Case Digest: La Tondena Distillers v. CA (1992)

 

CASE TITLE:  La Tondeña Distillers, Inc. v. Court of Appeals
GR No/ Date: G.R. No. 88938. June 8, 1992
PONENTE: Narvasa, J.
CASE WITH THE SC: Petition for Review of the Decision of the CA
PROCEDURAL ANTECEDENTS: RTC - Replevin with Damages CA - Petition for Certiorari, Prohibition and Mandamus with Preliminary Prohibitory and mandatory Injunction and/or Temporary Restraining Order, Motion for Reconsideration
FACTS: La Tondeña Distillers, Inc. manufactures and sells "Ginebra San Miguel" gin in 350 c.c. white flint bottles with marks of ownership stamped or blown into the bottles. The bottles were registered with the Philippine Patent Office. The defendant, Te Tien Ho, a junk dealer at Estrada Street, Singalong, Manila, possesses a quantity of these registered bottles worth P20,000.00. RTC (Hon. Natividad G. Adduru-Santillan): Issued the writ of delivery prayed for upon La Tondeña's posting of a bond in the amount of P40,000.00. On February 22, 1989, Deputy Sheriff Regio Ruefa seized 20,250 bottles marked "La Tondeña Inc." and "Ginebra San Miguel" from 1105 Estrada St., Singalong.  He executed a handwritten receipt, which was witnessed and signed by Alexander Elleve and Tee Chin Ho. On March 1, 1989, Tee Chin Ho filed an Answer with preliminary injunction and compulsory counterclaim, claiming legal interest in the seized bottles. On March 3, 1989, Sheriff Ruefa delivered the 20,250 seized bottles to La Tondeña.  RTC: Ruled in favor of Tee Chin Ho, directing the issuance of writs of preliminary prohibitory and mandatory injunctions upon his posting of a P45,000.00 bond, and ordering the return of the seized bottles. CA: Dismissed La Tondeña's petition.
ISSUE: Whether the Respondent Judge violated a rule on Replevin that the disposition of a property seized under a replevin order upon the defendant shall be done only within 5 days from date of seizure. YES
ARGUMENTS/LEGAL BASES
PETITIONER	RESPONDENTS
The bottles are property of La Tondeña and are unlawfully possessed by the defendant. The sale of gin does not include the sale of the bottles. La Tondeña has the right to reclaim their bottles under R.A. 623.	The purchase of the gin included the bottles, transferring ownership to the buyers. The bottles were seized from his business location, not from the address in the complaint. La Tondeña's previous seizures were unlawful and without basis. He has a legal right to possess and use the bottles in his business.
PREVAILING PARTY:   La Tondeña Distillers, Inc
DECISION/DOCTRINE: I A defendant or other party in a replevin proceeding against whom a writ of seizure has the following alternative remedies set forth in Section 5, Rule 60 of the Rules of Court, viz.: SEC. 5. Return, of property. — If the defendant objects to the sufficiency of the plaintiff's bond, or of the surety or sureties thereon, he cannot require the return of the property as in this section provided; but if he does not so object may, at any time before the delivery of the property to the plaintiff require the return thereof, by filing with the clerk or judge of the court a bond executed to the plaintiff in double the value of the property as stated in the plaintiff affidavit, for the delivery of the property to the plaintiff, if such delivery be adjudged, for the payment of such sum to him as may be recovered against the defendant, and by serving a copy of such bond on the plaintiff or his attorney. The defendant may avail of these alternative options only within five (5) days after the taking of the property by the officer. This was made plain albeit impliedly by Section 6 of the same Rule, providing as follows:   SEC. 6 Disposition of property by officer. — If within five (5) days after the taking of the property by the officer, the defendant does not object to the sufficiency of the bond, or of the surety or sureties thereon, or require the return of the property as provided in the last preceding section; or if the defendant so objects, and the plaintiff's first or new bond is approved; or if the defendant so requires, and his bond is objected to and found insufficient and he does not forthwith file an approved bond, the property shall be delivered to the plaintiff. If for any reason, the property is not delivered to the plaintiff, the officer must return it to the defendant. Thus if a defendant in a replevin action wishes to have the property taken by the sheriff restored to him, he should within five days from such taking, (1) post a counter-bond in double the value of said property, 30 and (2) serve plaintiff with a copy thereof both requirements — as well as compliance therewith within the five-day period mentioned — being mandatory.   