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A.M. No.

RTJ-93-1008 November 14, 1994


TERESITA P. ARELLANO, petitioner,
vs.
JUDGE NAPOLEON R. FLOJO, FELINO BANGALAN,
Clerk of Court III, HERMINIO DEL CASTILLO, RTCOCC.; LUCINO JOVE, Deputy Sheriff, respondents.
RESOLUTION
MELO, J.:
Teresita P. Arellano, defendant in Civil Case No. 111041 then pending before Branch 6 of the Regional
Trial Court of the Second Judicial Region and stationed
in Aparri, Cagayan, filed a verified complaint for
neglect of duty, misconduct, bias, and partiality against

(a) Judge Napoleon R. Flojo, then Presiding Judge of the


aforementioned Branch 6, now assigned as Presiding
Judge of Branch 2 of the Regional Trial Court of Manila,
for having irregularly issued an order dated January 21,
1986 for the issuance of a writ of attachment in the
said case on the same date despite the lack of legal
basis therefor.
(b) Felino Bangalan, then Acting Clerk of Court III, of
the Aparri RTC (now Presiding Judge, MTC, Branch 1,
Aparri, Cagayan) for issuing the writ of attachment in
the said case despite the failure of the plaintiffs to post
the required attachment bond of P100,000.00 and for
deliberately delaying the issuance of service of
summons to the defendant in that although the case
was filed on January 21, 1986, the defendant
(complainant herein) was served summons only on
May 13, 1986 or four (4) months thereafter, and that
she was not even furnished a copy of the Order
authorizing the issuance of a writ of attachment, the
so-called attachment bond, as well as the writ of
attachment itself.
(c) Herminio del Castillo, Branch Clerk of Court of the
Aparri RTC for deliberately delaying the issuance of
service of summons on the defendant.
(d) Luciano Jove, Deputy Sheriff, Aparri, Cagayan for
seizing a vehicle not owned by the defendant and
entrusting the custody thereof to Sheriff Guards
Rodolfo Auringan and Dioniso Co., Jr., instead of
personally keeping it under his custody, resulting in the
said vehicle being cannibalized to the damage and
prejudice of the complainant and the heirs of the late
Ruperto Arellano.
The complaint against Clerk of Court Herminio del
Castillo was dismissed for lack of merit by the Court in
its Resolution dated June 28, 1993, as he did not

appear to have had any participation in the issuance


and service of summons on the defendant in the
aforementioned civil case (pp. 42-43, Rollo.)
With respect to Judge Napoleon R. Flojo, inasmuch as
the charges against him were mere reiterations of the
charges filed by the same complainant in A.M. Case
No. RTJ-86-52 which had been earlier dismissed for lack
of merit by the Court en banc on March 24, 1987, the
instant complaint against him was likewise dismissed
in the resolution of the Court dated November 8, 1993
(p. 83, Rollo).
Thereafter, the case was referred to Justice Ramon A.
Barcelona of the Court of Appeals, for investigation,
report, and recommendation in regard to the remaining
respondents.
Justice Barcelona finds Judge Bangalan (then Clerk of
Court III) guilty of negligence for (1) having issued the
writ of attachment on January 21, 1986 in spite of the
applicants' failure to post an acceptable bond as
required under Section 4, Rule 57 of the Rules of Court
for what appears in the record is only a promissory
note in the form of an affidavit executed by Victor
Suguitan, Andres Langaman, and Mariano Retreta;
having caused the implementation through Sheriff
Jove, of the said writ of attachment on January 23,
1986, knowingly fully well that no summons had as yet
been issued and served as of said date upon defendant
therein in violation of Section 5, Rule 57 of the Rules of
Court and Section 3, Rule 14 of the same rules.
As for Sheriff Jove, Justice Barcelona found that in
serving the writ of attachment, the sheriff did not serve
the same on the defendant but on somebody whom he
suspected only as holding the property of the
complainant. He failed to verify the ownership of the
cargo truck he attached. To compound the sheriff's
failure to exercise diligence in the execution of the writ
of attachment, he surrendered the custody of the
property to the two alleged guards instead of
depositing the same in a bonded warehouse.
Finding both Judge Bangalan and Sheriff Jove remiss in
the performance of their duties, Justice Barcelona
recommends that they each be suspended for one (1)
month (not chargeable to their accumulated leave)
without pay. However, this Court is of the opinion and
thus hereby holds that a fine of P5,000.00 each for
Judge Bangalan and Sheriff Jove is the commensurate
penalty for the irregularity that attended the civil case
below. In this respect, we agree with the factual
findings and analysis of the Office of the Court
Administrator, thus:
Indeed, he issued the Writ of
Attachment although the plaintiffs have

not yet posted the required attachment


bond. It is explicitly stated in his
Comment that what was filed was
merely an undertaking. The fact that
the "Undertaking" was subscribed by
the branch clerk of court does not
necessarily follow that it carried the
imprimatur of the presiding judge
thereof. As a lawyer, respondent
Bangalan, who is now a Judge should
have known the glaring distinctions
between a plain undertaking and a real
attachment bond. The difference
between the two is not that hard to
discern. As ruled by Judge Ernesto A.
Talamayan in his order of April 23, 1993
(Rollo, pp. 18-19), no bond can be
confiscated to answer for the damages
sustained
by
defendants.
He
discovered that only a promissory note
in the form of an affidavit executed by
the bondsmen denominated as an
attachment bond appears on the
record. Had respondent Bangalan
carefully examined the undertaking
filed before he issued the writ of
attachment, such a situation could
have been obviated. Where a statute
authorizing attachment requires, as a
condition to the issuance of the writ,
that a bond shall be given by plaintiff
to indemnify defendant for any loss or
injury resulting from the attachment in
case it proves to be wrongful, a failure
to give such bond is fatal, and an
attachment
issued
without
the
necessary bond is invalid (7 C.J.S. 326).
However, we do not find that the delay
in the issuance and service of
summons was deliberately done to
prejudice the defendant. Bad faith
cannot be inferred by the mere fact of
delay considering that it was issued by
the Office of the Clerk of Court and not
by the branch clerk to whom the case
was already assigned.
For seizing a vehicle which is not
owned by the defendant, respondent
Sheriff
Jove
may
be
held
administratively liable. Although his
actuation may not have been tainted
with bad faith or malice, he failed to
exercise due prudence in attaching the
truck. He should have verified first if
the truck he seized was owned by the
judgment debtor, especially in this
case where it was found in the
possession of a person other than its

real owner. Consequently, the writ of


attachment was ordered dissolved in
the Decision of Judge Tumacder dated
August 9, 1989 (Rollo, pp. 25 to 41) as
the property attached does not belong
to the judgment debtor but to her
father, Ruperto Arellano. A sheriff
incurs liability if he wrongfully levies
upon the property of a third person (47
Am Jr 857). A sheriff has no authority to
attach the property of any person
under execution except that of the
judgment debtor. If he does so, the writ
of
execution
affords
him
no
justification, for the action is not in
obedience to the mandate of the writ
(Codesal and Ocampo vs. Ascue, 38
Phil. 902). The sheriff maybe liable for
enforcing
execution
on
property
belonging to a third party (Sec. 17,
Rule 39, Rules of Court). However, he
cannot be faulted for entrusting the
custody thereof to the sheriff guards
considering that he can not physically
keep the cargo truck under his custody.
His stand is sustained by the Court in
its Order of October 10, 1989 (Rollo,
pp. 110 to 111), holding the two (2)
sheriff guards liable for the cannibalism
of the truck.
(pp. 132-133. Rollo)
WHEREFORE, premises considered, Judge Felino
Bangalan and Sheriff Lucinio Jove are hereby each
fined the amount of FIVE THOUSAND PESOS
(P5,000.00), with the severe warning that a repetition
of the same or similar acts in the future will be dealt
with more severely.
SO ORDERED.

