THERE IS NO LAW AUTHORIZING SOLE PROPRIETORSHIPS TO BRING SUIT IN COURT

The 1997 Rules of Civil Procedure requires that every action must be prosecuted or defended in the name of the real party-in-interest, i.e., the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. (Rule 3, Section 2).  x x x x x

In Juasing Hardware v. Mendoza, 201 Phil. 369, 372-373 (1982), the Supreme Court said:

“Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in court. The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual, and requires the proprietor or owner thereof to secure licenses and permits, register the business name, and pay taxes to the national government. It does not vest juridical or legal personality upon the sole proprietorship nor empower it to file or defend an action in court.

Thus, the complaint in the court below should have been filed in the name of the owner of Juasing Hardware. The allegation in the body of the complaint would show that the suit is brought by such person as proprietor or owner of the business conducted under the name and style Juasing Hardware. The descriptive words “doing business as Juasing Hardware” may be added to the title of the case, as is customarily done. [Emphasis supplied.] (ROGER V. NAVARRO, vs. HON. JOSE L. ESCOBIDO, G.R. No.  153788, November 27, 2009, BRION, J.).

NON-JOINDER OF INDISPENSABLE PARTIES IS NOT GROUND FOR DISMISSAL OF THE ACTION:

The Supreme Court has held in a number of cases (Domingo v. Scheer, 466 Phil. 235 (2004); Vesagas, et al. v. Court of Appeals, et al., 422 Phil. 860 (2001); Salvador, et al. v. Court of Appeals, et al., 313 Phil. 36 (1995); Cuyugan v. Dizon, 79 Phil. 80 (1947); Alonso v. Villamor, 16 Phil. 315 (1910) that the misjoinder or non-joinder of indispensable parties in a complaint is not a ground for dismissal of action.

As stated in Macababbad v. Masirag, G.R. No. 161237, January 14, 2009:

Rule 3, Section 11 of the Rules of Court provides that neither misjoinder nor nonjoinder of parties is a ground for the dismissal of an action, thus:

“Sec. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately” (emphasis supplied).

In Domingo v. Scheer, the Supreme Court held that the proper remedy when a party is left out is to implead the indispensable party at any stage of the action.  The court, either motu proprio or upon the motion of a party, may order the inclusion of the indispensable party or give the plaintiff opportunity to amend his complaint in order to include indispensable parties.  If the plaintiff to whom the order to include the indispensable party is directed refuses to comply with the order of the court, the complaint may be dismissed upon motion of the defendant or upon the court's own motion.  Only upon unjustified failure or refusal to obey the order to include or to amend is the action dismissed. x x x (ROGER V. NAVARRO, vs. HON. JOSE L. ESCOBIDO, G.R. No.  153788, November 27, 2009, BRION, J.).

REPLEVIN: PRIOR DEMAND IS NOT A CONDITION PRECEDENT TO AN ACTION FOR A WRIT OF REPLEVIN

In Navarro vs. Hon. Escobido, the Supreme Court explained that plaintiff erred in arguing that prior demand is required before an action for a writ of replevin is filed since we cannot liken a replevin action to an unlawful detainer.

          For a writ of replevin to issue, all that the applicant must do is to file an affidavit and bond, pursuant to Section 2, Rule 60 of the Rules, which states:

“Sec. 2. Affidavit and bond.

The applicant must show by his own affidavit or that of some other person who personally knows the facts:

(a)      That the applicant is the owner of the property claimed, particularly describing it, or is entitled to the possession thereof;

(b)      That the property is wrongfully detained by the adverse party, alleging the cause of detention thereof according to the best of his knowledge, information, and belief;

(c)      That the property has not been distrained or taken for a tax assessment or a fine pursuant to law, or seized under a writ of execution or preliminary attachment, or otherwise placed under custodia legis, or if so seized, that it is exempt from such seizure or custody; and

(d) The actual market value of the property.

The applicant must also give a bond, executed to the adverse party in double the value of the property as stated in the affidavit aforementioned, for the return of the property to the adverse party if such return be adjudged, and for the payment to the adverse party of such sum as he may recover from the applicant in the action” (emphasis supplied).

          The Supreme Court held that there is nothing in the afore-quoted provision which requires the applicant to make a prior demand on the possessor of the property before he can file an action for a writ of replevin. Thus, prior demand is not a condition precedent to an action for a writ of replevin.

