G.R. No. 195450. February 1, 2017.*

 
DEVELOPMENT BANK OF THE PHILIPPINES,
petitioner, vs. HON. EMMANUEL C. CARPIO, in his
capacity as Presiding Judge, Regional Trial Court, Branch
16, Davao City, COUNTRY BANKERS INSURANCE
CORPORATION, DABAY ABAD, HATAB ABAD, OMAR
ABAS, HANAPI ABDULLAH, ROJEA AB ABDULLAH,
ABDULLAH ABEDIN, ALEX ABEDIN, et al., represented
by their Attorney-in-Fact, MR. MANUEL L. TE,
respondents.

Remedial Law; Civil Procedure; Jurisdiction; Residual

Jurisdiction; Words and Phrases; Residual jurisdiction refers to
the authority of the trial court to issue orders for the protection and
preservation of the rights of the parties which do not involve any
matter litigated by the appeal; to approve compromises; to permit
appeals by indigent litigants; to order execution pending appeal in
accordance with Section 2, Rule 39; and to allow the withdrawal
of the appeal, provided these are done prior to the transmittal of
the original record or the record on appeal, even if the appeal has
already been perfected or despite the approval of the record on
appeal or in case of a petition for review under Rule 42, before the
Court of Appeals (CA) gives due course to the petition.—Residual
jurisdiction refers to the authority of the trial court to issue orders
for the protection and preservation of the rights of the parties
which do not involve any matter litigated by the appeal; to
approve compromises; to permit appeals by indigent litigants; to
order execution pending appeal in accordance with Section 2, Rule
39; and to allow the withdrawal of the appeal, provided these are
done prior to the transmittal of the original record or the record
on appeal, even if the appeal has already been perfected or despite
the approval of the record on appeal or in case of a petition for
review under Rule 42, before the CA gives due course to the
petition. The “residual jurisdiction” of the trial court is available
at a stage in which the court is normally deemed to have lost
jurisdiction over the case or the subject matter involved in the
appeal. This stage is reached upon the perfection of the appeals by
the parties or upon the approval of the records on appeal, but
prior to the transmittal of

_______________

*  SECOND DIVISION.
  
 

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Development Bank of the Philippines vs. Carpio

the original records or the records on appeal. In either

instance, the trial court still retains its so-called residual
jurisdiction to issue protective orders, approve compromises,
permit appeals of indigent litigants, order execution pending
appeal, and allow the withdrawal of the appeal.
Same; Same; Same; Same; Before the trial court can be said to
have residual jurisdiction over a case, a trial on the merits must
have been conducted; the court rendered judgment; and the
aggrieved party appealed therefrom.—Before the trial court can be
said to have residual jurisdiction over a case, a trial on the merits
must have been conducted; the court rendered judgment; and the
aggrieved party appealed therefrom. In this case, there was no
trial on the merits as the case was dismissed due to improper
venue and respondents could not have appealed the order of
dismissal as the same was a dismissal, without prejudice.
Section 1(h), Rule 41 of the Rules of Civil Procedure states that no
appeal may be taken from an order dismissing an action without
prejudice. Indeed, there is no residual jurisdiction to speak of
where no appeal has even been filed. In Strongworld Construction
Corporation, et al. v. Hon. Perello, et al., 496 SCRA 700 (2006), the
Court elucidated on the difference between a dismissal with
prejudice and one without prejudice: We distinguish a dismissal
with prejudice from a dismissal without prejudice. The former
disallows and bars the refiling of the complaint; whereas, the
same cannot be said of a dismissal without prejudice. Likewise,
where the law permits, a dismissal with prejudice is subject to the
right of appeal. x x x Section 1, Rule 16 of the 1997 Revised Rules
of Civil Procedure enumerates the grounds for which a motion to
dismiss may be filed, viz.: Section 1. Grounds.— Within the time
for but before filing the answer to the complaint or pleading
asserting a claim, a motion to dismiss may be made on any of the
following grounds: (a) That the court has no jurisdiction over the
person of the defending party; (b) That the court has no
jurisdiction over the subject matter of the claim; (c) That venue is
improperly laid; (d) That the plaintiff has no legal capacity to sue;
(e) That there is another action pending between the same parties
for the same cause; (f) That the cause of action is barred by a prior
judgment or by the statute of limitations; (g) That the pleading
asserting the claim states no cause of action; (h) That the claim or
demand set forth in the plaintiffs pleading has been paid, waived,
abandoned, or otherwise extinguished; (i) That the claim on which
the action is

