### Facts:
1. **Contract and Breach:**
– In May 1987, David S. Tillson sued Leonard La Pierre and Seacraft International Corporation in RTC Pasig, Rizal (Civil Case No. 54587) for specific performance and damages regarding a yacht, “Creala 40.”
– Tillson had contracted with La Pierre to construct “Creala 40” for $65,000, to be delivered in Manila by July 1986. Instead, the advances made by Tillson were used for “Creala 36.”
2. **Injunction and Attachment:**
– The RTC issued a preliminary injunction against the removal of “Creala 40” and a preliminary attachment on “Creala 36.”
– Only Seacraft filed an answer, denying any contract with Tillson. La Pierre was declared in default for not responding.
3. **Judgment and Enforcement:**
– The RTC rendered a default judgment against La Pierre (March 2, 1988), awarding Tillson compensatory, moral, actual damages, and attorney’s fees.
– A sheriff levied on “Creala 36” and “Creala 40”; Tillson acquired “Creala 40” at an execution sale (February 7, 1989).
4. **Competing Claims:**
– John M. Cooney claimed “Creala 36” based on a compromise with La Pierre and later filed against Tillson for annulment of the auction of “Creala 40” in RTC Manila (Civil Case No. 89-48520). Cooney secured a writ of replevin.
– On April 20, 1989, the court ordered the Coast Guard to keep “Creala 40” for safekeeping. Tillson opposed; submitted a bond for redelivery.
5. **Procedural Course:**
– The RTC refused redelivery of “Creala 40” to Tillson; the Court of Appeals upheld this refusal.
– Tillson’s broader challenge (CA-G.R. SP No. 17586) was dismissed by the Court of Appeals based on precise technical shortcomings with redelivery procedures.
6. **Subsequent Developments:**
– Separate proceedings involved SEC ordering the revocation of Seacraft’s certificate, affirming it as La Pierre’s dummy.
### Issues:
1. **Applicability of Rule 60 (Replevin):**
– Whether the provisions of Rule 60 of the Rules of Court apply when the possession of the subject property was not transferred to the plaintiff but to a third party (Coast Guard).
2. **Compliance with Rule 60 for Redelivery:**
– Whether Tillson complied with Rule 60 requirements by filing the counter-bond and serving it within the prescribed time.
3. **Third-Party Claims by Parties to the Action:**
– Whether a party (Seacraft) can properly file a third-party claim under Section 17, Rule 39 when alleging ownership of properties involved in litigation.
### Court’s Decision:
**1. Applicability of Rule 60:**
– The Supreme Court ruled that Rule 60 applies even when property seized is not given directly to the plaintiff but held by a third party (Coast Guard). The defendant (Tillson) is entitled to remedies if deprived of possession under Rule 60.
**2. Compliance with Rule 60:**
– The Court found Tillson substantially complied with Rule 60: filed a valid bond within the prescribed five-day period and served a copy on the plaintiff timely. The RTC and Court of Appeals’ technical exigencies (delay in plaintiff’s receipt by registered mail) were dismissed as overly rigid.
**3. Third-Party Claims:**
– The Supreme Court clarified that Section 17, Rule 39 applies to strangers, not parties to the action. Seacraft’s third-party claim was not legitimate within the procedural context of this case.
**Disposition:**
– The Supreme Court nullified the Court of Appeals’ decision and the trial court’s order refusing Tillson’s redelivery motion. It mandated the return of “Creala 40” to Tillson.
### Doctrine:
– **Replevin Procedures:** Rule 60 applies even if seized property is held by a third party; defendants can reclaim property upon fulfilling bond requirements regardless.
– **Substantial Compliance:** Courts should prioritize substance over form in procedural compliance, rejecting technicalities detrimental to justice.
– **Third-Party Claims:** Claims under Section 17, Rule 39, are inapplicable to parties to the litigation, preserving the distinction between strangers and parties.
### Class Notes:
– *Replevin:* Provisional remedy for recovering personal property wrongfully taken; requires bond and detailed affidavit.
– *Procedural Compliance:* Service via registered mail regarded as timely if initiated within prescribed period.
– *Third-party Claims:* Meant for non-parties to litigation to recover wrongfully seized property.
**Key Concepts:**
– Section 5, Rule 60: Redelivery based on counter-bond filed within five days.
– Section 17, Rule 39: Designed for third parties, not litigants.
### Historical Background:
This case epitomizes the stringent procedural rigors and complexities in enforcing property and contract rights in maritime constructions. It reflects evolving norms in corporate law, particularly piercing the corporate veil to check fraudulent incorporations. It highlights Philippine courts balancing technical rules of procedure with equitable doctrines amidst corporate and civil controversies.
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