G.R. No. 74696 November 11, 1987


JOSE D. CALDERON, petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, GEORGE
SCHULZE, GEORGE SCHULZE, JR., ANTONIO C.
AMOR, MANUEL A. MOZO, and VICTOR M.
NALUZ, respondents.

Schulze is about to depart from the Philippines in order


to defraud his creditors.
To support the petition for preliminary attachment, the
petitioner posted a surety bond of P1,475,840.00. On
October 28, 1977, the trial court issued a writ of
preliminary attachment, whereupon properties of the
private respondents were attached and their bank
deposits were garnished.

G. R. No. 73916 November 11, 1987


FIRST INTEGRATED BONDING AND INSURANCE
COMPANY, INC., petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, GEORGE
SCHULZE, ANTONIO C. AMOR, MANUEL A. MOZO
and VICTOR M. NALUZ, respondents.
PARAS, J.:
For review on certiorari is respondent appellate Court's
decision 1 in AC-G.R. No. 01420, which affirmed the
Regional Trial Court's decision 2 appealed from holding
the plaintiff Jose D. Calderon (petitioner herein) and his
bondsman the Integrated Bonding and Insurance
Company, Inc., jointly and severally liable to pay
defendants (private respondents herein), damages
caused by the filing by Calderon of the allegedly
unwarranted suit and the wrongful and malicious
attachment of private respondents' properties.
The facts of the case are briefly as follows:
On November 2, 1976, petitioner Calderon purchased
from the private respondents the following: the Luzon
Brokerage Corporation (LBC for brevity) and its five (5)
affiliate companies, namely, Luzon Air Freight, Inc.,
Luzon Port Terminals Services, Inc., Luzon (GS)
Warehousing Corporation, GS Industrial Management
Corporation, and GS Luzon Trucking Corporation.
Twenty one (21) days thereafter or on November 23,
1976, the Bureau of Customs suspended the
operations of LBC for failure to pay the amount of
P1,475,840.00 representing customs taxes and duties
incurred prior to the execution of the sale. In order to
lift the suspension Calderon paid the sum of
P606,430.00 to the Bureau of Customs.
On October 27, 1977, Calderon filed a complaint
against private respondents to recover said amount of
P1,475,840.00, with damages by reason of breach of
warranty. In the same complaint, the petitioner prayed
for a preliminary attachment, alleging: that private
respondents had deliberately and willfully concealed
from his knowledge such staggering liability of the LBC
for the purpose of misleading him into buying the six
aforesaid companies; and that private respondent

On November 10, 1977, petitioner Calderon filed an


amended complaint, alleging that while the liabilities of
LBC are reflected in its books, the aforesaid amount
was fraudulently withdrawn and misappropriated by
private respondent Schulze. (pp. 7-18, Rollo)
On the other hand, private respondents claimed: that
the amount of P1,475,840.00 due to the Bureau of
Customs represents the duties and taxes payable out
of the advanced payments made by LBC's client,
Philippine Refining Company (PRC, for brevity) in
August, September and October, 1976, and in the first
and second weeks of November 1976, after Calderon
himself had taken control of the management of LBC
(Exhibit A); that these deposit payments were properly
recorded in the books of the corporation and existing
as part of the corporate funds; that from the first week
of June, 1976 up to October 30, 1976, private
respondent Schulze fully disclose and explained to
Calderon that these customer's advanced deposit
payments (including those of the PRC) are to be paid to
the Bureau of Customs when their corresponding
customs taxes and duties become due; that during this
phase of the negotiation, Calderon and his
representatives inspected and studied the corporate
books and records at will and learned the daily
operations and management of LBC; that the petitioner
did not pay out of his own pocket but out of the LBC
funds the said amount of P606,430,30 demanded by
the Bureau of Customs, as evidenced by a manager's
check No. FEBTC 25092 (Exhibits 9, 10, 11 & 38) and
another facility negotiated with the Insular Bank of Asia
and America (Exhibit K-2); and that private respondents
are setting up a counterclaim for actual, moral and
exemplary damages as well as attorney's fees, as a
consequence of the filing of the baseless suit and the
wrongful and malicious attachment of their properties,
(pp. 217-221, Rollo)
On November 17, 1977, private respondents filed a
counterbond, whereupon the trial court issued an order
directing the sheriff to return all real and personal
properties already levied upon and to lift the notices of
garnishment issued in connection with the said
attachment (Annex B, p. 42, Rollo).
After trial, the trial court dismissed the complaint,
holding Calderon and his surety First integrated
Bonding and Insurance Co., Inc., jointly and severally

liable to pay the damages prayed for by the private


respondents.
Said decision was affirmed on appeal, although slightly
modified in the sense that the award of moral and
exemplary damages in favor of private respondents
Schulze and Amor was reduced. The dispositive portion
of the judgment of affirmance and modification reads:
WHEREFORE, the judgment of
lower court is modified as follows:

the

To defendant-appellee George Schulze:


P650,000.00 as moral damages and
P200,000.00 as exemplary damages.
To defendant-appellee Antonio C.
Amor:
P150,000.00 as moral damages and
P30,000.00 as exemplary damages,
An other dispositions in the judgment
appealed from, including the dismissal
of the amended complainant are
hereby affirmed in toto.
SO ORDERED.
In his petition, petitioner Calderon asserts, among
other things, that the court below erred:
I
IN HOLDING THAT THE PETITIONER
FAILED TO ESTABLISH HIS CLAIMS.
II
IN HOLDING THAT THE PRELIMINARY
ATTACHMENT HAD BEEN WRONGFULLY
AND MALICIOUSLY SUED OUT.
III
IN HOLDING THAT THE PETITIONER IS
LIABLE NOT ONLY FOR ACTUAL
DAMAGES BUT MORAL AND EXEXEMPLARY DAMAGES AS WELL.
On the other hand, petitioner Insurance Company
raises the following issues:
I
WHETHER OR NOT THE PETITIONER
SURETY IS LIABLE FOR DAMAGES ON
ITS
CONTRACTED
SURETYSHIP

NOTWITHSTANDING THE DISSOLUTION


OF
THE
WRIT
OF
PRELIMINARY
ATTACHMENT, AS A CON. SEQUENCE
OF THE FILING OF THE DEFENDANT'S
COUNTER- BOND, WHEREBY LEVIED
PROPERTIES WERE ORDERED BY THE
COURT
RETURNED
TO
PRIVATE
RESPONDENTS AND THE NOTICES OF
GARNISHMENT ISSUED IN CONNECTION
THEREWITH ORDERED LIFTED.
II
WHETHER OR NOT THE SUBSEQUENT
FILING BY PRIVATE RESPONDENTS OF A
COUNTER-BOND TO DISCHARGE THE
WRIT OF PRELIMINARY ATTACHMENT
CONSTITUTE A WAIVER ON ANY
DEFECT IN THE ISSUANCE OF THE
ATTACHMENT WRIT.
III
WHETHER OR NOT A SURETY IS A
GUARANTOR OF THE EXISTENCE OF A
GOOD CAUSE OF ACTION IN THE
COMPLAINT.
The petition is devoid of merit.
Whether or not the amount of P1,475,840.00 was duly
disclosed as an outstanding liability of LBC or was
misappropriated by private respondent Schulze is
purely a factual issue. That Calderon was clearly in bad
faith when he asked for the attachment is indicated by
the fact that he failed to appear in court to support his
charge of misappropriation by Schulze, and in effect,
preventing his being cross-examined, no document on
the charges was presented by him.
What the Appellate Court found in this regard need not
be further elaborated upon. The Appellate Court ruled:
... The record shows that appellant
Calderon failed to produce any
evidence in support of his sworn
charge that appellee Schulze had
deliberately and willfully concealed the
liabilities
of
Luzon
Brokerage
Corporation. Neither did appellant
Calderon prove his sworn charges that
appellee Schulze had maliciously and
fraudulently
withdrawn
and
misappropriated
the
amount
of
Pl,475,840.00
and
that
an
the
defendants
had
maliciously
and
fraudulently concealed and withheld
from him this alleged liability of Luzon