 
 
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founded is unenforceable under the provisions of the statute

of frauds; and (j) That a condition precedent for filing the claim
has not been complied with.
Equity; Equity, “which has been aptly described as a ‘justice
outside legality,’ is applied only in the absence of, and never
against, statutory law or, as in this case, judicial rules of
procedure.”—DBP must be reminded that equity, “which has been
aptly described as a ‘justice outside legality,’ is applied only in the
absence of, and never against, statutory law or, as in this case,
judicial rules of procedure. The pertinent positive rules being
present here, they should preempt and prevail over all abstract
arguments based only on equity.” As the Court has stated in Lim
Tupas v. CA, 193 SCRA 597 (1991),   “[e]motional appeals for
justice, while they may wring the heart of the Court, cannot
justify disregard of the mandate of the law as long as it remains
in force. The applicable maxim, which goes back to the ancient
days of the Roman jurists — and is now still reverently observed
— is ‘aequetas nunquam contravenit legis.’”
Remedial Law; Provisional Remedies; Replevin Bond;
Conditions for the Recovery of Damages on a Replevin Bond.—To
recover damages on a replevin bond (or on a bond for preliminary
attachment, injunction or receivership), it is necessary (1) that the
defendant-claimant has secured a favorable judgment in the main
action, meaning that the plaintiff has no cause of action and was
not, therefore, entitled to the provisional remedy of replevin; (2)
that the application for damages, showing claimant’s right thereto
and the amount thereof, be filed in the same action before trial or
before appeal is perfected or before the judgment becomes
executory; (3) that due notice be given to the other party and his
surety or sureties, notice to the principal not being sufficient; and
(4) that there should be a proper hearing and the award for
damages should be included in the final judgment.
Multiplicity of Suits; To avoid multiplicity of suits, all
incidents arising from the same controversy must be settled in the
same court having jurisdiction of the main action.—To avoid
multiplicity of suits, all incidents arising from the same
controversy must be settled in the same court having jurisdiction
of the main action. Thus, the application for damages must be
filed in the court which took cognizance of the case, with due
notice to the other parties. In this case,

 
 
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 Development Bank of the Philippines vs. Carpio

DBP filed the application for damages long after the order of
dismissal had become final and executory. It explained that this
belated filing was due to its recourse to other remedies, such as
the enforcement of the writ of execution. The Court, however,
finds this reason to be wanting in persuasiveness. To begin with,
the filing of an application for damages does not preclude resort to
other remedies. Nowhere in the Rules of Court is it stated that an
application for damages bars the filing of a motion for a writ of
seizure, a writ of execution or any other applicable remedy. DBP,
from the beginning, had already perceived the attachment to be
improper; hence, it could have easily filed an application before
the judgment became executory.
Civil Law; Guaranty; A guarantor agrees that the creditor,
after proceeding against the principal, may proceed against the
guarantor if the principal is unable to pay.—A contract of
guaranty gives rise to a subsidiary obligation on the part of the
guarantor. A guarantor agrees that the creditor, after proceeding
against the principal, may proceed against the guarantor if the
principal is unable to pay. Moreover, he contracts to pay if, by the
use of due diligence, the debt cannot be made out of the principal
debtor.
Same; Human Relations; Abuse of Rights; Development Bank
of the Philippines (DBP) may file an action for damages based on
Article 19 of the New Civil Code against respondents for
unlawfully taking the certificates of title, which served as security
for their loan.—DBP may file an action for damages based on
Article 19 of the New Civil Code against respondents for
unlawfully taking the certificates of title, which served as security
for their loan. In Globe Mackay Cable and Radio Corporation v.
Court of Appeals, 176 SCRA 778 (1989), the Court held: This
article, known to contain what is commonly referred to as the
principle of abuse of rights, sets certain standards which must
be observed not only in the exercise of one’s rights, but also in the
performance of one’s duties. These standards are the following: to
act with justice; to give everyone his due; and to observe honesty
and good faith. The law, therefore, recognizes a primordial
limitation on all rights; that in their exercise, the norms of human
conduct set forth in Article 19 must be observed. A right, though
by itself legal because recognized or granted by law as such, may
nevertheless become the source of some illegality. When a right is
exercised in a manner which does not conform with the norms