Alternatively, "the defendant may object to the sufficiency of the plaintiff's bond, or of the surety or sureties thereon;" but if he does so, "he cannot require the return of the property" by posting a counter-bond pursuant to Sections 5 and 6. In other words, the law does not allow the defendant to file a motion to dissolve or discharge the writ of seizure (or delivery) — on the ground of insufficiency of the complaint or of the grounds relied upon therefor, as in proceedings on preliminary attachment or injunction and thereby put at issue the matter of the title or right, of possession over the specific chattel being replevied, the policy apparently being that said matter should be ventilated and determined only at the trial on the merits. On the other hand, a stranger to the action, i.e., a person not a party to the action, or as the law puts it, "any other person than the defendant or his agent," whose property is seized pursuant to the writ of delivery, is accorded the remedy known as terceria, a third party claim, to wit: SEC. 7. Third-party claim. — If the property taken be claimed by any other person then the defendant or his agent, and such person makes an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title, and serves the same upon the officer while he has possession of the property, and a copy thereof upon the plaintiff, unless the plaintiff or his agent, on demand of the officer, indemnifies him against such claim by a bond in a sum not greater than the value of the property, and in case disagreement as to such value the same shall be decided by the court issuing the order. The officer is not liable for damages for taking or keeping of such property, to any other person than the defendant or his agent, unless such claim is so made and the action upon the bond brought within one hundred and twenty (120) days from the date of filing of the said bond. But nothing herein contained shall prevent such third person from vindicating his claim to the property by any proper action. However, when the plaintiff, or the person in whose behalf the order of delivery was issued, is the Republic of the Philippines, or any officer duly representing it, the filing of bond shall not be required, and in case the sheriff or the officer executing the order is sued for damages as a result of such execution, he shall be represented by the Solicitor General, and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of the funds to be appropriated for the purpose. The remedy is identical to that granted to strangers in a proceeding on preliminary attachment or execution of judgments.   In lieu of, or in addition to the filing of a terceria, the third party may, as Section 7 points out, vindicate "his claim to the property by any proper action." This effort at vindication may take the form of a separate action for recovery of the property, or intervention in the replevin action itself.  It was thus imperative for the Trial Judge, before ultimately resolving the motion for leave to intervene as party defendant of the person identifying himself as "Tee Chin Ho," to determine the precise status of said "Tee Chin Ho:" whether he was indeed a stranger to the action, as he claims, and could therefore avail of the remedy of intervention as a party defendant, or he was in truth a proper party defendant, who had been mistakenly and inadvertently referred to as "Te Tien Ho", and who therefore only had the alternative remedies aforementioned of either (a) objecting to the replevin bond or the surety or sureties thereof or (b) posting a counter-bond to compel return of the property. As of April 11, 1989, when the Trial Judge issued the "writ of mandatory and prohibitory injunction," she was aware, or should have known, of certain facts in the record bearing strongly on the identity of "Tee Chin Ho," namely: — 1) that "Tee Chin Ho" was actually served with summons at his junk shop at Estrada Street; 2) that the bottles described in La Tondeña's complaint and the writ of delivery were actually found at his establishment, and were there seized; 3) that Tee Chin Ho's shop is the only junk shop on Estrada Street; 4) that "Tee Chin Ho" did not then protest to the sheriff he was not the defendant named in the summons, "Te Tien Ho," or that his address was different from that indicated in the process; instead he asked his wife to sign his name on the sheriff's receipt wherein he was described as "defendant," as well "on the original copy of the summons and the writ of seizure for and in his own behalf;" 35 5) that "Tee Chin Ho" is not phonetically all that different from "Tee Tien Ho;" 6) that "Tee Chin Ho" admitted that earlier, he had been found in possession of empty bottles marked "La Tondeña, Inc.," and "Ginebra San Miguel," which had been seized by Manila police officers; and 7) that La Tondeña had filed a "motion to admit attached amended complaint with motion to dismiss motion for intervention and