Brokerage Corporation in breach of the


contract-warranty that said corporation
had no obligations or liabilities except
those appearing in the books and
records of the said corporation. Indeed,
appellant Calderon never appeared in
the trial court to substantiate the
charges in his verified complaints and
in his affidavit to support his petition
for the issuance of a writ of
attachment. He distanced himself from
the appellees and avoided crossexamination
regarding
his
sworn
allegations. ...
... But even though appellant Calderon
failed to prove his serious charges of
fraud, malice and bad faith, the
appellees took it upon themselves to
show that they did not conceal or
withhold from appellant's knowledge
the deposits made by Philippine
Refining Co., Inc. with Luzon Brokerage
Corporation and that they did not
withdraw and misappropriate the
deposits made by Philippine Refining
Co.,
Inc.
with
Luzon
Brokerage
Corporation.
The books and records of Luzon
Brokerage Corporation on which the
Financial Statement of Luzon Brokerage
Corporation, as of October 31, 1976
was prepared by the auditing firm
retained by appellant Calderon himself
(Exhibit 1), disclose that the liabilities
of Luzon Brokerage Corporation in the
total amount of P4,574,498.32 appear
under the heading 'Customers Deposit'
(Exhibit 1-A) this amount includes the
deposit of Philippine Refining Co., Inc.
in the sum of Pl,475,840.00.
But appellant Calderon contends that
this financial statement was dated
February 4, 1977 (see Exhibit 1-C).
There is nothing commendable in this
argument because the bases of the
financial statement were the books,
records and documents of Luzon
Brokerage Corporation for the period
ending October 31, 1976, which were
all turned over to and examined by
appellant Calderon and his executive,
legal and financial staffs. There is also
no merit in the contention of appellant
Calderon that the appellees have
tampered
the
books
of
Luzon
Brokerage Corporation because there is

no proof to back this charge, let alone


the fact that appellant Calderon did not
even present the said books to support
his charge.
As stated above, the amount of
customers' deposits in the sum of
P4,574,498.32 includes the deposits of
Philippine Refining Co., Inc. (Exhibits
46-A, 46-B, 46-C, 46-D, 46-E, 46-F, 46G, 46-H, 46-1, 46-J, t.s.n. July 23, 1980,
pp. 12-13, 14-15). The amounts
deposited by Philippine Refining Co.,
Inc. on various dates with Luzon
Brokerage Corporation made before the
execution of the sale were all entered
in three other corporate books of Luzon
Brokerage Corporation namely, the
Cash Receipts Register (Exhibits 39-A-1
to 39-K-1 and 39-A-1-B to 39-K-1-B), the
Journal Vouchers (Exhibits 42 to 46 and
42-A to 43- A), and the Customer's
Deposit Ledger (Exhibit 46-A to 46J) ... .
Thus, the claim of appellant Calderon
that the deposits made by Philippine
Refining Co., Inc. with Luzon Brokerage
Corporation of P406,430.00 on August
24, 1976 (Exhibit N P53,640.00 on
October
13,
1976
(Exhibit
0),
P406,430.00 on September 8, 1976
(Exhibit P P199,508.00 on September
24, 1976 (Exhibit Q P52,738.00 on
October 22, 1976 (Exhibit R and
P264,436.00 on October 7, 1976
(Exhibit S) were not entered in the
books of Luzon Brokerage Corporation,
is completely without merit. ... (pp. 8587, Rollo)
It is evident from the foregoing that the attachment
was maliciously sued out and that as already pointed
out Schulze was not in bad faith.
While as a general rule, the liability on the attachment
bond is limited to actual damages, moral and
exemplary damages may be recovered where the
attachment was alleged to be maliciously sued out and
established to be so. (Lazatin vs. Twano et al,
L-12736, July 31, 1961).
In the instant case, the issues of wrongful and
malicious suing out of the writ of preliminary
attachment were joined not only in private
respondents' motion to discharge the attachment but
also in their answer to the amended complaint (p. 38,
Rollo). The trial court observed that the books and
records of Luzon Brokerage Corporation disclose that

the liabilities of the said corporation in the total


amount of P4,574,498.32 appear under the heading
"Customs Deposit" (Exhibit 1-A) and this amount
includes the deposit of Philippine Refining Co., Inc. in
the sum of P1,475,840.00 (p. 26, Rollo). On the other
hand, plaintiff never appeared in court, and failed to
produce any evidence to substantiate his charges (p.
26, Rollo).
Well settled is the rule that the factual findings of the
trial court are entitled to great weight and respect on
appeal, especially when established by unrebutted
testimonial and documentary evidence, as in this case.
Anent the petition of the surety, We say the following:
Specifically, petitioner surety contends that the
dissolution of the attachment extinguishes its
obligation under the bond, for the basis of its liability,
which is wrongful attachment, no longer exists, the
attachment bond having been rendered void and
ineffective, by virtue of Section 12, Rule 57 of the Rules
of Court. (p. 5, Petition)
While Section 12, Rule 57 of the Rules of Court
provides that upon the filing of a counterbond, the
attachment is discharged or dissolved, nowhere is it
provided that the attachment bond is rendered void
and ineffective upon the filing of counterbond.
The liability of the attachment bond is defined in
Section 4, Rule 57 of the Rules of Court, as follows:
Sec. 4. Condition of applicant's bond.
The party applying for the order must
give a bond executed to the adverse
party in an amount to be fixed by the
judge, not exceeding the applicant's
claim, conditioned that the latter will
pay all the costs which may be
adjudged to the adverse party and all
damages which he may sustain by
reason of the attachment, if the court
shall finally adjudge that the applicant
was not entitled thereto.
It is clear from the above provision that the
responsibility of the surety arises "if the court shall
finally adjudge that the plaintiff was not entitled
thereto." In Rocco vs. Meads, 96 Phil. Reports 884, we
held that the liability attaches if the plaintiff is not
entitled to the attachment because the requirements
entitling him to the writ are wanting, or if the plaintiff
has no right to the attachment because the facts
stated in his affidavit, or some of them, are untrue. It
is, therefore, evident that upon the dismissal of an
attachment wrongfully issued, the surety is liable for
damages as a direct result of said attachment.

Equally untenable is the Surety's contention that by


filing a counterbond, private respondents waived any
defect or flaw in the issuance of the attachment writ,
for they could have sought, without need of filing any
counterbond, the discharge of the attachment if the
same was improperly or irregularly issued, as provided
in Section 13, Rule 57 of the Rules of Court.
Whether the attachment was discharged by either of
the two (2) ways indicated in the law, i.e., by filing a
counterbond or by showing that the order of
attachment was improperly or irregularly issued, the
liability of the surety on the attachment bond subsists
because the final reckoning is when "the Court shall
finally adjudge that the attaching creditor was not
entitled" to the issuance of the attachment writ in the
first place.
The attachment debtor cannot be deemed to have
waived any defect in the issuance of the attachment
writ by simply availing himself of one way of
discharging the attachment writ, instead of the other.
Moreover, the filing of a counterbond is a speedier way
of discharging the attachment writ maliciously sought
out by the attaching creditor instead of the other way,
which, in most instances like in the present case, would
require presentation of evidence in a full-blown trial on
the merits and cannot easily be settled in a pending
incident of the case.
We believe, however, that in the light of the factual
situation in this case, the damages awarded by the
Intermediate Appellate Court are rather excessive.
They must be reduced.
WHEREFORE, the judgment of said Appellate Court is
hereby modified as follows: Both petitioner Calderon
and petitioner First Integrated Bonding and Insurance
Company, Inc. are hereby ordered to give jointly and
severally:
1.
Respondent
George
Schulze,
P250,000.00 as moral damages and
P50,000.00 as exemplary damages;
and
2. Respondent Antonio C. Amor,
P50,000.00 as moral damages and
P10,000.00 as exemplary damages.
The rest of the judgment of the Intermediate Appellate
Court is hereby AFFIRMED.
SO ORDERED.

