RAY U. VELASCO, JOSEYMOUR P. ECOBIZA, WILHELM BARLIS AND BERNABE ALABASTRO,PETITIONERS, VS. COURT OF APPEALS, FIRMWOOD DEVELOPMENT CORPORATION AND STA. CLARA HOUSING INDUSTRIES,…

Velasco versus Court of Appeals

The Case

This is a petition for review on certiorari brought by Ray Velasco, Joseymour Ecobiza, Wilhelm Barlis, and Bernabe Alabastro against the Court of Appeals, Firmwood Development Corporation, and Sta. Clara Housing Industries. The petitioners are the sheriff and other officers who seized eleven crates of plywood, and the private respondents are the corporations claiming ownership and possession of that plywood. The case matters because it fixes two rules every reviewee must carry: a temporary restraining order may never be used to transfer possession of a thing to a party who did not have it at the start of the case, and a summary judgment is proper only where no genuine issue of material fact remains.

Procedural History

The seizure gave rise to a complaint for delivery of personal property with damages filed by Firmwood before the Regional Trial Court of Davao City. Sta. Clara later filed a complaint in intervention, claiming a legal interest because it was answerable under a warranty to deliver the goods to Firmwood. Firmwood and Sta. Clara each moved for summary judgment. The trial court granted both motions, ordered the release of the eleven crates to the private respondents or payment of their value, and later ordered the petitioners to pay filing and sheriff's fees and attorney's fees. The petitioners appealed to the Court of Appeals, which dismissed the appeal and affirmed the trial court's orders. The petitioners then came to the Supreme Court by petition for review on certiorari.

Facts

In 1987 Naty Dy and Denver Builders Supply sued Nordy Diploma and Sta. Clara Housing Industries over a joint venture to operate the Sta. Clara plant in Davao City. The trial court issued a writ of preliminary injunction, but the Court of Appeals set it aside. The matter reached the Supreme Court, which on 4 September 1987 issued a temporary restraining order enjoining the Diplomas and Sta. Clara from withdrawing or further disposing of the plywood inventory in the Sta. Clara plant or warehouse.

On reports that crates of plywood were being hauled out in violation of that order, Deputy Sheriff Joseymour Ecobiza, accompanied by Atty. Bernabe Alabastro, seized eleven crates of plywood on 26 October 1987. The crates bore the markings of Sta. Clara and Firmwood. On 18 November 1987 Firmwood filed a complaint for delivery of personal property and damages against the petitioners, alleging that it owned the crates and praying for their return or their value, plus expenses and damages.

On 11 January 1988 the Supreme Court set aside the temporary restraining order. The petitioners answered that Firmwood was not the owner and that Sta. Clara was, and that the seizure was authorized by the restraining order. Sta. Clara intervened, confirming that Firmwood was the true and lawful owner of the plywood, which Sta. Clara had milled for it. Both private respondents then moved for summary judgment, which the trial court granted.

Issues

• Whether or not the trial court properly rendered summary judgment in favor of the private respondents.
• Whether or not the seizure of the eleven crates of plywood by the petitioners, done to implement the temporary restraining order, was lawful and placed the property in custodia legis.
• Whether or not the award of damages and attorney's fees to the private respondents was correct.

Applicable Provisions

Rule 34 of the Rules of Court, now Rule 35 of the 1997 Rules of Civil Procedure, governs summary judgment. The Court states its office in these terms:

This rule does not vest in the court summary jurisdiction to try the issues on pleadings and affidavits but gives the court limited authority to enter summary judgment only if it clearly appears that there is no genuine issue of material fact.

This provision is the measure of whether the trial court could dispense with trial, and it bears directly on the first issue.

Rule 60, Section 7 of the Rules of Court, as amended, is the basis for damages sustained by reason of a wrongful attachment or seizure. The Court of Appeals sustained the award under this provision, and it bears on the third issue.

Ruling

On the first issue, the Court held that the summary judgment was proper. On a motion for summary judgment the court does not decide an issue of fact; it determines whether the pleadings and records create an issue of fact to be tried. Where the motion is made by a claimant, the defending party must show a plausible ground of defense, something fairly arguable and of a substantial character. Here the petitioners admitted that the goods bore Firmwood's label and markings, and in their answer to the complaint in intervention they admitted Sta. Clara's ownership and right of possession. What remained was a pure question of law, and the existence of an important or complicated question of law, where the facts are not in issue, is no bar to summary judgment.

On the second issue, the Court held that the seizure was void and illegal. A preliminary injunction, which necessarily includes a temporary restraining order, should never be used to transfer possession or control of a thing to a party who did not have it at the inception of the case. The restraining order merely restrained Sta. Clara and its agents from withdrawing or disposing of the plywood inventory; it contained no directive to any petitioner to seize property or to keep it in their possession. The petitioners took the law into their own hands. The remedy for a violation of a restraining order is contempt proceedings, not self-help. With the lifting of the order, the crates were never placed under custodia legis, that is, under the custody of the court, so as to prevent the private respondents from recovering possession.

On the third issue, the Court held that the amount of damages directed by the trial court to be paid arising from the wrongful taking is a factual matter binding and conclusive upon the Supreme Court.

Doctrine

First, a temporary restraining order or preliminary injunction may never be used to transfer possession or control of a thing to a party who did not have such possession or control at the inception of the case. Second, property seized without legal authority is never placed in custodia legis, and the lifting of the order that supposedly authorized the seizure leaves the seizing party without any right to retain the property. Third, the remedy of an aggrieved party against a violation of a restraining order is contempt proceedings, not seizure of the property. Fourth, summary judgment lies only where there is no genuine issue of material fact; the court determines whether there is an issue to be tried, not the issue itself, and a defending party must show a plausible ground of defense of a substantial character.

Disposition

The petition was denied and the decision of the Court of Appeals was affirmed; the petitioners were directed to deliver possession of the eleven crates of plywood to the private respondents or pay their declared value of 140,000 pesos in case of loss, and to pay attorney's fees of 20,000 pesos to Firmwood, 30,000 pesos to Sta. Clara, and the filing, Judiciary Development Fund, and sheriff's fees, with costs against the petitioners.

Remember This

Memorize this line: an injunction or restraining order should never be used to transfer possession to a party who did not have it at the inception of the case. Examiners use this case to test the limits of a temporary restraining order and the strict standard for summary judgment.