which a
party agrees to let the other party enter a judgment against Juan de Dios Carlos’ Civil Action Against Felicidad and Teofilo
him or her. II
Summary judgment—a procedural device used during civil  On August 1995, Juan de Dios Carlos commenced a civil
litigation to promptly and expeditiously dispose of a case action against Felicidad and Teofilo II asserting that:
without a trial. It is used when there is no dispute as to the (a.) that the marriage between his late brother Teofilo
material facts of the case and a party is entitled to judgment and respondent Felicidad was a nullity in view of the
as a matter of law. absence of the required marriage license (nullity of
Judgment on the pleadings—a judgment rendered by the marriage).
court prior to a verdict because no material issue of fact (b.) that his deceased brother was neither the natural
exists and one party or the other is entitled to a judgment as nor the adoptive father of respondent Teofilo Carlos
a matter of law1. II (status of a child).
 He also sought:
FACTS (a.) the avoidance of the contracts he entered into with
respondent Felicidad with respect to the subject real
1
Matter of law—That which is determined or ascertained through the use properties (recovery of property).
of statutes, rules, court decisions, and interpretations of legal principles
 (b.) the cancellation of the certificates of title issued in Felicidad narrated that co-respondent Teofilo II is her
the name of respondents. He argued that the child with Teofilo.5
properties covered by such certificates of title,  Subsequently, the Office of the City Prosecutor of
including the sums received by respondents as Muntinlupa submitted to the trial court its report and
proceeds, should be reconveyed to him manifestation, discounting the possibility of collusion
(reconveyance). between the parties.
(c.) indemnification as and by way of moral and
exemplary damages, attorney's fees, litigation The RTC Ruling
expenses, and costs of suit (sum of money and  The Motion for Summary Judgment was denied. Juan de
damages) Dios Carlos’ Counter-Motion for Summary Judgment was
granted and the summary judgment is rendered in favor
The Answer of Felicidad and Teofilo II of Juan de Dios Carlos in saying, inter alia, that:
 On October 16, 1995, Felicidad and Teofilo II submitted (a.) the marriage between Felicidad and Teofilo is null
their answer. They denied the material averments of Juan and void
de Dios Carlos' complaint. Felicidad and Teofilo II (b.) Teofilo II is not the natural, illegitimate, or legally
contended that the dearth of details regarding the adopted child of the late Teofilo E. Carlos.
requisite marriage license did not invalidate Felicidad's  Dissatisfied, respondents appealed to the CA. In the
marriage to Teofilo. appeal, respondents argued, inter alia, that the trial court
 Respondents also declared that Teofilo II was the acted without or in excess of jurisdiction in rendering
illegitimate child of the deceased Teofilo Carlos with summary judgment annulling the marriage of Teofilo, Sr.
another woman. and Felicidad and in declaring Teofilo II as not an
 On the grounds of lack of cause of action and lack of illegitimate child of Teofilo, Sr.
jurisdiction over the subject matter, respondents also
prayed for the dismissal of the case before the trial court. The CA Ruling
They also asked that their counterclaims for moral and  On October 15, 2002, the CA reversed and set aside the
exemplary damages, as well as attorney's fees, be RTC ruling, disposing that the summary judgment
granted. appealed from is REVERSED and SET ASIDE and in lieu
thereof, a new one is entered REMANDING2 the case to
The Summary Judgment the court of origin for further proceedings.
 However, before the parties could even proceed to pre-  On November 22, 2006, Juan de Dios Carlos moved for
trial, respondents Felicidad and Teofilo II moved for reconsideration and for the inhibition of the ponente,
summary judgment. Attached to the motion was the Justice Rebecca De Guia-Salvador. The CA denied the