G.R. No. L-39596

March 23, 1934

"CONSULTA" No. 1013 OF THE REGISTER OF


DEEDS OF TAYABAS. GOTAUCO & CO., applicantappellant,
vs.
THE REGISTER OF DEEDS OF TAYABAS, oppositorappellee.
Godofredo Reyes for appellant.
Office of the Solicitor-General Hilado for appellee.
BUTTE, J.:
This is an appeal from a judgment of the Fourth Branch
of the Court of First Instance of Manila in
a consultasubmitted by the register of deeds of
Tayabas.
Our decision upon this appeal has been facilitated
because both the appellant and the appellee, the latter
being represented by the Solicitor-General, agreed that
the judgment should be reversed.
On August 12, 1932, when Exhibits A and B were
presented to the register, by which a levy of execution
against the judgment debtor, Rafael Vilar was made on
fifteen contracts of land described in Exhibit B and
registered in the name of Florentino Vilar, the register
properly denied the inscription of said levy of execution
because the title to the lands was in the name of
Florentino Vilar and no evidence was submitted that
Rafael Vilar had any present or possible future interest
in the land. On September 17, 1932, there was
presented to him a copy of a petition filed in the Court
of First Instance of the province, entitled, "Intestado del
Finado Florentino Vilar", from which he could properly
infer that Florentino Vilar was dead and that the
judgment debtor Rafael Vilar is one of the heirs of the
deceased Florentino Vilar. Although the value of the
participation of Rafael Vilar in the estate of Florentino
Vilar was indeterminable before the final liquidation of
the estate, nevertheless, the right of participation in
the estate and the lands thereof may be attached and
sold. The real test was laid down by this court in the
case ofReyes vs. Grey (21 Phil., 73, 76), namely: Does
the judgment debtor hold such a beneficial interest in
the property that he can sell or otherwise dispose of it
for value? Nothing appears in this record to indicate
that Rafael Vilar being sui juris could not dispose of his
interest or share as heir in the estate of Florentina
Vilar. Having this right, he could by a conveyance
defeat pro tanto the provisions of section 450 of the
Code of Civil Procedure and thus deprive the judgment
creditor of the benefit of a lawful execution. (See
also Consulta No. 441 de los Abogados de Smith, Bell &
Co., 48 Phil., 656, 664, 665.)

On October 12, 1932, with the knowledge which he


them had, the register should have accepted and
inscribed Exhibit A, B and D.
The judgment in this consulta is reversed without
special pronouncement as to costs.

G.R. No. 107303 February 21, 1994


EMMANUEL C. OATE and ECON HOLDINGS
CORPORATION, petitioners,
vs.
HON. ZUES C. ABROGAR, as Presiding Judge of
Branch 150 of the Regional Trial Court of Makati,
and SUN LIFE ASSURANCE COMPANY OF
CANADA, respondents.
G.R. No. 107491 February 21, 1994
BRUNNER DEVELOPMENT
CORPORATION, petitioner,
vs.
HON. ZUES C. ABROGAR, as Presiding Judge of
Branch 150 of the Regional Trial Court of Makati,
and SUN LIFE ASSURANCE COMPANY OF
CANADA, respondents.
NOCON, J.:
These are separate petitions for certiorari with a prayer
for temporary restraining order filed by Emmanuel C.
Oate and Econ Holdings Corporation (in G.R. No.
107303), and Brunner Development Corporation (in
G.R. No. 107491), both of which assail several orders
issued by respondent Judge Zues C. Abrogar in Civil
Case No. 91-3506.
The pertinent facts are as follows: On December 23,
1991, respondent Sun Life Assurance Company of
Canada (Sun Life, for brevity) filed a complaint for a
sum of money with a prayer for the immediate
issuance of a writ of attachment against petitioners,
and Noel L. Dio, which was docketed as Civil Case No.
91-3506 and raffled to Branch 150 of the RTC Makati,
presided over by respondent Judge. The following day,
December 24, 1991, respondent Judge issued an order
granting the issuance of a writ of attachment, and the
writ was actually issued on December 27, 1991.
On January 3, 1992, upon Sun Life's ex-parte motion,
the trial court amended the writ of attachment to
reflect the alleged amount of the indebtedness. That
same day, Deputy Sheriff Arturo C. Flores,
accompanied by a representative of Sun Life,
attempted to serve summons and a copy of the
amended writ of attachment upon petitioners at their
known office address at 108 Aguirre St., Makati but was
not able to do so since there was no responsible officer
to receive the same. 1 Nonetheless, Sheriff Flores
proceeded, over a period of several days, to serve
notices of garnishment upon several commercial banks
and financial institutions, and levied on attachment a
condominium unit and a real property belonging to
petitioner Oate.

Summons was eventually served upon petitioners on


January 9, 1992, while defendant Dio was served with
summons on January 16, 1992.
On January 21, 1992, petitioners filed an "Urgent
Motion to Discharge/Dissolve Writ of Attachment." That
same day, Sun Life filed an ex-parte motion to examine
the books of accounts and ledgers of petitioner
Brunner Development Corporation (Brunner, for
brevity) at the Urban Bank, Legaspi Village Branch, and
to obtain copies thereof, which motion was granted by
respondent Judge. The examination of said account
took place on January 23, 1992. Petitioners filed a
motion to nullify the proceedings taken thereat since
they were not present.
On January 30, 1992, petitioners and their codefendants filed a memorandum in support of the
motion to discharge attachment. Also on that same
day, Sun Life filed another motion for examination of
bank accounts, this time seeking the examination of
Account No. 0041-0277-03 with the Bank of Philippine
Islands (BPI) which, incidentally, petitioners claim
not to be owned by them and the records of
Philippine National Bank (PNB) with regard to checks
payable to Brunner. Sun Life asked the court to order
both banks to comply with the notice of garnishment.
On February 6, 1992, respondent Judge issued an order
(1) denying petitioners' and the co-defendants' motion
to discharge the amended writ of attachment, (2)
approving Sun Life's additional attachment, (3)
granting Sun Life's motion to examine the BPI account,
and (4) denying petitioners' motion to nullify the
proceedings of January 23, 1992.
On March 12, 1992, petitioners filed a motion for
reconsideration of the February 6, 1992 order. On
September 6, 1992, respondent Judge denied the
motion for reconsideration.
Hence, the instant petitions. Petitioners' basic
argument is that respondent Judge had acted with
grave abuse of discretion amounting to lack or in
excess of jurisdiction in (1) issuing ex parte the original
and amended writs of preliminary attachment and the
corresponding notices of garnishment and levy on
attachment since the trial court had not yet acquired
jurisdiction over them; and (2) allowing the
examination of the bank records though no notice was
given to them.
We find both petitions unmeritorious.
Petitioners initially argue that respondent Judge erred
in granting Sun Life's prayer for a writ of preliminary
attachment on the ground that the trial court had not
acquired jurisdiction over them. This argument is