 
 
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Development Bank of the Philippines vs. Carpio
 enshrined in Article 19 and results in damage to another, a
legal wrong is thereby committed for which the wrongdoer must
be held responsible. But while Article 19 lays down a rule of
conduct for the government of human relations and for the
maintenance of social order, it does not provide a remedy for its
violation. Generally, an action for damages under either Article
20 or Article 21 would be proper.
Same; Mortgages; If the parcels of land covered by the
certificates of title, which Development Bank of the Philippines
(DBP) sought to recover from respondents, were mortgaged to the
former, then DBP, as mortgage-creditor, has the option of either
filing a personal action for collection of sum of money or
instituting a real action to foreclose on the mortgage security; If the
mortgagee opts to foreclose the real estate mortgage, he waives the
action for the collection of the debt, and vice versa.—Nothing
precludes DBP from instituting an action for collection of sum of
money against respondents. Besides, if the parcels of land covered
by the certificates of title, which DBP sought to recover from
respondents, were mortgaged to the former, then DBP, as
mortgage-creditor, has the option of either filing a personal action
for collection of sum of money or instituting a real action to
foreclose on the mortgage security. The two remedies are
alternative and each remedy is complete by itself. If the
mortgagee opts to foreclose the real estate mortgage, he waives
the action for the collection of the debt, and vice versa.

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
   Velasquez & Associates for respondent CBIC.
   Renato B. Pagatpatan for Manuel L. Te, et al.

 
 

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Development Bank of the Philippines vs. Carpio

MENDOZA, J.:
 
This is a petition for review on certiorari seeking to
reverse and set aside the July 9, 2008 Decision1 and the
January 21, 2011 Resolution2 of the Court of Appeals (CA)
in C.A.-G.R. S.P. No. 85719, which dismissed the petition
for certiorari and mandamus praying for the annulment of
the May 17, 2004 and July 9, 2004 Orders3 of the Regional
Trial Court, Branch 16, Davao City (RTC), in Civil Case
No. 28,721-01.
 
The Antecedents
 
 On August 21, 2001, Dabay Abad, Hatab Abad, Omar
Abas, Hanapi Abdullah, Rojea Ab Abdullah, Abdullah
Abedin, Alex Abedin, et al. (Abad, et al.), represented by
their attorney-in-fact, Manuel L. Te, filed a complaint for
delivery of certificates of title, damages, and attorney’s fees
against petitioner Development Bank of the Philippines
(DBP) and Guarantee Fund for Small and Medium
Enterprise (GFSME) before the RTC.4
In their, Complaint,5 Abad, et al. prayed, among others,
for the issuance of a writ of seizure, pending hearing of the
case, for delivery of their certificates of title they claimed to
be unlawfully detained by DBP and GFSME. They alleged
that their certificates of title were submitted to DBP for
safekeeping pursuant to the loan agreement they entered
into with DBP. The same certificates of title were turned
over by DBP to GFSME because of its call on GFSME’s
guarantee on their

_______________

1   Penned by Associate Justice Edgardo T. Lloren, with Associate

Justices Edgardo A. Camello and Jane Aurora C. Lantion, concurring;
Rollo, pp. 18-25.
2  Id., at pp. 27-28.
3  Penned by Presiding Judge Emmanuel C. Carpio; id., at pp. 49-51.
4  Id., at p. 19.
5  Id., at pp. 53-59.

 
 
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Development Bank of the Philippines vs. Carpio

loan, which became due and demandable, and pursuant to

the guarantee agreement between DBP and GFSME.
As prayed for, the RTC issued the Writ of Seizure6 on
August 24, 2001. The writ was accompanied by Plaintiff’s
Bond for Manual Delivery of Personal Property7 issued by
Country Bankers Insurance Corporation (CBIC).
On September 5, 2001, DBP filed its Omnibus Motion to
Dismiss Complaint and to Quash Writ of Seizure8 on the
ground of improper venue, among others. Abad, et al. filed
their Opposition9 and later, their Supplemental
Opposition,10 to which they attached the Delivery Receipt11
showing that the court sheriff took possession of 228
certificates of title from GFSME.
In its Order,12 dated September 25, 2001, the RTC
granted DBP’s omnibus motion and dismissed the case for
improper venue.
On December 20, 2001, DBP and GFSME filed their
Joint Motion to Order Plaintiffs to Return Titles to
Defendants DBP and GFSME.13 After Abad, et al., filed
their opposition, the RTC issued the Order,14 dated
January 27, 2003, directing Abad, et al., to return the 228
certificates of title.
Abad, et al. filed a petition for certiorari and prohibition
with the Court praying, among others, for the nullification
and reversal of the January 27, 2003 Order of the RTC. The