affidavit of the justice of the peace who solemnized the twin motions. Thus, a petition before the SC was filed.
marriage. Respondents also submitted the Certificate of
Live Birth of respondent Teofilo II. In the certificate, the ISSUES
late Teofilo Carlos and respondent Felicidad were 1. WON a marriage may be declared void ab
designated as parents. initio through a judgment on the pleadings or a
 On January 5, 1996, petitioner opposed the motion for summary judgment and without the benefit of a trial.
summary judgment on the ground of irregularity of the 2. WON a person who is not a spouse could bring the
contract evidencing the marriage. In the same breath, action for nullity of marriage.
petitioner lodged his own motion for summary judgment.
Petitioner presented a certification from the Local Civil HELD
Registrar of Calumpit, Bulacan, certifying that there is no 1. NO, a marriage may NOT be declared void ab
record of birth of respondent Teofilo II. initio through a judgment on the pleadings or a
 Petitioner also incorporated in the counter-motion for summary judgment and without the benefit of a trial.
summary judgment the testimony of respondent Felicidad 2. NO, a person who is not a spouse could NOT bring
in another case. Said testimony was made in Civil Case the action for nullity of marriage.
No. 89-2384, entitled Carlos v. Gorospe, before the RTC
2
Branch 255, Las Piñas. In her testimony, respondent When an appellate court sends an appealed case back to the trial
court for further action, the case is said to be remanded.
 judgment, or confession of
RULING judgment shall be allowed.”
I. The grounds for declaration of absolute nullity of  Likewise instructive is SC’s pronouncement
marriage must be proved. Neither judgment on in Republic v. Sandiganbayan.13 In that case, the SC
the pleadings nor summary judgment is allowed. excluded actions for nullity or annulment of marriage
So is confession of judgment disallowed. from the application of summary judgments:
II. A petition for declaration of absolute nullity of "rescinding from the
void marriage may be filed solely by the foregoing discussion, save for
husband or wife. Exceptions: (1) Nullity of annulment of marriage or
marriage cases commenced before the declaration of its nullity or for
effectivity of A.M. No. 02-11-10-SC; and (2) legal separation, summary
Marriages celebrated during the effectivity of the judgment is applicable to all
Civil Code. kinds of actions. ”
III. The case must be remanded to determine  By issuing said summary judgment, the trial court
whether or not petitioner is a real-party-in- has divested the State of its lawful right and duty to
interest to seek the declaration of nullity of the intervene in the case
marriage in controversy.  Only the active participation of the public prosecutor
IV. Remand of the case regarding the question of or the Solicitor General will ensure that the interest
filiation of respondent Teofilo II is proper and in of the State is represented and protected in
order. There is a need to vacate the disposition proceedings for declaration of nullity of marriages by
of the trial court as to the other causes of action preventing the fabrication or suppression of evidence
before it.
2. On Ruling II
RATIO  Under the Rule on Declaration of Absolute
Nullity of Void Marriages and Annulment of
1. On Ruling I Voidable Marriages, the petition for declaration of
 With the advent of A.M. No. 02-11-10-SC, known as absolute nullity of marriage may not be filed by
"Rule on Declaration of Absolute Nullity of Void any party outside of the marriage. The Rule
Marriages and Annulment of Voidable Marriages," the made it exclusively a right of the spouses by stating:
question on the application of summary judgments SEC. 2. Petition for
or even judgment on the pleadings in cases of nullity declaration of
or annulment of marriage has been stamped with absolute nullity of
clarity. The significant principle laid down by the said void marriages.
Rule, which took effect on March 15, 2003  is found 12
-Who may file. - A
in Section 17, viz.: petition for
“SEC. 17. Trial. - (1) The declaration of