petition for preliminary injunction" dated April 5, 1989, in which it alleged inter alia, in relation to the amendment of its complaint, that — a) the "name of defendant Tee Chin Ho and his address at 1105 Estrada St., Singalong, Manila . . . (had been) inadvertently indicated as Te Tien Ho with address at 1005 Estrada St., Singalong, Manila in the complaint;" b) the amendment consisted merely in the correction of "the spelling in the name of the defendant as well as his address . . ;" c) the error in La Tondeña's identification of the defendant was not a fatal one since the principal object of the replevin suit was the recovery of identifiable bottles in the wrongful possession of another; and d) in any case, Tee Chin Ho had waived his right to object such an error. There were thus circumstances of record, of which Her Honor was charged with knowledge, that tended to show that La Tondeña's proffered thesis was not entirely far-fetched: that the real target of its replevin suit was a junk dealer at Estrada Street, Singalong, Manila, who was in unlawful possession of a large number of its empty bottles, whose name and address had been mistakenly stated in the original complaint but could nonetheless be ascertained. At the very least, therefore, it was a matter of preferential priority for the Judge to determine whether "Tee Chin Ho" is in fact "Te Tien Ho," and thus enable her to know in turn, whether or not the remedy of intervention was proper in the premises, instead of that provided in Section 5 of Rule 60, supra. In other words, unless there were a prior determination by Her Honor of whether or not "Tee Chin Ho" was a proper party defendant or a stranger to the action, she was in no position to adjudge that this intervention as party defendant was correct. But this is what respondent Judge did. Without first making that prior determination, she proceeded to pass upon the motion for intervention; she just simply assumed and declared that Tee Chin Ho was not Te Tien Ho. She thus appears to have acted without foundation, rashly, whimsically, oppressively. II Also overlooked by respondent Judge was that the amendment sought by La Tondeña was one of those explicitly mentioned, and could, in the premises, be made as a matter of right, in accordance with Section 1 and 2, Rule 10 of the Rules of Court, viz.:   Sec. 1. Amendments in general. — Pleadings may be amended by adding or striking out an allegation or the name of any party, or by correcting a mistake in the name of a party or a mistaken or inadequate or description in any other respect, so that the actual merits of the controversy may speedily be determined, without regard to technicalities, and in the most expeditious and inexpensive manner. Sec. 2. When amendments allowed as a matter of right. — A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, he may so amend it at any time within ten (10) days after it is served. It is plain from the record that at the time that La Tondeña moved to amend its complaint to correct "a mistake in the name of a party" and "a mistaken or inadequate allegation or description" of that party's place of residence or business, no effective "responsive pleading" (i.e., the answer) had been served on it by the person impleaded in the action as defendant; for the admission of Tee Chin Ho's answer-in-intervention (with permissive counterclaim) was yet hanging fire and no notice of the Court's action thereon had been served on La Tondeña. Clearly, then, the amendment which La Tondeña wished to make was a matter of right in accordance with Section 2, Rule 10. Being directed at a "defect in the designation of the parties," it was in truth a correction that could be summarily made at any stage of the action provided no prejudice is caused thereby to the adverse party," as Section 4 of the same Rule 10 further provides. It is simply amazing why in light of all these factual and legal consideration, respondent Judge did not quickly admit the amendment in question to correct the mistaken reference to Tee Chin Ho as Te Tien Ho, but what is worse, first granted leave to Tee Chin Ho's intervention, and then indefinitely deferred the matter of the amendment of the complaint by simply declaring it" submitted for resolution" and commending it to the attention of the Judge who would succeed her in her sala in view of her impending retirement. The Judge thus appears to have acted in disregard of the plain provisions of the Rules, whimsically, oppressively. III It is amazing, too, why Tee Chin Ho — who was already actually a defendant because he had been served with summons and had implicitly acknowledged his status as such by signing or causing the signing of his name to certain papers in which he was described as defendant — should thereafter still have moved to intervene in the action as defendant in