_______________

6   Id., at pp. 60-61.

7   Id., at p. 62.
8   Id., at pp. 68-72.
9   Id., at pp. 179-183.
10  Id., at pp. 185-187.
11  Id., at pp. 188-190.
12  Id., at pp. 196-197.
13  Id., at pp. 207-211.
14  Id., at p. 79.

 
 
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Development Bank of the Philippines vs. Carpio

Court, however, in its June 9, 2003 Resolution,15 dismissed

the petition.
On September 18, 2003, DBP filed its Motion for Writ of
Execution16 of the January 27, 2003 Order before the RTC.
On December 16, 2003, the RTC issued the corresponding
Writ of Execution.17 The Sheriff’s Return of Service,18
however, indicated that Abad, et al., failed to deliver the
certificates of title.
 
The Subject Motion
against the Bond
 
Due to the nondelivery of the certificates of title by
Abad, et al., DBP filed its Motion/Application to Call on
Plaintiff’s Surety Bond,19 dated February 3, 2004, praying
for the release of the bond issued by CBIC to answer for the
damages it sustained as a result of the failure to return the
228 certificates of title.
 
The RTC’s Ruling
 
In its Order, dated May 17, 2004, the RTC denied the
subject motion explaining that the resolution of the motion
was no longer part of its residual power. It pointed out that
although there was indeed an order to return the 228
certificates of title to DBP, it was not made as a result of a
trial of the case, but as a consequence of the order of
dismissal based on improper venue.
DBP moved for reconsideration. Nevertheless, in its July
9, 2004 Order, the RTC denied the motion.
Aggrieved, DBP filed a petition for certiorari and
mandamus before the CA.

_______________

15  Id., at pp. 80-81.

16  Id., at pp. 85-86.
17  Id., at p. 90.
18  Id., at p. 91.
19  Id., at pp. 218-222.

 
 

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The CA’s Ruling

 
In its July 9, 2008 Decision, the CA dismissed the
petition for certiorari and mandamus. It noted that DBP
did not move for reconsideration of the September 25, 2001
Order of dismissal. It considered the RTC decision as final
and executory. It added that Section 20, Rule 57 of the
Rules of Court provided that the claim for damages against
the bond must be filed before trial or before appeal was
perfected or before the judgment became executory.20
DBP moved for reconsideration, but its motion was
denied by the CA in its January 21, 2011 Resolution.
Hence, this petition.

Issue
 
THE COURT OF APPEALS ERRED IN ITS BLIND
ADHERENCE TO AND STRICT APPLICATION OF
SECTION 20, RULE 57 OF THE 1997 RULES OF CIVIL
PROCEDURE.21

 
Petitioner DBP argues that it could not have anticipated
that Abad, et al. (respondents) would not abide by the writ
of execution; hence, prior to such failure of execution, it
would be premature to claim for damages against the bond
because DBP had not yet suffered any consequential
damages with the implementation of the writ of seizure;
and that Section 20, Rule 57 of the Rules of Court was not
applicable as the damages resulting from the improper
issuance of the writ of seizure occurred only after the
unjustified refusal of respondents to return the titles
despite the order from the RTC.

_______________

20  Id., at pp. 24-25.

21  Id., at p. 9.

 
 
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Development Bank of the Philippines vs. Carpio