presiding judge shall personally absolute nullity of
conduct the trial of the case. No void marriage may
delegation of evidence to a be filed solely by
commissioner shall be allowed the husband or the
except as to matters involving wife.
property relations of the  This rule should be read and contrasted with NIÑAL
spouses. vs. BAYADOG where any proper interested party may
(2) The grounds for attack a void marriage after a spouses’ death.
declaration of absolute nullity  Only an aggrieved or injured spouse may file a
or annulment of marriage petition for annulment of voidable marriages
must be proved. No judgment or declaration of absolute nullity of void marriages.
on the pleadings, summary Such petition cannot be filed by compulsory or
intestate heirs of the spouses or by the State. The
 Committee is of the belief that they do not have a petitioner's bare allegation that respondent
legal right to file the petition. Compulsory or Teofilo II was adopted from an indigent couple is
intestate heirs have only inchoate (partial) rights insufficient to support a total forfeiture of rights
prior to the death of their predecessor, and, hence, arising from his putative filiation.
can only question the validity of the marriage of the  However, the SC is not inclined to support its
spouses upon the death of a spouse in a proceeding pronouncement that the declaration of
for the settlement of the estate of the deceased respondent Felicidad as to the illegitimate
spouse filed in the regular courts. On the other hand, filiation of respondent Teofilo II is more credible.
the concern of the State is to preserve marriage and For the guidance of the appellate court, such
not to seek its dissolution. declaration of respondent Felicidad should not be
 A.M. No. 02-11-10-SC covers marriages under the afforded credence. The CA is reminded of the
Family Code of the Philippines, and is prospective in guaranty provided by Article 167 of the Family
its application. Code to protect the status of legitimacy of a
 The marriage having been solemnized prior to the child,
effectivity of the Family Code, the applicable law is
the Civil Code which was the law in effect at the time DISPOSITIVE PORTION
of its celebration. But the Civil Code is silent as to “WHEREFORE, the appealed Decision is MODIFIED as follows:
who may bring an action to declare the marriage 1. The case is REMANDED to the Regional Trial Court
void. Does this mean that any person can bring an in regard to the action on the status and filiation of
action for the declaration of nullity of marriage? respondent Teofilo Carlos II and the validity or nullity
 True, under the New Civil Code which is the law in of marriage between respondent Felicidad Sandoval
force at the time the respondents were married, or and the late Teofilo Carlos;
even in the Family Code, there is no specific 2. If Teofilo Carlos II is proven to be the legitimate,
provision as to who can file a petition to declare the or illegitimate, or legally adopted son of the late
nullity of marriage; however, only a party who can Teofilo Carlos, the RTC is
demonstrate "proper interest" can file the same. A strictly INSTRUCTED to DISMISS the action for
petition to declare the nullity of marriage, like any nullity of marriage for lack of cause of action;
other actions, must be prosecuted or defended in 3. The disposition of the RTC in Nos. 1 to 8 of
the name of the real party-in-interestand must be the fallo of its decision is VACATED AND SET ASIDE.
based on a cause of action. Thus, in Niñal v. The Regional Trial Court is ORDERED to conduct trial on the
Badayog, the Court held that the children have the merits with dispatch and to give this case priority in its
personality to file the petition to declare the nullity of calendar.”
marriage of their deceased father to their stepmother
as it affects their successional rights.
Vicente CHUIDIAN V. SANDIGANBAYAN and the
3. On Ruling III Republic
 The Court finds that a remand of the case for
trial on the merits to determine the validity or G.R. No. 1339941 | JANUARY 19, 2001