          More importantly, the Supreme Court held that the plaintiff is no longer in the position to claim that a prior demand is necessary, as he has already admitted in his Answers that he had received the letters that defendant sent him, demanding that he either pay his unpaid obligations or return the leased motor vehicles. Accordingly, plaintiff’s position that a demand is necessary and has not been made is totally unmeritorious. (ROGER V. NAVARRO, vs. HON. JOSE L. ESCOBIDO, G.R. No.  153788, November 27, 2009, BRION, J.).

           

REPLEVIN: THE IMPLEMENTATION OF THE WRIT OF REPLEVIN SHOULD CONFORM TO THE REQUIREMENTS OF DUE PROCESS

Replevin is one of the most ancient actions known to law, taking its name from the object of its process. (Stone v. Church, 16 N.Y.S.2d 512, 515, 172 Misc. 1007, 1008 (1939). It originated in common law as a remedy against the wrongful exercise of the right of distress for rent (Sinnott v. Feiock, 59 N.E. 265, 165 N.Y. 444, 80 Am.S.R. 736, 53 L.R.A. 565  (1901); and Kurzweil v. Story & Clark Piano Co. and Blumgarten v. Mason & Hamlin Co., 159 N.Y.S. 231, 95 Misc. 484 (1916) and, according to some authorities, could only be maintained in such a case. (Palmer v. King, 41 App. DC. 419, L.R.A.1916D 278, Ann. Cas.1915C 1139 (1914). But by the weight of authority, the remedy is not and never was restricted to cases of wrongful distress in the absence of any statutes relating to the subject, but is a proper remedy for any unlawful taking. (Stone v. Church, 2216 N.Y.S.2d 512, 515, 172 Misc. 1007, 1008 (1939).

 “Replevied,” used in its technical sense, means delivered to the owner (Steuer v. Maguire, 66 N. E. 706, 707; 182 Mass. 575, 576 (1903) while the words “to replevy” means to recover possession by an action of replevin. (Tillson v. Court of Appeals, G.R. No. 89870, May 28, 1991, 197 SCRA 587, 598).

Broadly understood in this jurisdiction, replevin is both a form of principal remedy and of provisional relief.  It may refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the plaintiff by another, or to the provisional remedy that would allow the plaintiff to retain the thing during the pendency of the action and to hold it pendente lite. (BA Finance Corporation v. CA, 327 Phil. 716, 724-725 (1996). See also Tillson v. Court of Appeals, id.; Bouvier's Dictionary, Third (Rawle's) Revision, Vol. 2; Black's Law Dictionary, Sixth Edition, p. 1299). The action is primarily possessory in nature and generally determines nothing more than the right of possession. (BA Finance Corporation v. CA, supra, at 725). The law presumes that every possessor is a possessor in good faith. (Art. 527 of the New Civil Code). He is entitled to be respected and protected in his possession (Art. 539 of the New Civil Code) as if he were the true owner thereof until a competent court rules otherwise (Yu v. Honrado, No. 50025, August 21, 1980, 99 SCRA 273, 277, citing Chua Hai v. Kapunan,  Jr., etc. and Ong Shu, 104 Phil. 110, 118 (1958).

Before a final judgment, property cannot be seized unless by virtue of some provision of law. (Heath v. Steamer “San Nicolas,” 7 Phil. 532, 538 (1907). The Rules of Court, under Rule 60, authorizes such seizure in cases of replevin. However, a person seeking a remedy in an action for replevin must follow the course laid down in the statute, since the remedy is penal in nature. (Weaver Piano Co., Inc. v. Curtis, 158 S.C. 117; 155 SE 291, 300 (1930).

When no attempt is made to comply with the provisions of the law relating to seizure in this kind of action, the writ or order allowing the seizure is erroneous and may be set aside on motion (Heath v. Steamer “San Nicolas) by the adverse party. Be it noted, however, that a motion to quash the writ of replevin goes to the technical regularity of procedure, and not to the merits of the case (Cummings v. Gordon, 29 Pa. Dist. 740; 77 C.J.S. 120) in the principal action.

The process regarding the execution of the writ of replevin in Section 4 of Rule 60 is unambiguous: the sheriff, upon receipt of the writ of replevin and prior to the taking of the property, must serve a copy thereof to the adverse party (petitioner, in this case) together with the application, the affidavit of merit, and the replevin bond. (Sec. 4, Rule 60 of the Rules of Court).