In its Comment,22 dated August 11, 2011, respondent

CBIC averred that Section 20, Rule 57 of the Rules of Court
specified that an application for damages on account of
improper, irregular or excessive attachment must be filed
before the trial or before appeal is perfected or before the
judgment becomes executory; that the motion to call on
plaintiff’s surety bond was filed more than two (2) years
after the September 25, 2001 Order of the RTC, dismissing
the case, became final and executory; that, under Section
10, Rule 60 of the Rules of Court, the surety’s liability
under the replevin bond should be included in the final
judgment; that, there being no judgment as to who,
between the plaintiffs and the defendants, was entitled to
the possession of the certificates of title, the RTC properly
denied the motion to call on plaintiff’s surety bond; that,
any claim for damages against the bond was only proper
with respect to any loss that DBP might have suffered by
being compelled to surrender the possession of the
certificates of title pending trial of the action; that, in this
case, the motion to call on plaintiff’s surety bond was filed
after the trial was already terminated with the issuance of
the order of dismissal; and that, instead of moving to claim
for damages, DBP sought to quash the writ of seizure, even
though it might already have some basis to claim for
damages at that time as could be gleaned from the
wordings of their motion to dismiss the complaint, based
on, among others, improper venue and inapplicability of
replevin as proper remedy.
Respondents, on the other hand, failed to file their
comment despite several opportunities granted to them.
Thus, their right to file a comment on the petition for
review was deemed waived.
In its Consolidated Reply,23 dated August 15, 2016, DBP
asserted that Section 20, Rule 57 of the Rules of Court did
not cover a situation where there was an instantaneous
dismissal

_______________
 22  Id., at pp. 264-281.
23  Id., at pp. 431-440.

 
 
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of the case due to improper venue; that the damages

resulting from the improper issuance of the writ of seizure
occurred only after the unjustified refusal of respondents to
return the titles despite order from the RTC; and, that DBP
could not resort to the surety prior to recovering the titles
from respondents at any time during the trial or before the
judgment became final and executory.
 
The Court’s Ruling
 
The petition lacks merit.
 
The trial court did not reach
the residual jurisdiction stage
 
Residual jurisdiction refers to the authority of the trial
court to issue orders for the protection and preservation of
the rights of the parties which do not involve any matter
litigated by the appeal; to approve compromises; to permit
appeals by indigent litigants; to order execution pending
appeal in accordance with Section 2, Rule 39; and to allow
the withdrawal of the appeal, provided these are done prior
to the transmittal of the original record or the record on
appeal, even if the appeal has already been perfected or
despite the approval of the record on appeal24 or in case of
a petition for review under Rule 42, before the CA gives
due course to the petition.25
The “residual jurisdiction” of the trial court is available
at a stage in which the court is normally deemed to have
lost jurisdiction over the case or the subject matter
involved in the appeal. This stage is reached upon the
perfection of the appeals by the parties or upon the
approval of the records on appeal, but prior to the
transmittal of the original records or the records on appeal.
In either instance, the trial court still retains its so-called
residual jurisdiction to issue protective

_______________

24  Section 9, Rule 41 of the RULES OF COURT.

25  Section 8, Rule 42, id.

 
  

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Development Bank of the Philippines vs. Carpio

orders, approve compromises, permit appeals of indigent

litigants, order execution pending appeal, and allow the
withdrawal of the appeal.26
From the foregoing, it is clear that before the trial court
can be said to have residual jurisdiction over a case, a trial
on the merits must have been conducted; the court
rendered judgment; and the aggrieved party appealed
therefrom.
In this case, there was no trial on the merits as the case
was dismissed due to improper venue and respondents
could not have appealed the order of dismissal as the same
was a dismissal, without prejudice. Section 1(h), Rule 41
of the Rules of Civil Procedure states that no appeal may
be taken from an order dismissing an action without
prejudice. Indeed, there is no residual jurisdiction to speak
of where no appeal has even been filed.27
In Strongworld Construction Corporation, et al. v. Hon.
Perello, et al.,28 the Court elucidated on the difference
between a dismissal with prejudice and one without
prejudice:

We distinguish a dismissal with prejudice from a dismissal

without prejudice. The former disallows and bars the refiling of
the complaint; whereas, the same cannot be said of a dismissal
without prejudice. Likewise, where the law permits, a dismissal
with prejudice is subject to the right of appeal.
x x x
Section 1, Rule 16 of the 1997 Revised Rules of Civil Procedure
enumerates the grounds for which a motion to dismiss may be
filed, viz.:

_______________

26  Angeles v. Court of Appeals, G.R. No. 178733, September 15, 2014,

735 SCRA 82, 92-93.
27  Fernandez v. Court of Appeals, 497 Phil. 748, 759; 458 SCRA 454,
465 (2005).
28  528 Phil. 1080; 496 SCRA 700 (2006).