nullity of the subject marriage is called for. But

the RTC is strictly instructed to dismiss the (modes of quashal of the writ of attachment)

nullity of marriage case for lack of cause of

action if it is proven by evidence that FACTS:

Teofilo II is a legitimate, illegitimate, or

legally adopted son of Teofilo Carlos, the
deceased brother of petitioner

4. On Ruling IV
 The SC agrees with the CA that without trial on
the merits having been conducted in the case,
In September 1980, Chuidian allegedly a dummy of Ferdinand compelled by the Marcos administration to agree to the terms
and Imelda Marcos, was able to obtain, allegedly under false of the settlement; (b) Chuidian blackmailed Marcos into
pretenses, a loan guarantee from Philguarantee Corp., the pursuing the settlement agreement by threatening to expose
BOI and the Central Bank, in favor of the Asian Reliability Co. the fact that the Marcoses made investments in Chuidian’s
Inc. (ARCI). ARCI, 98% of which was allegedly owned by American enterprises; and (c) the Aquino administration had
Chuidian, was granted a loan guarantee of US $25M for the ordered Philguarantee not to make further payments on the
establishment of 5 inter-related projects in the country.  L/C to Chuidian.  However, the Californian court concluded
that Philguarantee was not able to sufficiently show that the
However, Chuidian used the same in investing in corporations settlement should be set aside. On appeal, the CA of the
operating in the US. ARCI then defaulted in the payments of State of California affirmed the judgment of the Superior
the loan, compelling Philguarantee to undertake payments for Court denying Philguarantee’s motion.
the same. Philguarantee sued Chuidian before a Californian
court, charging him of violating the terms of the loan, Chuidian filed before the California Central District Court, an
defaulting in payments and misusing the proceeds for his action against PNB seeking to compel the latter to pay the
personal benefit. Chuidian claimed that he himself was a proceeds of the L/C. Philguarantee intervened in said action,
victim of the systematic plunder perpetrated by the Marcoses. raising the same issues and arguments it had earlier raised in
the action before the Santa Clara Superior Court, alleging that
On November 1985, Philguarantee entered into a compromise PNB was excused from making payments on the L/C since the
agreement with Chuidian whereby Chuidian shall assign and settlement was void due to illegality, duress and fraud.
surrender title to all his companies in favor of the Phil.
Gov’t.  In return, Philguarantee shall absolve Chuidian from The Federal Court rendered judgment ruling:  (1) in favor of
all civil and criminal liability concerning the payments PNB excusing the said bank from making payment on the L/C;
Philguarantee had made on Chuidian’s defaulted loans. It was and (2) in Chuidian’s favor by denying intervenor
further stipulated that the Phil. government shall pay Philguarantee’s action to set aside the settlement agreement.
Chuidian the amount of US $5.3M. Chuidian received the
1st two installments of the payment. The remaining balance of
US $4.6M was to be paid through an irrevocable Letter of
Credit (L/C) from which Chuidian would draw US $100k
monthly.
Meanwhile a Deed of Transfer was executed between then
Sec. of Finance and then PNB President Edgardo Espiritu, to
facilitate the rehabilitation of PNB. Thus, the gov’t assumed all
liabilities of PNB including the L/C listed in favor of Chuidian in
the amount of US $4.4M
With the advent of the Aquino administration, the newly-
established PCGG exerted earnest efforts to search and
recover properties and assets suspected as having been
illegally acquired by the Marcoses, their relatives and
cronies.Chuidian was among those whose assets were
On July 1987, the gov’t filed before the Sandiganbayan a civil
sequestered by the PCGG.  The PNB was directed to place the
case against the Marcos spouses, several gov’t officials, and a
letters of credit under its custody, in behalf of the PCGG. 
number of individuals known to be cronies of the Marcoses,
including Chuidian, seeking the reconveyance, accounting and
restitution of all forms of wealth allegedly procured illegally by
the defendants. 

In the meantime, Philguarantee filed a motion before the While the case was pending, the Republic filed a motion for
Superior Court of California, seeking to vacate the stipulated issuance of a writ of attachment over the L/C in the name of
judgment containing the settlement between Philguarantee Chuidian, citing as grounds therefor the following:
and Chuidian on the grounds that: (a) Philguarantee was
(1) Chuidian embezzled or fraudulently misapplied the funds (5) Chuidian’s absence from the country does not necessarily
of ARCI acting in a fiduciary capacity, justifying issuance of make him a non-resident; and
the writ under Section 1(b), Rule 57 of the Rules of Court;
(6) Service of summons by publication cannot be used to
(2) The writ is justified under Section 1(d) of the same rule as justify the issuance of the writ since Chuidian had already
Chuidian is guilty of fraud in contracting the debt or incurring submitted to the jurisdiction of the Court by way of a motion
the obligation upon which the action was brought, or that he to lift the freeze order filed through his counsel.
concealed or disposed of the property that is the subject of
the action;