clearly unavailing since it is well-settled that a writ of


preliminary attachment may be validly applied for and
granted even before the defendant is summoned or is
heard from. 2 The rationale behind this rule was stated
by the Court in this wise:
A preliminary attachment may be
defined, paraphrasing the Rules of
Court, as the provisional remedy in
virtue of which a plaintiff or other
proper
party
may,
at
the
commencement of the action or any
time thereafter, have the property of
the adverse party taken into the
custody of the court as security for the
satisfaction of any judgment that may
be recovered. It is a remedy which is
purely statutory in respect of which the
law requires a strict construction of the
provisions granting it. Withal no
principle, statutory or jurisprudential,
prohibits its issuance by any court
before acquisition of jurisdiction over
the person of the defendant.
Rule 57 in fact speaks of the grant of
the remedy "at the commencement of
the action or at any time thereafter."
The phrase "at the commencement of
the action," obviously refers to the date
of the filing of the complaint which,
as abovepointed out, its the date that
marks "the commencement of the
action;" and the reference plainly is to
a time before summons is served on
the defendant or even before summons
issues. What the rule is saying quite
clearly is that after an action is
properly
commenced by the filing of the
complaint and the payment of all
requisite docket and other fees the
plaintiff may apply for and obtain a writ
of
preliminary
attachment
upon
fulfillment of the pertinent requisites
laid down by law, and that he may do
so at any time, either before or after
service of summons on the defendant.
And this indeed, has been the
immemorial practice sanctioned by the
courts: for the plaintiff or other proper
party to incorporate the application for
attachment in the complaint or other
appropriate pleading (counterclaim,
cross-claim, third-party claim) and for
the Trial Court to issue the writ exparte at the commencement of the
action if it finds the application

otherwise sufficient
substance. 3

in

form

and

Petitioners then contended that the writ should have


been discharged since the ground on which it was
issued fraud in contracting the obligation was not
present. This cannot be considered a ground for lifting
the writ since this delves into the very complaint of the
Sun Life. As this Court stated in Cuatro v. Court of
Appeals: 4
Moreover, an attachment may not be
dissolved by a showing of its irregular
or improper issuance if it is upon a
ground which is at the same time the
applicant's cause of action in the main
case since an anomalous situation
would result if the issues of the main
case would be ventilated and resolved
in a mere hearing of the motion (Davao
Light and Power Co., Inc. vs. Court of
Appeals, supra, The Consolidated Bank
and Trust Corp. (Solidbank) vs. Court of
Appeals, 197 SCRA 663 [1991]).
In the present case, one of the
allegation in petitioner's complaint
below is that the defendant spouses
induced the plaintiff to grant the loan
by issuing postdated checks to cover
the installment payments and a
separate set of postdated checks for
payment of the stipulated interest
(Annex "B"). The issue of fraud, then, is
clearly within the competence of the
lower court in the main action. 5
The fact that a criminal complaint for estafa filed by
Sun Life against the petitioners was dismissed by the
Provincial Prosecutor of Rizal for Makati on April 21,
1992 and was upheld by the Provincial Prosecutor on
July 13, 1992 is of no moment since the same can be
indicative only of the absence of criminal liability, but
not of civil liability. Besides, Sun Life had elevated the
case for review to the Department of Justice, where the
case is presently pending.
Finally, petitioners argue that the enforcement of the
writ was invalid since it undisputedly preceded the
actual service of summons by six days at most.
Petitioners cite the decisions in Sievert vs. Court of
Appeals, et al. 6 andBAC Manufacturing and Sales
Corp. vs. Court of Appeals, et al., 7 wherein this Court
held that enforcement of the writ of attachment can
not bind the defendant in view of the failure of the trial
court to acquire jurisdiction over the defendant through
either summons or his voluntary appearance.

We do not agree entirely with petitioners. True, this


Court had held in a recent decision that the
enforcement of writ of attachment may not validly be
effected
until
and
unless
proceeded
or
contemporaneously accompanied by service of
summons. 8
But we must distinguish the case at bar from
the Sievert and BAC Manufacturing cases. In those two
cases,summons
was
never
served
upon
the
defendants. The plaintiffs therein did not even attempt
to cause service of summons upon the defendants,
right up to the time the cases went up to this Court.
This is not true in the case at bar. The records reveal
that Sheriff Flores and Sun Life did attempt a
contemporaneous service of both summons and the
writ of attachment on January 3, 1992, but we stymied
by the absence of a responsible officer in petitioners'
offices. Note is taken of the fact that petitioners Oate
and Econ Holdings admitted in their answer 9that the
offices of both Brunner Development Corporation and
Econ Holdings were located at the same address and
that petitioner Oate is the President of Econ Holdings
while petitioner Dio is the President of Brunner
Development Corporation as well as a stockholder and
director of Econ Holdings.
Thus, an exception to the established rule on the
enforcement of the writ of attachment can be made
where a previous attempt to serve the summons and
the writ of attachment failed due to factors beyond the
control of either the plaintiff or the process server,
provided that such service is effected within a
reasonable period thereafter.
Several reasons can be given for the exception. First,
there is a possibility that a defendant, having been
alerted of plaintiffs action by the attempted service of
summons and the writ of attachment, would put his
properties beyond the reach of the plaintiff while the
latter is trying to serve the summons and the writ
anew. By the time the plaintiff may have caused the
service of summons and the writ, there might not be
any property of the defendant left to attach.

respondent Judge on the ground that the amount of the


counter-bond was less than that of Sun Life's bond.
II.
Petitioners' second ground assail the acts of
respondent Judge in allowing the examination of Urban
Banks' records and in ordering that the examination of
the bank records of BPI and PNB as invalid since no
notice of said examinations were ever given them. Sun
Life grounded its requests for the examination of the
bank accounts on Section 10, Rule 57 of the Rules of
Court, which provided, to wit:
Sec. 10. Examination of party whose
property is attached and persons
indebted to him or controlling his
property; delivery of property to
officer. Any person owing debts to
the party whose property is attached or
having in his possession or under his
control any credit or other personal
property belonging to such party, may
be required to attend before the court
in which the action is pending, or
before a commissioner appointed by
the court and be examined on oath
respecting the same. The party whose
property is attached may also be
required to attend for the purpose of
giving
information respecting his
property, and may be examined on
oath. The court may, after such
examination, order personal property
capable of manual delivery belonging
to him, in the possession of the person
so required to attend before the court,
to be delivered to the clerk or court,
sheriff, or other proper officer on such
terms as may be just, having reference
to any lien thereon or claim against the
same, to await the judgment in the
action.

Second, the court eventually acquired jurisdiction over


the petitioners six days later. To nullify the notices of
garnishment issued prior thereto would again open the
possibility that petitioners would transfer the garnished
monies while Sun Life applied for new notices of
garnishment.

It is clear from the foregoing provision that notice need


only be given to the garnishee, but the person who is
holding property or credits belonging to the defendant.
The provision does not require that notice be furnished
the defendant himself, except when there is a need to
examine said defendant "for the purpose of giving
information respecting his property.

Third, the ease by which a writ of attachment can be


obtained is counter-balanced by the ease by which the
same can be discharged: the defendant can either
make a cash deposit or post a counter-bond equivalent
to the value of the property attached. 10 The petitioners
herein tried to have the writ of attachment discharged
by posting a counter-bond, the same was denied by

Furthermore, Section 10 Rule 57 is not incompatible


with Republic Act No. 1405, as amended, "An Act
Prohibiting Disclosure or Inquiry Into, Deposits With
Any Banking Institution and Providing Penalty
Therefore," for Section 2 therefore provides an
exception "in cases where the money deposited or
invested is the subject matter of the litigation."

The examination of the bank records is not a fishing


expedition, but rather a method by which Sun Life
could trace the proceeds of the check it paid to
petitioners.
WHEREFORE, the instant petitions are hereby
DISMISSED. The temporary restraining order issued on
June 28, 1993 is hereby lifted.
SO ORDERED.