 
 

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Development Bank of the Philippines vs. Carpio
 Section 1. Grounds.—Within the time for but before filing the
answer to the complaint or pleading asserting a claim, a motion to
dismiss may be made on any of the following grounds:
(a) That the court has no jurisdiction over the person of the
defending party;
(b) That the court has no jurisdiction over the subject matter of
the claim;
(c) That venue is improperly laid;
(d) That the plaintiff has no legal capacity to sue;
(e) That there is another action pending between the same parties
for the same cause;
(f) That the cause of action is barred by a prior judgment or by the
statute of limitations;
(g) That the pleading asserting the claim states no cause of action;
(h) That the claim or demand set forth in the plaintiff’s pleading
has been paid, waived, abandoned, or otherwise extinguished;
(i) That the claim on which the action is founded is unenforceable
under the provisions of the statute of frauds; and
(j) That a condition precedent for filing the claim has not been
complied with.
Section 5 of the same Rule, recites the effect of a dismissal
under Sections 1(f), (h), and (i), thereof, thus:
SEC. 5. Effect of dismissal.—Subject to the right of appeal,
an order granting a motion to dismiss based on paragraphs (f),
(h), and (i) of Section 1 hereof shall bar the refiling of the same
action or claim.
Briefly stated, dismissals that are based on the following
grounds, to wit: (1) that the cause of action is barred by a prior
judgment or by the statute of limitations; (2) that the claim or
demand set forth in the plain-

 
 
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Development Bank of the Philippines vs. Carpio

tiff’s pleading has been paid, waived, abandoned or otherwise

extinguished; and (3) that the claim on which the action is
founded is unenforceable under the provisions of the statute of
frauds, bar the refiling of the same action or claim. Logically, the
nature of the dismissal founded on any of the preceding grounds
is with prejudice because the dismissal prevents the refiling of the
same action or claim. Ergo, dismissals based on the rest of the
grounds enumerated are without prejudice because they do not
preclude the refiling of the same action.
x x x
As has been earlier quoted, Section 1(h), Rule 41 of the 1997
Revised Rules of Civil Procedure mandates that no appeal may be
taken from an order dismissing an action without prejudice. The
same section provides that in such an instant where the final
order is not appealable, the aggrieved party may file an
appropriate special civil action under Rule 65.29

 
Here, the RTC dismissed the replevin case on the
ground of improper venue. Such dismissal is one without
prejudice and does not bar the refiling of the same action;
hence, it is not appealable. Clearly, the RTC did not reach,
and could not have reached, the residual jurisdiction stage
as the case was dismissed due to improper venue, and such
order of dismissal could not be the subject of an appeal.
Without the perfection of an appeal, let alone the
unavailability of the remedy of appeal, the RTC did not
acquire residual jurisdiction. Hence, it is erroneous to
conclude that the RTC may rule on DBP’s application for
damages pursuant to its residual powers.
 
Equity cannot supersede
the Rules of Court
 
DBP admits that it filed the application for damages
after the order of dismissal had become final and executory.
In

_______________

29  Id., at pp. 1093-1097; pp. 712-716.

 
 
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seeking relief from this Court, however, it invokes equity

and argues that a strict application of Section 20, Rule 57
of the Rules of Court would prejudice its right to recover
damages arising from the improper attachment of the
certificates of title.
DBP, however, must be reminded that equity, “which
has been aptly described as a ‘justice outside legality,’ is
applied only in the absence of, and never against, statutory
law or, as in this case, judicial rules of procedure.30 The
pertinent positive rules being present here, they should
preempt and prevail over all abstract arguments based
only on equity.”31 As the Court has stated in Lim Tupas v.
CA,32 “[e]motional appeals for justice, while they may
wring the heart of the Court, cannot justify disregard of the
mandate of the law as long as it remains in force. The
applicable maxim, which goes back to the ancient days of
the Roman jurists — and is now still reverently observed —
is ‘aequetas nunquam contravenit legis.’”33
 Accordingly, the CA did not commit any reversible error
when it applied the rules of procedure in resolving the
issue at hand.
 
