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SOLIDBANK CORPORATION v. GOYU

FACTS:

This case involves multiple parties, including Solidbank Corporation (SOLIDBANK), Goyu & Sons, Inc. (GOYU), Malayan Insurance Company, Inc. (MICO), and Rizal Commercial Banking Corporation (RCBC). GOYU incurred obligations to SOLIDBANK, and as additional security, obtained fire insurance policies from MICO. A fire occurred in one of GOYU's buildings, and GOYU's claim for indemnity with MICO was denied. RCBC also filed a claim for the proceeds of GOYU's insurance policies, but it was likewise denied. Subsequently, GOYU filed a complaint against MICO and RCBC for specific performance and damages. SOLIDBANK also filed an action for collection of sum of money and a writ of preliminary attachment against GOYU, the individual guarantors, and MICO. The RTC issued an interlocutory order requiring the proceeds of GOYU's insurance policies to be deposited with the court, and MICO complied. The RTC ruled in favor of GOYU and ordered the release of the deposited amount, along with interest, to GOYU. The RTC also ordered MICO and RCBC to pay various damages and attorneys' fees to GOYU.

Another case involves SOLIDBANK, MICO, Goyu Trading, and Malayan Insurance. SOLIDBANK filed a complaint against MICO, Goyu Trading, and Malayan Insurance, seeking payment for losses due to fire under multiple causes of action. The RTC ruled in favor of SOLIDBANK and ordered the defendants to pay specified amounts for each cause of action. SOLIDBANK filed a Motion for Execution Pending Appeal, which was granted by the RTC. The defendants, except Malayan Insurance, appealed the decision to the Court of Appeals (CA). During the appeal, SOLIDBANK filed a motion for execution against the defendants, and a writ of execution was issued. SOLIDBANK withdrew a substantial amount from the garnished funds held by RCBC. RCBC then filed a motion with the CA for restitution and to cite SOLIDBANK, its president, the sheriff, and the bank's counsel in contempt of court, alleging unlawful interference with the court proceedings. SOLIDBANK, in turn, filed a motion to declare RCBC in contempt for forum shopping and failure to disclose the garnished funds.

ISSUES:

  1. Whether SOLIDBANK had the legal authority to withdraw the amount from the garnished funds.

  2. Whether RCBC has the right to demand restitution of the amount withdrawn by SOLIDBANK.

  3. Whether the Court of Appeals erred in allowing RCBC to intervene in the case despite not being a party in Civil Case No. 92-62749.

  4. Whether the Court of Appeals committed a grave abuse of discretion in ordering Solidbank to fully restitute the funds it had withdrawn.

  5. Whether the Court of Appeals erred in taking judicial notice of a Supreme Court decision and ordering the release of funds to RCBC.

  6. Whether the Court of Appeals should have re-raffled the case for study and report.

  7. Whether the Court of Appeals committed a grave abuse of discretion in reversing its previous ruling on forum shopping.

  8. Whether the Order of the RTC of Cebu directing the issuance of a certificate of proprietary membership share is a patent nullity.

  9. Whether the levy on the Silverio share and the subsequent auction sale by the sheriff in the Cebu case is valid.

  10. Whether the sheriff in Civil Case No. 92-62749 improperly levied on the deposited insurance proceeds.

  11. Whether the funds deposited in court were pursuant to an order of Branch 14 in Civil Case No. 92-62749.

  12. Whether SOLIDBANK should be bound by the judgment in G.R. Nos. 128833, 128834, and 128866.

  13. Whether the Court of Appeals erred when it found the levy in Civil Case No. 92-62749 of the garnished insurance proceeds in Civil Case No. 93-65442 to be improper.

  14. Whether SOLIDBANK had the right to withdraw from the amount in custodia legis in Civil Case No. 93-65442.

RULING:

  1. The Court of Appeals initially denied RCBC's motion for restitution and to cite SOLIDBANK in contempt of court, ruling that SOLIDBANK had the legal authority to withdraw the amount by virtue of the final and executory judgment in its favor. RCBC's motion to intervene in the case was also denied by the RTC. Therefore, SOLIDBANK's withdrawal was valid.

  2. The Court of Appeals later reversed its decision and ordered SOLIDBANK to restitute the amount withdrawn with interest. The court held that no court, other than the one having jurisdiction over the properties in custodia legis, has the right to interfere with and change possession over the same. It found that the court in another case, CA-G.R. CV No. 46162, had jurisdiction over the properties in custodia legis and had not issued an order allowing the withdrawal by SOLIDBANK.