G.R. No. 107303 February 23, 1995


EMMANUEL C. OATE and ECON HOLDINGS
CORPORATION, petitioners,
vs.
HON. ZEUS C. ABROGAR, as Presiding Judge of
Branch 150 of the Regional Trial Court of Makati,
and SUN LIFE ASSURANCE COMPANY OF CANADA,
respondents.
BRUNNER DEVELOPMENT CORPORATION,
petitioner,
vs.
HON. ZEUS C. ABROGAR, as Presiding Judge of
Branch 150 of the Regional Trial Court of Makati,
and SUN LIFE ASSURANCE COMPANY OF CANADA,
respondents.
RESOLUTION
MENDOZA, J.:
These are motions separately filed by petitioners,
seeking reconsideration of the decision of the Second
Division holding that although the levy on attachment
of petitioners' properties had been made before the
trial court acquired jurisdiction over them, the
subsequent service of summons on them cured the
invalidity of the attachment.
The motions were referred to the Court en banc in view
of the fact that in another decision rendered by the
Third Division on the same question, it was held that
the subsequent acquisition of jurisdiction over the
person of a defendant does not render valid the
previous attachment of his property. 1 The Court en
banc accepted the referral and now issues this
resolution.
Petitioners maintain that, in accordance with prior
decisions of this Court, the attachment of their
properties was void because the trial court had not at
that time acquired jurisdiction over them and that the
subsequent service of summons on them did not cure
the invalidity of the levy. They further contend that the
examination of the books and ledgers of the Bank of
the Philippine Islands (BPI), the Philippine National
Bank (PNB) and the Urban Bank was a "fishing
expedition" which the trial court should not have
authorized because petitioner Emmanuel C. Oate,
whose accounts were examined, was not a signatory to
any of the documents evidencing the transaction
between Sun Life Assurance of Canada (Sun Life) and
Brunner Development Corporation (Brunner).
On the other hand private respondent Sun Life stresses
the fact that the trial court eventually acquired
jurisdiction over petitioners and contends that this

cured the invalidity of the attachment of petitioners'


properties. With respect to the second contention of
petitioners, private respondent argues that the
examination of petitioner Oate's bank account was
justified because it was he who signed checks
transferring huge amounts from Brunner's account in
the Urban Bank to the PNB and the BPI.
I
At the outset, it should be stated that the Court does
not in the least doubt the validity of the writ of
attachment issued in these cases. The fact that a
criminal complaint for estafa which Sun Life had filed
against petitioner Oate and Noel L. Dio, president of
Brunner, was dismissed by the Office of the Provincial
Prosecutor is immaterial to the resolution of the
motions for reconsideration. In the first place, the
dismissal, although later affirmed by the Department of
Justice, is pending reconsideration. In the second place,
since the issue in the case below is precisely whether
petitioners were guilty of fraud in contracting their
obligation, resolution of the question must await the
trial of the main case.
However, we find petitioners' contention respecting the
validity of the attachment of their properties to be well
taken. We hold that the attachment of petitioners'
properties prior to the acquisition of jurisdiction by the
respondent court is void and that the subsequent
service of summons on petitioners did not cure the
invalidity of such attachment. The records show that
before the summons and the complaint were served on
petitioners Oate and Econ Holdings Corporation
(Econ) on January 9, 1992, Deputy Sheriff Arturo C.
Flores had already served on January 3, 1992 notices of
garnishment on the PNB Head office 2 and on all its
Metro Manila branches and an A.B capital. 3 In addition
he made other levies before the service of summons
on petitioners, to wit:
On January 6, 1992, he served notices of
garnishment on the Urban Bank Head Office and all its
Metro Manila branches, 4 and on the BPI. 5
On the same day, he levied on attachment Oate's
condominium unit at the Amorsolo Apartments
Condominium Project, covered by Condominium
Certificate of Title No. S-1758. 6
On January 7, 1992, he served notice of garnishment
on the Union Bank of the Philippines. 7
On January 8, 1992, he attached Oate's lot,
consisting of 1,256 square meters, at the AyalaAlabang Subdivision, Alabang, Muntinlupa, covered by
TCT No. 112673. 8

First. The Deputy Sheriff claims that he had tried to


serve the summons with a copy of the complaint on
petitioners on January 3, 1992 but that there was no
one in the offices of petitioners on whom he could
make a service. This is denied by petitioners who claim
that their office was always open and that Adeliza M.
Jaranilla, Econ's Chief Accountant who eventually
received summons on behalf of Oate and Econ, was
present that day. Whatever the truth is, the fact is that
no other attempt was made by the sheriff to serve the
summons except on January 9, 1992, in the case of
Oate and Econ, and on January 16, 1992, in the case
of Dio. Meantime, he made several levies, which
indicates a predisposition to serve the writ of
attachment in anticipation of the eventual acquisition
by the court of jurisdiction over petitioners.
Second. Private respondent invokes the ruling in Davao
Light & Power Co. v. Court of Appeals 9 in support of its
contention that the subsequent acquisition of
jurisdiction by the court cured the defect in the
proceedings for attachment. It cites the following
portion of the decision in Davao Light and Power,
written by Justice, now Chief Justice, Narvasa:
It goes without saying that whatever be
the acts done by the Court prior to the
acquisition of jurisdiction over the
person of the defendant, as above
indicated issuance of summons,
order of attachment and writ of
attachment (and/or appointment of
guardian ad litem, or grant of authority
to the plaintiff to prosecute the suit as
a pauper litigant, or amendment of the
complaint by the plaintiff as a matter of
right without leave of court and
however valid and proper they might
otherwise be, these do not and cannot
bind and affect the defendant until and
unless jurisdiction over his person
is eventually obtained by the court,
either by service on him of summons or
other coercive process or his voluntary
submission to the court's authority.
Hence, when the sheriff or other
proper
officer
commences
implementation
of
the
writ
of
attachment, it is essential that he
serve on the defendant not only a copy
of
the
applicant's
affidavit and
attachment bond, and of the order of
attachment, as explicitly required by
Section 5 of Rule 57, but also the
summons addressed to said defendant
as well as a copy of the complaint and
order for appointment of guardian ad
litem, if any, as also explicitly directed

by Section 3, Rule 14 of the Rules of


Court. 10
It is clear from the above excerpt, however, that while
the petition for a writ of preliminary attachment may
be granted and the writ itself issued before the
defendant is summoned, the writ of attachment cannot
be implemented until jurisdiction over the person of
the defendant is obtained. As this Court explained,
"levy on property pursuant to the writ thus issued may
not
be
validly
effected
unless
preceded,
or contemporaneously accompanied, by service on the
defendant of summons, a copy of the complaint (and of
the appointment of guardian ad litem, if any), the
application for attachment (if not incorporated in but
submitted separately from the complaint), the order of
attachment, and the plaintiff's attachment bond." 11
Further clarification on this point was made in Cuartero
v. Court of Appeals, 12 in which it was held:
It must be emphasized that the grant
of
the
provisional
remedy
of
attachment practically involves three
stages; first, the court issues the order
granting the application; second, the
writ of attachment issues pursuant to
the order granting the writ; and third,
the writ is implemented. For the initial
two stages, it is not necessary that
jurisdiction over the person of the
defendant should first be obtained.
However, once the implementation
commences, it is required that the
court must have acquired jurisdiction
over the defendant for without such
jurisdiction, the court has no power and
authority to act in any manner against
the defendant. Any order issuing from
the Court will not bind the defendant.
Private
respondent
argues
that
the
case
of Cuartero itself provides for an exception as shown in
the statement that "the court [in issuing the writ of
preliminary attachment] cannot bind and affect the
defendant until jurisdiction is eventually obtained" and
that since petitioners were subsequently served with
summons, no question can be raised against the
validity of the attachment of petitioners' properties
before such service.
The statement in question has been taken out of
context. The full statement reads:
It is clear from our pronouncements
that a writ of preliminary attachment
may issue even before summons is
served upon the defendant. However,

