Yau vs. Manila Banking Corporation

Co-equal courts cannot interfere with or issue orders affecting property already under the custodia legis of another co-equal court.

Ricardo C. Silverio, Sr. was a debtor in multiple lawsuits. Manila Banking Corporation (Manilabank) sued him in the RTC of Makati City and obtained writs of preliminary attachment over his Manila Golf proprietary membership share in 1990. Separately, Esteban Yau sued Silverio in the RTC of Cebu City, obtained a judgment, and had the same Manila Golf share levied and sold at a public auction in 1992, where Yau emerged as the highest bidder.

• Original Filing: Civil Case No. CEB-2058 (RTC Cebu City, Branch 6); Civil Case Nos. 90-513 and 90-271 (RTC Makati City, Branches 62 and 64)
• Lower Court Decision:
  • RTC Makati Br. 62 denied Yau's intervention (parties had rested).
  • RTC Makati Br. 64 granted Yau's intervention.
  • RTC Cebu Br. 6 ordered Manila Golf to issue a new certificate in Yau's name subject to Manilabank's attachment.
  • Appeal: Manilabank filed separate petitions for certiorari in the CA (CA-G.R. SP Nos. 32405 and 37085). The CA nullified the RTC Cebu orders for interfering with a co-equal court's custodia legis, but sustained the RTC Makati Br. 64 order allowing Yau's intervention.
  • SC Action: Both Yau and Manilabank filed separate Rule 45 petitions assailing the CA decisions, which the SC consolidated.

• Yau's Judgment and Execution: Yau obtained a final and executory judgment against Silverio in RTC Cebu City. Upon failure to pay, the sheriff levied Silverio's Manila Golf share on December 7, 1992.
• The Execution Sale: On December 29, 1992, Yau bought the share at a public auction for P2 Million. A Certificate of Sale was issued in his name.
• Manilabank's Prior Attachment: Unbeknownst to Yau at the time of levy, the share was already subject to writs of preliminary attachment issued in 1990 by RTC Makati City (Branches 62 and 64) in favor of Manilabank.
• Yau's Attempt to Intervene in Makati: Yau filed motions to intervene in both Makati cases. Branch 62 denied the motion; Branch 64 granted it. Manilabank assailed the Branch 64 order via certiorari in the CA.
• Yau's Request to Manila Golf: Yau requested Manila Golf to cancel Silverio's certificate and issue a new one to him, expressly agreeing it would remain subject to Manilabank's attachments. Manila Golf refused, fearing contempt due to existing garnishment notices.
• Yau's Motion in Cebu: Yau filed a motion in his Cebu case to compel Manila Golf to issue the new certificate. RTC Cebu granted the motion.
• Manilabank's Direct CA Petition: Manilabank directly filed a certiorari petition in the CA assailing the RTC Cebu order without first filing a motion for reconsideration in the RTC Cebu. The CA nullified the RTC Cebu order for interfering with a co-equal court.

• Yau (G.R. No. 126731):
  • The CA should have dismissed Manilabank's petition outright because Manilabank failed to file a motion for reconsideration with the RTC Cebu before elevating to the CA.
  • Yau is entitled to a new certificate as the purchaser at the execution sale, regardless of the prior attachment.
  • The RTC Cebu did not interfere with or invade the jurisdiction of RTC Makati when it ordered the issuance of a new certificate.
• Manilabank (G.R. No. 128623):
  • Yau has no legal interest to justify intervention in the Makati case and no standing to assail the writ of attachment.
  • Yau's rights can be fully protected in a separate proceeding.
  • Yau's intervention will unduly delay and prejudice the rights of the original parties.
  • Intervention is prohibited after trial has already been concluded.

• Manilabank (Respondent in G.R. No. 126731):
  • The RTC Cebu order is a patent nullity because it interfered with the custodia legis of the RTC Makati, justifying the bypass of a motion for reconsideration.
• Yau (Respondent in G.R. No. 128623):
  • As a judgment creditor and purchaser at the execution sale, he would be adversely affected by the disposition of the attached property, giving him the legal interest required to intervene.

• Procedural Issues:
  • Whether Manilabank's certiorari petition should have been dismissed outright for failure to file a motion for reconsideration with the RTC Cebu.
  • Whether Yau is guilty of forum shopping.
  • Whether Yau may be allowed to intervene after trial has concluded.
• Substantive Issues:
  • Whether the RTC Cebu interfered with the jurisdiction of a co-equal court (RTC Makati) by ordering the issuance of a new certificate for property already under custodia legis.
  • Whether Yau has the legal interest required to intervene in the attachment case pending in RTC Makati.

• Procedural:
  • Failure to file MR: The SC held that while filing a motion for reconsideration is a condition sine qua non for certiorari, an exception exists where the assailed order is a patent nullity. Because the RTC Cebu had no jurisdiction to act on property under the custodia legis of a co-equal court, its order was a patent nullity, excusing the MR requirement.
  • Forum Shopping: The SC held Yau guilty of forum shopping. He simultaneously sought relief in RTC Cebu (compelling issuance of a new certificate) while intervening in RTC Makati to protect the same interest. This created the possibility of conflicting decisions and vexed the courts.
  • Timing of Intervention: The SC noted that under the 1997 Rules, intervention is allowed "before rendition of judgment by the trial court." After trial and decision, intervention can no longer be permitted. However, the SC affirmed the CA's disposition allowing intervention, as the trial court has full discretion and the rule aims to economize litigation.
• Substantive:
  • Judicial Stability/Custodia Legis: The SC ruled that the RTC Cebu unlawfully interfered with the RTC Makati. The notice of garnishment brought the property into the custodia legis of the RTC Makati. A court that has control of property under custodia legis exercises exclusive jurisdiction over it. No co-equal court has the right to interfere with or change that possession.
  • Legal Interest to Intervene: The SC held that Yau possesses legal interest. A judgment creditor who has reduced his claim to judgment may be allowed to intervene. A purchaser who acquires an interest in attached property may intervene to challenge the attachment. Yau would be adversely affected if a decision favored Manilabank, giving him standing to protect his interest in the very court that had custody of the property.

• Doctrine of Judicial Stability (Non-Interference) — Co-equal and coordinate courts cannot interfere with each other's orders, judgments, or proceedings. A court that has control of property under custodia legis exercises exclusive jurisdiction over it and retains all incidents relative to its conduct.
• Custodia Legis — Property brought under the jurisdiction of the court issuing a writ of attachment/garnishment is in the custody of the law. It is fastened with a lien and placed under the sole control of that court, beyond the interference of all other coordinate courts.
• Forum Shopping — Exists when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and essential facts, raising substantially the same issues, thereby causing vexation to courts and litigants and creating the possibility of conflicting decisions.
• Intervention — A person who has a legal interest in the matter in litigation, or is so situated as to be adversely affected by a distribution or disposition of property in the custody of the court, may be allowed to intervene before rendition of judgment by the trial court.

• Section 1, Rule 19, 1997 Rules of Civil Procedure (formerly Sec 2, Rule 12) — Governs who may intervene. Applied to recognize that Yau falls under the instance of a person "so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court."
• Section 2, Rule 19, 1997 Rules of Civil Procedure — Governs the time to intervene. Applied to state that intervention may be allowed "before rendition of judgment by the trial court."
• Rule 65, Rules of Court — Governs certiorari. Applied regarding the procedural requirement of filing a motion for reconsideration before resorting to certiorari, and the exceptions thereto.