The application for damages
was belatedly filed
 
Section 10, Rule 60 of the Rules of Court provides that in
replevin cases, as in receivership and injunction cases, the
damages to be awarded to either party upon any bond filed
by the other shall be claimed, ascertained, and granted in
accordance with Section 20 of Rule 57 which reads:

_______________

30   Philippine Carpet Manufacturing Corporation v. Tagyamon, 723

Phil. 562, 572; 712 SCRA 489, 498-499 (2013).
31  Id.
32  Tupas v. Court of Appeals, 271 Phil. 628, 632-633; 193 SCRA 597,
602 (1991).
33  Id., at p. 633; pp. 601-602.

 
 
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Development Bank of the Philippines vs. Carpio

SEC. 20. Claim for damages on account of illegal attachment.—

If the judgment on the action be in favor of the party against
whom attachment was issued, he may recover, upon the bond
given or deposit made by the attaching creditor, any damages
resulting from the attachment. Such damages may be
awarded only upon application and after proper hearing,
and shall be included in the final judgment. The application
must be filed before the trial or before appeal is perfected or
before the judgment becomes executory, with due notice to the
attaching creditor and his surety or sureties, setting forth the
facts showing his right to damages and the amount thereof.
If the judgment of the appellate court be favorable to the party
against whom the attachment was issued, he must claim
damages sustained during the pendency of the appeal by
filing an application with notice to the party in whose favor the
attachment was issued or his surety or sureties, before the
judgment of the appellate court becomes executory. The appellate
court may allow the application to be heard and decided by the
trial court. [Emphases supplied]

 
In other words, to recover damages on a replevin bond
(or on a bond for preliminary attachment, injunction or
receivership), it is necessary (1) that the defendant-
claimant has secured a favorable judgment in the main
action, meaning that the plaintiff has no cause of action
and was not, therefore, entitled to the provisional remedy
of replevin; (2) that the application for damages, showing
claimant’s right thereto and the amount thereof, be filed in
the same action before trial or before appeal is perfected or
before the judgment becomes executory; (3) that due notice
be given to the other party and his surety or sureties,
notice to the principal not being sufficient; and (4) that
there should be a proper hearing
 
 
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VOL. 816, FEBRUARY 1, 2017 489

Development Bank of the Philippines vs. Carpio

and the award for damages should be included in the final

judgment.34
Likewise, to avoid multiplicity of suits, all incidents
arising from the same controversy must be settled in the
same court having jurisdiction of the main action. Thus,
the application for damages must be filed in the court
which took cognizance of the case, with due notice to the
other parties.35
In this case, DBP filed the application for damages long
after the order of dismissal had become final and executory.
It explained that this belated filing was due to its recourse
to other remedies, such as the enforcement of the writ of
execution. The Court, however, finds this reason to be
wanting in persuasiveness. To begin with, the filing of an
application for damages does not preclude resort to other
remedies. Nowhere in the Rules of Court is it stated that
an application for damages bars the filing of a motion for a
writ of seizure, a writ of execution or any other applicable
remedy. DBP, from the beginning, had already perceived
the attachment to be improper; hence, it could have easily
filed an application before the judgment became executory.
In Jao v. Royal Financing Corporation,36 the Court
precluded the defendant therein from claiming damages
against the surety bond because it failed to file the
application for damages before the termination of the case,
thus:

x x x The dismissal of the case filed by the plaintiffs-appellees

on July 11, 1959, had become final and executory before the
defendant-appellee corporation filed its motion for judgment on
the bond on September 7, 1959. In the order of the trial court,
dismissing the complaint, there appears no pronouncement
whatsoever

_______________
 34  Malayan Insurance Co., Inc. v. Salas, 179 Phil. 201, 206; 90 SCRA
252, 257 (1979).
35  Stronghold Insurance Co., Inc. v. Court of Appeals, 258-A Phil. 690,
699; 179 SCRA 117, 124 (1989).
36  114 Phil. 1152; 4 SCRA 1210 (1962).

 
 
490

490 SUPREME COURT REPORTS ANNOTATED

Development Bank of the Philippines vs. Carpio

against the surety bond. The appellee-corporation failed to file

its proper application for damages prior to the
termination of the case against it. It is barred to do so now.
The prevailing party, if such would be the proper term for the
appellee-corporation, having failed to file its application for
damages against the bond prior to the entry of final judgment, the
bondsman-appellant is relieved of further liability thereunder.
[Emphases supplied]37

 
Thus, the RTC has indeed no residual jurisdiction on
DBP’s claim for damages.
 