intervention. The more direct step indicated under the circumstances, since he had already been brought into the action as defendant, although against his will, was merely to draw the court's attention, by some appropriate motion or pleading, to the lack of any cause of action against him because he was not the person impleaded as defendant in the complaint and, of course, seek relief from the writ of seizure and recovery as such damages as might have been cause to him by the enforcement thereof. However, Tee Chin Ho chose the more circuitous path: although already technically a defendant, he still filed a motion to intervene as defendant, and also with the same basic objective: to tell the Court he was not the person named in the complaint, and to recover the property seized from him as well as damages. By this maneuver, Tee Chin Ho was able to evade the legal consequences of the expiration of the five-day period prescribed by Section 5 (in relations to Section 6) of Rule 10, supra; he succeeded in recovering the bottles in question even after the expiry of said period, and what is more, as defendant in intervention, he was able to put at issue the propriety of the ground relied upon for a writ of delivery, — which he would have been disqualified to do as defendant. It was seriously wrong: for the Court to have sanctioned such a maneuver. IV Again, the subject of La Tondeña's replevin suit, as already stated, are the 20,250 bottles seized from Tee Chin Ho on February 22, 1989 on the strength of the writ of delivery of February 13, 1989. But the Trial Court's Order of April 7, 1989, directed La Tondeña to "return and restore unto intervenor Tee Chin Ho . . . all 41,850 empty bottles/containers with blown up mark "La Tondeña Inc." and "Ginebra San Miguel" seized from intervenor mentioned in Annexes "4" and "5" of the answer-in-intervention" — more particularly, in the permissive counterclaim set out in said answer-in-intervention. In other words, the Court ordered the return not only of the 20,250 bottles seized pursuant to its writ of delivery on February 13, 1989, but, also the quantity of bottles claimed by Tee Chin Ho to have been seized from him by Manila Police officers at an earlier date. Now, as regards these bottles earlier taken into custody by the Manila Police, certain circumstances are germane, namely: 1) the claim therefor was made in a permissive counterclaim, it not appearing that said claim "arises out of or is necessarily connected with, the transaction or occurrence that is the subject matter of the opposing party's . . . claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction;" 37 and 2) the only evidence on record is the receipt issued by the officers involved in the seizure (Annex 5, answer-in-intervention); the police officers were not impleaded as parties defendant on Tee Chin Ho's counterclaim nor required to appear and give evidence of said seizure; no proof was ever adduced by Tee Chin Ho of the reason for the confiscation of the bottles, or whether or not the bottles had been turned over to La Tondeña. It does not appear that any docketing fees were paid by Tee Chin Ho for his permissive counterclaim. At no point has Tee Chin Ho ever stated that he had indeed paid any filing or other fees thereon. The Trial Court, therefore, should not have admitted the permissive counterclaim, much less issued preliminary mandatory and prohibitory injunctions founded on the averments thereof.   The Trial Court also required La Tondeña to return to Tee Chin Ho the bottles seized from the latter by Manila police officers notwithstanding the absence of any showing whatever that the confiscation of those bottles had been had at La Tondeña's instance or, more importantly, that the bottles had been turned over to La Tondeña, and without requiring the police officers concerned to give evidence of the facts surrounding the seizure of those bottles. It being presumed that "official duty has been regularly performed" and "the law has been obeyed," the act of seizure of the police officers cannot initially be deemed unlawful upon its face, in the absence of evidence of the circumstances under which they effected the seizure. Indeed, since regularity may be assumed in the act of the police officers in question, it may not unreasonably be supposed that they acted in virtue of a search warrant or some order of a competent Court — a court other than respondent Judge's, which would consequently have jurisdiction, to the exclusion of the Court a quo, to release the bottles. Prudence thus dictated that the respondent Judge at the very least require evidence on this matter: as to why seizure was made and whether or not, the bottles had been surrendered to La Tondeña — so that it could be ordered to return them to Tee Chin Ho But this the respondent Judge did not