The reasons are simple, i.e., to provide proper notice to the adverse party that his property is being seized in accordance with the court’s order upon application by the other party, and ultimately to allow the adverse party to take the proper remedy consequent thereto.

Service of the writ upon the adverse party is mandatory in line with the constitutional guaranty on procedural due process and as safeguard against unreasonable searches and seizures. (Sections 1 and 2, Art. III of the Constitution).

If the writ was not served upon the adverse party but was instead merely handed to a person who is neither an agent of the adverse party nor a person authorized to receive court processes on his behalf, the service thereof is erroneous and is, therefore, invalid, running afoul of the statutory and constitutional requirements. The service is likewise invalid if the writ of replevin was served without the required documents.  Under these circumstances, no right to seize and to detain the property shall pass, the act of the sheriff being both unlawful and unconstitutional.

In the case at bar, petitioner avers that the writ of replevin was served upon the security guard where the rock-crushing plant to be seized was located. The signature of the receiving party indicates that the writ was received on April 29, 2003 by a certain Joseph Rejumo, the guard on duty in a plant in Sariaya, Quezon, where the property to be seized was located, and witnessed by Claudio Palatino, respondent’s caretaker. The sheriff’s return,  however, peremptorily states that both the writ of replevin and the summons were served upon Rivera. On May 8, 2003, or nine (9) days after the writ was served on the security guard, petitioner filed an answer to the complaint accompanied by a prayer for the approval of her redelivery bond. The RTC, however, denied the redelivery bond for having been filed beyond the five-day mandatory period prescribed in Sections 5 and 6 of Rule 60. But since the writ was invalidly served, petitioner is correct in contending that there is no reckoning point from which the mandatory five-day period shall commence to run.

The trial court is reminded that not only should the writ or order of replevin comply with all the requirements as to matters of form or contents prescribed by the Rules of Court. (Vicente Francisco, The Revised Rules of Court in the Philippines, Provisional Remedies, Vol. IV-A, 1971, p. 394, citing 77 C.J.S. 81-82).

 The writ must also satisfy proper service in order to be valid and effective: i.e. it should be directed to the officer who is authorized to serve it; and it should be served upon the person who not only has the possession or custody of the property involved but who is also a party or agent of a party to the action. Consequently, a trial court is deemed to have acted without or in excess of its jurisdiction with respect to the ancillary action of replevin if it seizes and detains a personalty on the basis of a writ that was improperly served, such as what happened in this case.

At the outset, petitioner’s proper remedy should have been to file a motion to quash the writ of replevin or a motion to vacate the order of seizure. Nevertheless, petitioner’s filing of an application for a redelivery bond, while not necessary, did not thereby waive her right to question the improper service. It now becomes imperative for the trial court to restore the parties to their former positions by returning the seized property to petitioner and by discharging the replevin bond filed by respondent. The trial, with respect to the main action, shall continue. Respondent may, however, file a new application for replevin should he choose to do so. (TERLYNGRACE RIVERA vs. FLORENCIO L. VARGAS, G.R. No. 165895, 2009 June 5, Nachura J). 

FORECLOSURE PROCEEDINGS: PERSONAL NOTICE TO THE MORTGAGOR IS NOT NECESSARY FOR THE VALIDITY OF THE PROCEEDINGS

In Philippine National Bank v. Nepomuceno Productions, Inc., the Supreme Court emphatically stated that the personal notice to the mortgagor is not necessary for the validity of the foreclosure proceedings.  Thus:

"The principal object of a notice of sale in a foreclosure of mortgage is not so much to notify the mortgagor as to inform the public generally of the nature and condition of the property to be sold, and of the time, place, and terms of the sale. Notices are given to secure bidders and prevent a sacrifice of the property. Clearly, the statutory requirements of posting and publication are mandated, not for the mortgagor’s benefit, but for the public or third persons. In fact, personal notice to the mortgagor in extrajudicial foreclosure proceedings is not even necessary, unless stipulated." x x x (RESORT HOTELS CORPORATION vs. DEVELOPMENT BANK OF THE PHILIPPINES and SM INVESTMENT CORPORATION, G.R. No. 180439, December 23, 2009, NACHURA, J.).