Remedies
 
The Court is not unmindful of the plight of DBP. Its
chosen remedy, however, cannot be countenanced as it
disregards the Rules of Court and the settled jurisprudence
on the matter. Nevertheless, this is not to say that DBP
has no other available remedies in order to recover
respondents’ indebtedness.
First, DBP could enforce its guarantee agreement with
GFSME. A contract of guaranty gives rise to a subsidiary
obligation on the part of the guarantor.38 A guarantor
agrees that the creditor, after proceeding against the
principal, may proceed against the guarantor if the
principal is unable to pay. Moreover, he contracts to pay if,
by the use of due diligence, the debt cannot be made out of
the principal debtor.39
Further, it may file an action for damages based on
Article 19 of the New Civil Code against respondents for
unlawfully taking the certificates of title, which served as
security for

_______________

37  Id., at p. 1157; pp. 1215-1216.

38   Ong v. Philippine Commercial International Bank, 489 Phil. 673,
677; 448 SCRA 705, 708-709 (2005).
 39  Trade and Investment Development Corporation of the Philippines
v. Asia Paces Corporation, 726 Phil. 555, 566; 716 SCRA 67, 78-79 (2014).

 
 
491

VOL. 816, FEBRUARY 1, 2017 491

Development Bank of the Philippines vs. Carpio

their loan. In Globe Mackay Cable and Radio Corporation

v. Court of Appeals,40 the Court held:

This article, known to contain what is commonly referred to as

the principle of abuse of rights, sets certain standards which
must be observed not only in the exercise of one’s rights, but also
in the performance of one’s duties. These standards are the
following: to act with justice; to give everyone his due; and to
observe honesty and good faith. The law, therefore, recognizes a
primordial limitation on all rights; that in their exercise, the
norms of human conduct set forth in Article 19 must be observed.
A right, though by itself legal because recognized or granted by
law as such, may nevertheless become the source of some
illegality. When a right is exercised in a manner which does not
conform with the norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby committed for which
the wrongdoer must be held responsible. But while Article 19 lays
down a rule of conduct for the government of human relations and
for the maintenance of social order, it does not provide a remedy
for its violation. Generally, an action for damages under either
Article 20 or Article 21 would be proper.41 [Emphasis supplied]

 
Finally, nothing precludes DBP from instituting an
action for collection of sum of money against respondents.
Besides, if the parcels of land covered by the certificates of
title, which DBP sought to recover from respondents, were
mortgaged to the former, then DBP, as mortgage-creditor,
has the option of either filing a personal action for
collection of sum of money or instituting a real action to
foreclose on the mortgage security. The two remedies are
alternative and each remedy is complete by itself. If the
mortgagee opts to foreclose the real es-

_______________

40  257 Phil. 783; 176 SCRA 778 (1989).

41  Id., at pp. 788-789; pp. 783-784.

 
 

492
 492 SUPREME COURT REPORTS ANNOTATED
Development Bank of the Philippines vs. Carpio

tate mortgage, he waives the action for the collection of the

debt, and vice versa.42
WHEREFORE, the petition is DENIED. The July 9,
2008 Decision and the January 21, 2011 Resolution of the
Court of Appeals, in C.A.-G.R. S.P. No. 85719, are
AFFIRMED in toto.
SO ORDERED.

Peralta (Acting Chairperson), Reyes,** Leonen and

Jardeleza, JJ., concur.

Petition denied, judgment and resolution affirmed in

toto.

Notes.—The rule allowing consolidation is designed to

avoid multiplicity of suits, to guard against oppression or
abuse, to prevent delays, to clear congested dockets, and to
simplify the work of the trial court — in short, the
attainment of justice with the least expense and vexation
to the parties-litigants. (Domdom vs. Third and Fifth
Divisions of the Sandiganbayan, 613 SCRA 528 [2010])
Any residual jurisdiction of the court of origin shall
cease — including the authority to order execution pending
appeal — the moment the complete records of the case are
transmitted to the appellate court. (Villareal vs. People,
743 SCRA 351 [2014])
 
——o0o——

_______________

42   BPI Family Savings Bank, Inc. v. Vda. de Coscolluela, 526 Phil.

419, 439; 493 SCRA 472, 493-494 (2006).
** Designated additional member, in lieu of Associate Justice Antonio
T. Carpio, per Raffle dated January 9, 2017.

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