FACTS:

The case involves a dispute between Ley Construction Corporation (LEYCON) and Rizal Commercial Banking Corporation (RCBC). LEYCON borrowed Thirty Million Pesos from RCBC, with a real estate mortgage as collateral. When LEYCON failed to settle its obligations, RCBC initiated extrajudicial foreclosure proceedings and became the highest bidder in the foreclosure. LEYCON filed an action for Nullification of Extrajudicial Foreclosure Sale and Damages against RCBC. Meanwhile, RCBC consolidated its ownership over the property and demanded rental payments from Metro Container Corporation (METROCAN), which leased the property from LEYCON. LEYCON also filed an action for Unlawful Detainer against METROCAN. METROCAN then filed an interpleader complaint against LEYCON and RCBC, seeking to determine which party was entitled to the rental payments. During the pre-trial conference, METROCAN and LEYCON entered into an amicable settlement and the case was dismissed as to them. The court rendered a judgment in favor of LEYCON in the Unlawful Detainer Case, ordering METROCAN to pay the rentals due. METROCAN and LEYCON then moved for the dismissal of the interpleader case, citing the settlement and the judgment in the Unlawful Detainer Case. In its decision, the Court of Appeals granted the petition and dismissed the interpleader case. RCBC filed a petition for review, but the Supreme Court affirmed the decision of the Court of Appeals.

ISSUES:

1. Whether the decision in Civil Case No. 6202 can render the interpleader action in Civil Case No. 4398-V-94 moot and academic.

2. Whether a party who initiates an interpleader action may unilaterally cause the dismissal of the case after the answer has been filed and if the defendants in an interpleader suit should be given full opportunity to litigate their claims.

RULING:

1. The Court of Appeals granted the petition and set aside the orders of the RTC, ordering the dismissal of Civil Case No. 4398-V-94. The Court held that the interpleader action became moot and academic when the decision in Civil Case No. 6202, which determined the payment of rentals, became final and executory. The court further ruled that while the petitioner is not bound by the decision in Civil Case No. 6202, it cannot compel the plaintiff to pursue the interpleader action and that the issue of ownership can be resolved in the case for Nullification of Extrajudicial Foreclosure Sale and Damages filed by the plaintiff.

PRINCIPLES:

• An interpleader action becomes moot and academic if the conflicting claims have already been resolved by a court decision. (Section 1, Rule 63 of the Revised Rules of Court)

• A party who initiates an interpleader action may unilaterally cause the dismissal of the case if the issue has already been resolved and there is no longer a need to pursue the cause of action.

• The issue of ownership can be resolved in a separate case and is not an indispensable issue in an interpleader action.