  3. The Court held that the issue of RCBC's intervention is not within the scope of the present petition, which is only a review of an interlocutory order. The Court cannot pass upon the conflicting rights of Solidbank and RCBC with respect to the insurance proceeds. RCBC's right to intervene in the appeal of Civil Case No. 92-62749 stems from its status as a party and judgment creditor in another case. Therefore, the Court of Appeals did not err in allowing RCBC to intervene.

  4. The Court stated that a mere error in judgment is not sufficient to justify a petition for certiorari. In order to warrant certiorari, there must be a grave abuse of discretion amounting to lack or excess of jurisdiction. The Court reviewed the assailed resolutions and found no grave abuse of discretion on the part of the Court of Appeals. Therefore, the Court of Appeals did not err in ordering Solidbank to restitute the withdrawn funds.

  5. The Court agreed with Solidbank that it cannot be bound by the Supreme Court decision which the Court of Appeals took judicial notice of. However, the Court clarified that the issue in the case at bar is not the merits of the decision itself but the implementation of the writ of execution and notice of garnishment. Therefore, the Court of Appeals did not err in ordering the release of funds to RCBC.

  6. The Court held that there was no need to re-raffle the case for study and report. The case involves the same parties and the Court of Appeals has already rendered its decision. Therefore, the Court of Appeals did not err in proceeding with the case.

  7. The Court ruled that Solidbank failed to provide any proof or evidence to support its claim of forum shopping. Without sufficient evidence, the Court of Appeals did not commit a grave abuse of discretion in reversing its previous ruling on forum shopping.

  8. Yes, the Order of the RTC of Cebu directing the issuance of a certificate of proprietary membership share is a patent nullity. The filing of a motion for reconsideration is a condition sine qua non for certiorari to lie, but there are exceptions to this rule, one of which is when the assailed order is a patent nullity. In this case, the RTC of Cebu had no jurisdiction over the Manila Golf share since it was already under the custody of the court in the RTC of Makati.

  9. No, the levy on the Silverio share and the subsequent auction sale by the sheriff in the Cebu case is not valid. The Notice of Garnishment of the Silverio share brought the property into the custodia legis of the court issuing the writ, which is the RTC of Makati, beyond the interference of other coordinate courts such as the RTC of Cebu. The act of the sheriff in levying on the garnished share in Manila Golf was a patent nullity.

  10. Yes, the sheriff in Civil Case No. 92-62749 improperly levied on the deposited insurance proceeds. The October 12, 1993 Order of Branch 3 of the RTC of Manila explicitly directed the defendant to deposit the proceeds of the fire insurance policies with the court. Thus, the funds were already under the sole control of the RTC of Manila.

  11. No, the funds deposited in court were not pursuant to an order of Branch 14 in Civil Case No. 92-62749. SOLIDBANK did not dispute that the funds were deposited pursuant to an order of Branch 3 in Civil Case No. 93-65442.

  12. SOLIDBANK should not be bound by the judgment in G.R. Nos. 128833, 128834, and 128866. Taking judicial notice of the said judgment does not make SOLIDBANK bound by it since SOLIDBANK is not a party to the case.

  13. The Court of Appeals did not err when it found the levy in Civil Case No. 92-62749 of the garnished insurance proceeds in Civil Case No. 93-65442 to be improper. The Court of Appeals ordered the restitution of the amount withdrawn by SOLIDBANK.

  14. SOLIDBANK did not have the right to withdraw from the amount in custodia legis in Civil Case No. 93-65442. SOLIDBANK is not a party in Civil Case No. 93-65442 and the property garnished is under the sole control of the court for the purposes of that civil case only. SOLIDBANK's withdrawal from the amount in custodia legis was not permissible.

PRINCIPLES:

  • The court having jurisdiction over properties in custodia legis has the exclusive authority to determine possession and disposition of such properties.

  • A party who is not a party to the case and whose motion to intervene was denied does not have the right to demand restitution of funds withdrawn pursuant to a final and executory judgment.

  • A petition for review on certiorari is not the proper remedy for interlocutory orders.

  • Certiorari requires a grave abuse of discretion amounting to lack or excess of jurisdiction.

  • Intervention by a party in a case is allowed when they have a legal, actual, and immediate interest in the matter in litigation.

  • The custodia legis of a court only applies to the specific civil case where the property is attached or garnished.

  • Judicial notice may be taken of a Supreme Court decision, but it does not bind parties who were not part of that case.

  • Re-raffling a case for study and report is unnecessary when the same parties are involved and a decision has already been rendered.

  • Proof or evidence is required to support a claim of forum shopping.

  • A party who is not a party to a civil case in which property is garnished cannot withdraw from the amount in custodia legis.

  • The property garnished is under the sole control of the court for the purposes of the civil case in which the garnishment was made, regardless of whether a decision has been rendered in the case.