we have likewise ruled that the writ


cannot bind and affect the defendant
until jurisdiction over his person is
eventually obtained. Therefore, it is
required that when proper officer
commences implementation of the writ
of attachment service of summons
should be simultaneously made. 13
Indeed, as this Court through its First Division has ruled
on facts similar to those in these cases, the attachment
of properties before the service of summons on the
defendant is invalid, even though the court later
acquires jurisdiction over the defendant. 14 At the very
least, then, the writ of attachment must be
served simultaneously with the service of summons
before the writ may be enforced. As the properties of
the petitioners were attached by the sheriff before he
had served the summons on them, the levies made
must be considered void.
Third. Nor can the attachment of petitioners' properties
before the service of summons on them was made be
justified an the ground that unless the writ was then
enforced, petitioners would be alerted and might
dispose of their properties before summons could be
served on them.
The Rules of Court do not require that issuance of the
writ be kept a secret until it can be enforced. Otherwise
in no case may the service of summons on the
defendant precede the levy on attachment. To the
contrary, Rule 57, 13 allows the defendant to move to
discharge the attachment even before any attachment
is actually levied upon, thus negating any inference
that before its enforcement, the issuance of the writ
must
be
kept
secret.
Rule
57,
13 provides:
Sec. 13. Discharge of attachment for
improper or irregular issuance. The
party whose property has been
attached may also, at any time either
before or after the release of the
attached property, or before any
attachment shall have been actually
levied, upon reasonable notice to the
attaching creditor, apply to the judge
who granted the order, or to the judge
of the court in which the action is
pending, for an order to discharge the
attachment on the ground that the
same was improperly or irregularly
issued. . . . (Emphasis added).
As this Court pointed out in Davao Light and
Power, 15 the lifting of an attachment "may be
resorted to even before any property has been levied
on."

It is indeed true that proceedings for the issuance of a


writ of attachment are generally ex parte. InMindanao
Savings and Loans Ass'n v. Court of Appeals 16 it was
held that no hearing is required for the issuance of a
writ of attachment because this "would defeat the
objective of the remedy [because] the time which such
hearing would take could be enough to enable the
defendant to abscond or dispose of his property before
a writ of attachment issues." It is not, however, notice
to defendant that is sought to be avoided but the "time
which such hearing would take" because of the
possibility that defendant may delay the hearing to be
able to dispose of his properties. On the contrary there
may in fact be a need for a hearing before the writ is
issued as where the issue of fraudulent disposal of
property is raised. 17 It is not true that there should be
no hearing lest a defendant learns of the application
for attachment and he remove's his properties before
the writ can be enforced.
On the other hand, to authorize the attachment of
property even before jurisdiction over the person of the
defendant is acquired through the service of summons
or his voluntary appearance could lead to abuse. It is
entirely possible that the defendant may not know of
the filing of a case against him and consequently may
not be able to take steps to protect his interests.
Nor may sheriff's failure to abide by the law be excused
on the pretext that after all the court later acquired
jurisdiction over petitioners. More important than the
need for insuring success in the enforcement of the
writ is the need for affirming a principle by insisting on
that "most fundamental of all requisites the
jurisdiction of the court issuing attachment over the
person of the defendant." 18 It may be that the same
result would follow from requiring that a new writ be
served all over again. The symbolic significance of such
an act, however, is that it would affirm our
commitment to the rule of law. 19
II
We likewise find petitioners' second contention to be
meritorious. The records show that, on January 21,
1992, respondent judge ordered the examination of the
books of accounts and ledgers of Brunner at the Urban
Bank, Legaspi Village branch, and on January 30, 199
the records of account of petitioner Oate at the BPI,
even as he ordered the PNB to produce the records
regarding certain checks deposited in it.
First. Sun Life defends these court orders on the
ground that the money paid by it to Brunner was
subsequently withdrawn from the Urban Bank after it
had been deposited by Brunner and then transferred to
BPI and to the unnamed account in the petitioner
Oate's account in the BPI and to the unnamed
account in the PNB.

The issue before the trial court, however, concerns the


nature of the transaction between petitioner Brunner
and Sun Life. In its complaint, Sun Life alleges that
Oate, in his personal capacity and as president of
Econ, offered to sell to Sun Life P46,990,000.00 worth
of treasury bills owned by Econ and Brunner at the
discounted price of P39,526,500.82; that on November
27, 1991, Sun Life paid the price by means of a check
payable to Brunner; that Brunner, through its president
Noel L. Dio, issued to it a receipt with undertaking to
deliver the treasury bills to Sun Life; and that on
December 4, 1991, Brunner and Dio delivered instead
a promissory note, dated November 27, 1991, in which
it was made to appear that the transaction was a
money placement instead of sale of treasury bills.
Thus the issue is whether the money paid to Brunner
was the consideration for the sale of treasury bills, as
Sun Life claims, or whether it was money intended for
placement, as petitioners allege. Petitioners do not
deny receipt of P39,526,500.82 from Sun Life. Hence,
whether the transaction is considered a sale or money
placement does not make the money the "subject
matter of litigation" within the meaning of 2 of
Republic Act No. 1405 which prohibits the disclosure or
inquiry into bank deposits except "in cases where the
money deposited or invested is the subject matter of
litigation." Nor will it matter whether the money was
"swindled" as Sun Life contends.
Second. The examination of bank books and records
cannot be justified under Rule 57, 10. This provision
states:
Sec. 10. Examination of party whose
property is attached and persons
indebted to him or controlling his
property; delivery
of
property
to
officer. Any person owing debts to
the party whose property is attached or
having in his possession or under his
control any credit or other personal
property belonging to such party, may
be required to attend before the court
in which the action is pending, or
before a commissioner appointed by
the court, and be examined on oath
respecting the same. The party whose
property is attached may also be
required to attend for the purpose of
giving
information respecting his
property, and may be examined on
oath. The court may, after such
examination, order personal property
capable of manual delivery belonging
to him, in the possession of the person
so required to attend before the court,
to be delivered to the clerk of the
court, sheriff, or other proper officer on

such terms as may be just, having


reference to any lien thereon or claims
against the same, to await the
judgment in the action.
Since, as already stated, the attachment of petitioners'
properties was invalid, the examination ordered in
connection with such attachment must likewise be
considered invalid. Under Rule 57, 10, as quoted
above, such examination is only proper where the
property of the person examined has been validly
attached.
WHEREFORE, the decision dated February 21, 1994 is
RECONSIDERED and SET ASIDE and another one is
rendered GRANTING the petitions for certiorari and
SETTING ASIDE the orders dated February 26, 1992
and September 9, 1992, insofar as they authorize the
attachment of petitioners' properties and the
examination of bank books and records pertaining to
their accounts, and ORDERING respondent Judge Zeus
C. Abrogar
(1) forthwith to issue an alias writ of attachment upon
the same bond furnished by respondent Sun Life
Assurance Company of Canada;
(2) direct the sheriff to lift the levy under the original
writ of attachment and simultaneously levy on the
same properties pursuant to the alias writ so issued;
and
(3) take such steps as may be necessary to insure that
there will be no intervening period between the lifting
of the original attachment and the subsequent levy
under the alias writ.
Petitioners may file the necessary counterbond to
prevent subsequent levy or to dissolve the attachment
after such levy.SO
ORDERED.