(3) Chuidian has removed or disposed of his property with the

intent of defrauding the plaintiff as justified under Section
On July 1993, the Sandiganbayan ordered the issuance of a
1(c) of Rule 57; and
writ of attachment against the L/C as security for the
satisfaction of judgment. The Sandiganbayan ruled:
(4) Chuidian is residing out of the country or one on whom
summons may be served by publication, which justifies the
1) Although there was no separate was attached to the
writ of attachment prayed for under Section 1(e) of the same
motion, the motion itself contained all the requisites of an
rule.
affidavit, and the verification thereof is deemed a substantial
compliance of Rule 57, Section 3.
The Republic also averred that should the action brought by
Chuidian before the U.S. District Court of California to compel
2) Fiduciary relationship exists between Chuidian and ARCI
payment of the L/C prosper, inspite of the sequestration of
but not with the Republic. Hence, the Republic cannot invoke
the said L/C, Chuidian can ask the said foreign court to
Sec. 1(b) of Rule 57.
compel the PNB Los Angeles branch to pay the proceeds of
the L/C.  Eventually, Philguarantee will be made to shoulder
3) There was a prima facie case of fraud committed by
the expense resulting in further damage to the
Chuidian, justifying the issuance of the writ of attachment.  
government.  Thus, there was an urgent need for the writ of
attachment to place the L/C under the custody of the
4) The Sandiganbayan also adopted the Republic’s position
Sandiganbayan so the same may be preserved as security for
that since it was compelled to pay, through Philguarantee, the
the satisfaction of judgment in the case before said court.
bank loans taken out by Chuidian, the proceeds of which were
fraudulently diverted, it is entitled to the issuance of the writ
of attachment to protect its rights as creditor.

5) Chuidian’s absence from the country was considered by the

Chuidian opposed the motion for issuance of the writ of Sandiganbayan to be the most compelling ground for the
attachment, contending that: issuance of the writ. 

(1) The plaintiff’s affidavit appended to the motion was in

form and substance fatally defective;

(2) Section 1(b) of Rule 57 does not apply since there was no

Almost four (4) years after the issuance of the order of
fiduciary relationship between the plaintiff and Chuidian;
attachment, Chuidian filed a motion to lift the attachment
based on the following grounds:  
(3) While Chuidian does not admit fraud on his part, if ever
there was breach of contract, such fraud must be present at
1) He had returned to the Philippines, and considering that his
the time the contract is entered into;
absence was the most compelling ground for the issuance of
the writ, the latter should be lifted. 
(4) Chuidian has not removed or disposed of his property in
the absence of any intent to defraud plaintiff;
2) There was no evidence at all of initial fraud or subsequent WON the writ of preliminary attachment should be lifted as a
concealment except for the affidavit submitted by the PCGG result of petitioner’s return to the country and his averments
Chairman whose statement is hearsay since he was not a that there was no fraud in incurring the obligation
witness to the litigated incidents, was never presented as a
witness by the Republic and thus was not subject to cross-
examination.

3) He denies that he ever disposed of his assets to defraud

HELD: No
the Republic, and there is nothing in the records that support
the Sandiganbayan’s erroneous conclusion on the matter. 
*Preliminary attachment issued upon a ground which is
at the same time the applicant’s cause of action. When
4) He was never a defendant in any other pending criminal
the preliminary attachment is issued upon a ground which is
action. 
at the same time the applicant’s cause of action, the
defendant is not allowed to file a motion to dissolve the
5) He was not guilty of fraud in contracting the debt or
attachment under Section 13 of Rule 57 by offering to show
incurring the obligation. L/C was not a product of fraudulent
the falsity of the factual averments in the plaintiff’s
transactions but the result of court-approved settlement.
application and affidavits on which the writ was based – and
consequently that the writ based thereon had been
6) Should the attachment be allowed to continue, he will be
improperly or irregularly issued – the reason being that the
deprived of his property without due process.  The L/C was
hearing on such a motion for dissolution of the writ would be
payment to Chuidian in exchange for the assets he turned
tantamount to a trial of the merits of the action. In other
over to the Republic.  Said assets had already been sold by
words, the merits of the action would be ventilated at a mere
the Republic and cannot be returned to Chuidian should the
hearing of a motion, instead of at the regular trial.
government succeed in depriving him of the proceeds of the
L/C.