do. Without knowing if jurisdiction over the bottles seized by the Manila Police was in another court, without requiring the officers concerned to appear and shed light on the issue, without knowing, if the bottles were indeed, in possession of La Tondeña , she required La Tondeña to restore possession. thereof to Tee Chin Ho. In doing so, Her Honored acted quite imprudently, recklessly, capriciously, oppressively. V Finally, it would appear that respondent Judge, in resolving an application for a provisional remedy, in the process already disposed of the case on the merits. The basic issue in the action at bar is whether or not La Tondeña has a right of action to prevent the use by Tee Chin Ho (or as he was mistakenly named in the complaint: Te Tien Ho) of the bottles especially manufactured for it pursuant to its specifications. This issue was resolved by respondent Judge in her challenged Order of April 7, 1989 in the following manner: . . . even under Republic Act 623, as amended by Republic Act 5700, the fact that the law provides that the sale of the bottled products does not ipso jure carry with it the sale of the bottle, yet the same law negates any right of action of plaintiff manufacturer and seller to recover the empty bottles from "any person to whom the registered manufacturer . . . seller it has transferred . . . any of the containers (Section 5) and, moreover, the statute expressly, exempts from its coverage the use of bottles as containers for "sisi," "bagoong," "patis," and similar native products" (Section 6); and that the due process clause protects intervenor in his right to earn his livelihood through engagement in his junk shop business (Quisumbing and Fernando, Philippine Constitutional Law, p, 80). It is of public knowledge that when a person purchase a drink, whatever it may be the buyer is required to deposit an amount for the bottles and if the empty bottles, after consuming its contents, is not returned, then the buyer is answerable for the empty bottle, thereby converting the transaction to one of a sale to include the bottle thereof and the seller would not and shall not be permitted to complaint and recover the said bottles until and unless the corresponding deposit is returned to the buyer in exchange of the bottle. Such a ruling having been handed down, what else, it may be asked, would still have to be resolved at the trial, and stated in its final judgment, as regards the merits of the action? Said ruling moreover, does not seem to correct, being in conflict with Section 3 of Republic Act No. 623, which reads:  Sec. 3. The use by any person other then the registered manufacturer, bottler or seller, without written permission of the latter of any such bottle, cask, barrel, keg, box, steel cylinders, tanks, flasks, accumulators, or other similar containers, or the possession thereof without any written permission of the manufacturer, by any junk dealer or dealer in casks, barrels, kegs, boxes, steel cylinders, tanks, flasks, accumulators, or other similar containers, the same being duly marked or stamped and registered as herein provided, shall give rise to a prima facie presumption that such use of possession is unlawful. Since Tee Chin Ho never denied being a junk dealer — indeed, his registered business name describes him as one such — or that he did not have La Tondena's written permission to possess the bottles in question, a correct application of the law called for invoking the presumption created by the confluence of these twin circumstances to deny said respondent any right to the possession or use of the bottles, instead of ordering their return to him, howsoever provisionally. And lacking any showing that La Tondeña conveyed the bottles, sans contents, to Tee Chin Ho, or that the latter is a bottler of "sisi," "bagoong," or similar products, no argument can be made for extending to him the exemptive provisions of Section 5 and 6 of the same Act cited in the questioned Order of the Regional Trial Court. VI All the foregoing considered; the Court is satisfied that the grave errors ascribed to the Regional Trial Court were in fact committed; and that it was quite wrong for the Court of Appeals to have failed to declare those errors as constituting grave abuse of discretion, and to have upheld the Order assailed in these proceedings. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals complained of is REVERSED. The Order of April 7, 1989 of the Regional Trial Court of Manila in Civil Case No. 89-47768 and the Writ of Mandatory and Prohibitory Injunction of April 11, 1989 issued pursuant thereto are NULLED and SET ASIDE. The status quo obtaining prior to the issuance of said Order and Writ is ORDERED RESTORED, and the proceedings in said case shall continue as if they had never been issued. Costs against the private respondent.