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Doctrine:
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On returning the seized vehicle to Young
We agree with the Court of Appeals in directing the trial court to return the seized car to Young since this is the necessary consequence of the dismissal of the replevin case for failure to prosecute without prejudice. Upon the dismissal of the replevin case for failure to prosecute, the writ of seizure, which is merely ancillary in nature, became functus officio and should have been lifted. There was no adjudication on the merits, which means that there was no determination of the issue who has the better right to possess the subject car. Advent cannot therefore retain possession of the subject car considering that it was not adjudged as the prevailing party entitled to the remedy of replevin.
Contrary to Advent’s view, Olympia International Inc. v. Court of Appeals16 applies to this case. The dismissal of the replevin case for failure to prosecute results in the restoration of the parties’ status prior to litigation, as if no complaint was filed at all. To let the writ of seizure stand after the dismissal of the complaint would be adjudging Advent as the prevailing party, when precisely no decision on the merits had been rendered. Accordingly, the parties must be reverted to their status quo ante. Since Young possessed the subject car before the filing of the replevin case, the same must be returned to him, as if no complaint was filed at all.
Advent’s contention that returning the subject car to Young would constitute a violation of the stay order issued by the rehabilitation court is untenable. As the Court of Appeals correctly concluded, returning the seized vehicle to Young is not an enforcement of a claim against Advent which must be suspended by virtue of the stay order issued by the rehabilitation court pursuant to Section 6 of the Interim Rules on Corporate Rehabilitation (Interim Rules).17 The issue in the replevin case is who has better right to possession of the car, and it was Advent that claimed a better right in filing the replevin case against Young. In defense, Young claimed a better right to possession of the car arising from Advent’s car plan to its executives, which he asserts entitles him to offset the value of the car against the proceeds of his retirement pay and stock option plan.
Young cannot collect a money “claim” against Advent within the contemplation of the Interim Rules. The term “claim” has been construed to refer to debts or demands of a pecuniary nature, or the assertion to have money paid by the company under rehabilitation to its creditors.18 In the replevin case, Young cannot demand that Advent pay him money because such payment, even if valid, has been “stayed” by order of the rehabilitation court. However, in the replevin case, Young can raise Advent’s car plan, coupled with his retirement pay and stock option plan, as giving him a better right to possession of the car. To repeat, Young is entitled to recover the subject car as a necessary consequence of the dismissal of the replevin case for failure to prosecute without prejudice.
On the damages against the replevin bond
Section 10, Rule 60 of the Rules of Court19 governs claims for damages on account of improper or irregular seizure in replevin cases. It provides that in replevin cases, as in receivership and injunction cases, the damages to be awarded upon the bond “shall be claimed, ascertained, and granted” in accordance with Section 20 of Rule 57 which reads:
Sec. 20. Claim for damages on account of improper, irregular or excessive attachment. - 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, with due notice to the attaching obligee or his surety or sureties, setting forth the facts showing his right to damages and the amount thereof. Such damages may be awarded only after proper hearing and shall be included in the judgment on the main case. e
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 in the appellate court 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.
Nothing herein contained shall prevent the party against whom the attachment was issued from recovering in the same action the damages awarded to him from any property of the attaching obligee not exempt from execution should the bond or deposit given by the latter be insufficient or fail to fully satisfy the award.
The above provision essentially allows the application to be filed at any time before the judgment becomes executory.20 It should be filed in the same case that is the main action,21 and with the court having jurisdiction over the case at the time of the application.22
e remed
In this case, there was no application for damages against Stronghold resulting from the issuance of the writ of seizure before the finality of the dismissal of the complaint for failure to prosecute. It appears that Young filed his omnibus motion claiming damages against Stronghold after the dismissal order issued by the trial court on 28 April 2005 had attained finality. While Young filed a motion for partial reconsideration on 10 June 2005, it only concerned the dismissal of his counterclaim, without any claim for damages against the replevinbond. It was only on 8 July 2005 that Young filed an omnibus motion seeking damages against the replevin bond, after the dismissal order had already become final for Advent’s non-appeal of such order. In fact, in his omnibus motion, Young stressed the finality of the dismissal order.23 Thus, Young is barred from claiming damages against the replevin bond.
In Jao v. Royal Financing Corporation,24 the Court held that defendant therein was precluded from claiming damages against the surety bond since defendant failed to file the application for damages before the termination of the case, thus:
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 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.
Since Young is time-barred from claiming damages against the replevin bond, the dismissal order having attained finality after the application for damages, the Court of Appeals erred in ordering the trial court to set a hearing for the determination of damages against the replevin bond.
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