7) Finally, throughout the 4 years that the preliminary

attachment had been in effect, the gov’t had not set the case
for hearing.  The case itself should be dismissed for laches The merits of the action in which a writ of preliminary
owing to the Republic’s failure to prosecute its action for an attachment has been issued are not triable on a motion for
unreasonable length of time.  Accordingly, the preliminary dissolution of the attachment; otherwise an applicant for the
attachment, being only a temporary or ancillary remedy, must lifting of the writ could force a trial of the merits of the case
be lifted and the PNB ordered to immediately pay the on a mere motion.
proceeds of the L/C to Chuidian.

The Republic opposed e motion and contended that allowing

the foreign judgment as a basis for the lifting of the
attachment would essentially amount to an abdication of the
There are only two ways of quashing a writ of
jurisdiction of the Sandiganbayan to hear and decide the ill
attachment: (a) by filing a counterbound immediately; or (b)
gotten wealth cases lodged before it in deference to the
by moving to quash on the ground of improper and irregular
judgment of foreign courts.
issuance. These grounds for the dissolution of an attachment

The Sandganbayan denied petitioner’s motion and also the are fixed in Rule 57 of the Rules of Court and the power of the

latter’s subsequent MR. Court to dissolve an attachment is circumscribed by the

grounds specified therein. Petitioner’s motion to lift
attachment failed to demonstrate any infirmity or defect in
the issuance of the writ of attachment; neither did he file a
counterbond.

ISSUE:
UNITED PULP AND PAPER CO., INC vs. the counter-bond. Neither can novation be presumed in this
ACROPOLIS CENTRAL GUARANTY CORPORATION case.

G.R. No. 171750 January 25, 2012 Novation by presumption has never been favored. To be
sustained, it need be established that the old and new
FACTS: contracts are incompatible in all points, or that the will to
novate appears by express agreement of the parties or in acts
On September 29, 2003, Unibox, Ortega and UPPC executed a of similar import.
compromise agreement, wherein Unibox and Ortega
acknowledged their obligation to UPPC in the amount of ALFREDO C. LIM, JR., PETITIONER, vs. SPOUSES TITO S.
P35,089,544.00 as of August 31, 2003, inclusive of the LAZARO AND CARMEN T. LAZARO, RESPONDENTS.
principal and the accrued interest, and bound themselves to
pay the said amount in accordance with a schedule of G.R. No. 185734 July 3, 2013
payments agreed upon by the parties. Consequently, the RTC
promulgated its Judgment dated October 2, 2003 approving
the compromise agreement.

For failure of Unibox and Ortega to pay the required amounts FACTS: Petitioner Lim Jr filed a complaint for a sum of money

for the months of May and June 2004 despite demand by with a prayer for the issuance of a writ of preliminary

UPPC, the latter filed its Motion for Execution to satisfy the attachment against the respondent Sps Lazaro. The RTC

remaining unpaid balance. In the July 30, 2004 Order, the granted the writ of preliminary attachment application and

RTC acted favorably on the said motion and, on August 4, upon the posting of the required bond issued the

2004, it issued the requested Writ of Execution. corresponding writ on October 14, 2005. 3 parcels of land
owned by the respondent spouses were levied upon.

ISSUE:
The parties later entered into a Compromise Agreement
Whether the execution of the compromise agreement whereby Sps. Lazaro agreed to pay Lim, Jr. the amount of
between UPPC and Unibox and Ortega was tantamount to a P2,351,064.80 on an installment basis, following a schedule
novation, which had the effect of releasing Acropolis from its of payments covering the period from September 2006 until
obligation under the counter-attachment bond. October 2013. The RTC rendered a decision on the basis of
the compromise.
RULING:

Sps. Lazaro then filed an Omnibus Motion, seeking to lift the

The argument of Acropolis that its obligation under the
writ of preliminary attachment annotated on the subject TCTs.
counter-bond was novated by the compromise agreement is,
thus, untenable. In order for novation to extinguish its
In granting the Motion, the RTC ruled that a writ of
obligation, Acropolis must be able to show that there is an
preliminary attachment is a mere provisional or ancillary
incompatibility between the compromise agreement and the
remedy, resorted to by a litigant to protect and preserve
terms of the counter-bond, as required by Article 1292 of the
certain rights and interests pending final judgment.
Civil Code, which provides that:
Considering that the case had already been considered closed
and terminated by the rendition of the decision based on the
Art. 1292. In order that an obligation may be extinguished by
compromise agreement, the writ of preliminary attachment
another which substitute the same, it is imperative that it be
should be lifted and quashed.
so declared in unequivocal terms, or that the old and the new
obligations be on every point incompatible with each other.
ISSUE: Whether or not the writ of preliminary attachment
Nothing in the compromise agreement indicates, or even hints was properly lifted.
at, releasing Acropolis from its obligation to pay UPPC after
the latter has obtained a favorable judgment. Clearly, there is
no incompatibility between the compromise agreement and
HELD: NO. By its nature, preliminary attachment, under Rule under the agreement, as in the case at bench, where Antonio
57 of the Rules of Court (Rule 57), is an ancillary remedy Garcia failed to hold up his own end of the deal, so to speak.
applied for not for its own sake but to enable the attaching
party to realize upon the relief sought and expected to be xxxx
granted in the main or principal action; it is a measure
auxiliary or incidental to the main action. As such, it is
If we were to rule otherwise, we would in effect create a back
available during its pendency which may be resorted to by a
door by which a debtor can easily escape his creditors.
litigant to preserve and protect certain rights and interests
Consequently, we would be faced with an anomalous situation
during the interim, awaiting the ultimate effects of a final
where a debtor, in order to buy time to dispose of his
judgment in the case. In addition, attachment is also availed
properties, would enter into a compromise agreement he has
of in order to acquire jurisdiction over the action by actual or
no intention of honoring in the first place. The purpose of the
constructive seizure of the property in those instances where
provisional remedy of attachment would thus be lost. It would
personal or substituted service of summons on the defendant
become, in analogy, a declawed and toothless tiger.
cannot be effected.
(Emphasis and underscoring supplied; citations omitted)

In this relation, while the provisions of Rule 57 are silent on

In fine, the Court holds that the writ of preliminary
the length of time within which an attachment lien shall
attachment subject of this case should be restored and its
continue to subsist after the rendition of a final judgment,
annotation revived in the subject TCTs, re-vesting unto Lim,
jurisprudence dictates that the said lien continues until the
Jr. his preferential lien over the properties covered by the
debt is paid, or the sale is had under execution issued on the
same as it were before the cancellation of the said writ. Lest it
judgment or until the judgment is satisfied, or the attachment
be misunderstood, the lien or security obtained by an
discharged or vacated in the same manner provided by law.
attachment even before judgment, is in the nature of a
vested interest which affords specific security for the
Applying these principles, the Court finds that the discharge satisfaction of the debt put in suit.30 Verily, the lifting of the
of the writ of preliminary attachment against the properties of attachment lien would be tantamount to an abdication of Lim,
Sps. Lazaro was improper. Jr.’s rights over Sps. Lazaro’s properties which the Court,
absent any justifiable ground therefor, cannot allow.
Records indicate that while the parties have entered into a
compromise agreement which had already been approved by
the RTC in its January 5, 2007 Amended Decision, the
obligations thereunder have yet to be fully complied with –
particularly, the payment of the total compromise amount of
P2,351,064.80. Hence, given that the foregoing debt remains
unpaid, the attachment of Sps. Lazaro’s properties should
have continued to subsist.
In the earlier case of Chemphil Export & Import Corporation
v. CA, the Court ruled that a writ of attachment is not
extinguished by the execution of a compromise agreement
between the parties. In that case the Court held thus:

xxxx

The case at bench admits of peculiar character in the sense

that it involves a compromise agreement. Nonetheless, x x x.
The parties to the compromise agreement should not be
deprived of the protection provided by an attachment lien
especially in an instance where one reneges on his obligations