G.R. No. 106989 May 10, 1994


H.B. ZACHRY COMPANY
INTERNATIONAL, petitioner,
vs.
HON. COURT OF and VINNEL-BELVOIR
CORPORATION, respondents.
G.R. No. 107124 May 10, 1994
VINNEL-BELVOIR CORPORATION, petitioner,
vs.
THE COURT OF APPEALS and H.B. ZACHRY
COMPANY INTERNATIONAL, respondents.
DAVIDE, JR., J.:
Challenged in these petitions for review, which were
ordered consolidated on 9 December 1992, 1 is the
decision of the Court of Appeals in CA-G.R. SP No.
24174, 2 promulgated on 1 July 1992, the dispositive
portion of which reads:
WHEREFORE, premises considered, this
Petition for Certiorari and Prohibition is
hereby granted in so far as it prayed
for the dissolution of the writ of
preliminary attachment inasmuch as it
was issued prior to the service of
summons and a copy of the complaint
on petitioner. The writ of preliminary
attachment issued by respondent Court
on March 21, 1990 is hereby ordered
lifted and dissolved as having been
issued in grave abuse of discretion by
respondent Court.
With respect to the issue of whether or
not parties should submit the instant
dispute [to] arbitration, We hereby
order public respondent to conduct a
hearing for the determination of the
proper interpretation of the provisions
of the Subcontract Agreement.
No pronouncement as to costs.

and its 2 September 1992 Resolution 4 which denied


the motion for partial reconsideration of H.B. Zachry
Company International (hereinafter Zachry) and the
motion
for
reconsideration
of
Vinnel-Belvoir
Corporation (hereinafter VBC).
The pleadings of the parties and the challenged
decision disclose the following material facts:
On 17 July 1987, VBC entered into a
Subcontract Agreement 5 with Zachry, a

written
foreign

corporation. The latter had been engaged by the


United States Navy to design and construct 264 Family
Housing Units at the US Naval Base at Subic,
Zambales. Under the agreement, specifically under
Section 3 on Payment, VBC was to perform all the
construction work on the housing project and would be
paid "for the performance of the work the sum of Six
Million Four Hundred Sixty-eight Thousand U.S. Dollars
(U.S. $6,468,000.00), subject to additions and
deductions for changes as hereinafter provided." This
"lump sum price is based on CONTRACTOR'S proposal,
dated 21 May 1987 (including drawings), submitted to
OWNER for Alternate Design-Apartments." It was also
provided "that substantial differences between the
proposal and the final drawings and Specification
approved by the OWNER may be grounds for an
equitable adjustment in price and/or time of
performance if requested by either party in accordance
with Section 6 [on] Changes." 6 Section 27 of the
agreement reads:
Section 27. DISPUTES PROCEDURE
A. In case of any dispute, except those
that are specifically provided for in this
SUBCONTRACT,
between
the
SUBCONTRACTOR
and
the
CONTRACTOR, the SUBCONTRACTOR
agrees
to
be
bound
to
the
CONTRACTOR to the same extent that
the CONTRACTOR is bound to the
OWNER by the terms of the GENERAL
CONTRACT and by any and all
decisions or determinations made
thereunder by the party or boards so
authorized in the GENERAL CONTRACT.
The SUBCONTRACTOR, on items or
issues relating or attributable to the
SUBCONTRACTOR, also agrees to be
bound to the CONTRACTOR to the
same extent that the CONTRACTOR is
bound to the OWNER by the final
decision of a court of competent
jurisdiction, whether or not the
SUBCONTRACTOR is a party to such
proceeding. If such a dispute is
prosecuted or defended by the
CONTRACTOR against the OWNER
under the terms of the GENERAL
CONTRACT or in court action, the
SUBCONTRACTOR agrees to furnish all
documents, statements, witnesses and
other information required by the
CONTRACTOR for such purpose. It is
expressly understood that as to any
and all work done and agreed to be
done by the CONTRACTOR and as to
any and all materials, equipment or
services furnished or agreed to be

furnished by the SUBCONTRACTOR,


and as to any and all damages incurred
by the SUBCONTRACTOR in connection
with
this
SUBCONTRACT,
the
CONTRACTOR shall not be liable to the
SUBCONTRACTOR to any greater extent
than the OWNER is liable to and pays
the CONTRACTOR for the use and
benefit of the SUBCONTRACTOR for
such claims, except those claims
arising from acts of the CONTRACTOR.
No dispute shall interfere with the
progress of the WORK and the
SUBCONTRACTOR agrees to proceed
with his WORK as directed, despite any
disputes it may have with the
CONTRACTOR, the OWNER, or other
parties.
B. If at any time any controversy
should arise between the CONTRACTOR
and the SUBCONTRACTOR, with respect
to any matter or thing involved in,
related to or arising out of this
SUBCONTRACT, which controversy is
not controlled or determined by
subparagraph 27.A. above or other
provisions in this SUBCONTRACT, then
said controversy shall be decided as
follows:
1. The SUBCONTRACTOR shall be
conclusively bound and abide by the
CONTRACTOR'S
written
decision
respecting said controversy, unless the
SUBCONTRACTOR
shall
commence
arbitration proceedings as hereinafter
provided within thirty (30) days
following receipt of such written
decision.
2. If the SUBCONTRACTOR decides to
appeal from the written decision of the
CONTRACTOR, then the controversy
shall be decided by arbitration in
accordance with the then current rules
of the Construction Industry Arbitration
Rules of the American Arbitration
Association,
and
the
arbitration
decision shall be final and binding on
both parties; provided, however, that
proceedings before the American
Arbitration
Association
shall
be
commenced by the SUBCONTRACTOR
not later than thirty (30) days following
the CONTRACTOR'S written decision
pursuant to subparagraph 27.B.1
above. If the SUBCONTRACTOR does
not file a demand for arbitration with

the American Arbitration Association


and CONTRACTOR within this thirty
(30)
day
period,
then
the
CONTRACTOR'S written decision is final
and binding.
3. This agreement to arbitrate shall be
specifically enforceable. 7
When VBC had almost completed the project, Zachry
complained of the quality of work, making it a reason
for its decision to take over the management of the
project, which paragraph c, Section 7 of the
Subcontract Agreement authorized. However, prior to
such take-over, the parties executed on 18 December
1989 a Supplemental Agreement, 8 pertinent portions
of which read as follows:
2. All funds for progress as computed
by the schedule of prices under the
subcontract will be retained by ZACHRY
to insure sufficiency of funds to finish
the lump sum project as scoped by the
subcontract. However, one month after
the date of this agreement, when
ZACHRY shall have determined the cost
to complete the subcontract, ZACHRY
shall as appropriate, release to VBC the
corresponding portion of the amounts
retained.
xxx xxx xxx
7. All costs incurred by ZACHRY
chargeable
to
VBC
under
the
subcontract from the date of the
takeover to complete the scope of the
subcontract will be to the account of
VBC and/or its sureties. Zachry will
advise both VBC and its sureties on a
periodic basis as to progress and
accumulated costs.
xxx xxx xxx
9. VBC will be invited to participate in
negotiations with the Navy in Change
Orders concerning its scope of work.
VBC will accept as final, without
recourse against ZACHRY the Navy's
decision regarding its interest in these
Change Orders or modifications.
In accordance with the above conditions, VBC
submitted to Zachry on 10 January 1990 a detailed
computation of the cost to complete the subcontract
on the housing project. According to VBC's
computation,
there
remains
a
balance
of

$1,103,000.00 due in its favor as of 18 January 1990.


This amount includes the sum of $200,000.00 allegedly
withheld by Zachry and the labor escalation
adjustment granted earlier by the US Navy in the
amount of $282,000.00 due VBC. Zachry, however, not
only refused to acknowledge the indebtedness but
continually failed to submit to VBC a statement of
accumulated costs, as a result of which VBC was
prevented from checking the accuracy of the said
costs. On 2 March 1990, VBC wrote Zachry a letter
demanding compliance with its obligations. 9 Zachry
still failed to do so. VBC made representations to
pursue its claim, including a formal claim with the
Officer-in-Charge of Construction, NAVFAC Contracts,
Southwest Pacific, 10 which also failed.
Hence, on 20 March 1990, VBC filed a Complaint 11 with
the Regional Trial Court (RTC) of Makati against Zachry
for the collection of the payments due it with a prayer
for a writ of preliminary attachment over Zachry's bank
account in Subic Base and over the remaining thirtyone undelivered housing units which were to be turned
over to the US Navy by Zachry on 30 March 1990. The
case was docketed as Civil Case No. 90-772 and was
raffled to Branch 142 of the said court presided over by
Judge Salvador P. de Guzman, Jr. Paragraph 2 of the
Complaint alleges that defendant Zachry "is a foreign
corporation with address at 527 Longwood Street, San
Antonio, Texas, U.S.A. and has some of its officers
working at U.S. Naval Base, Subic Bay, Zambales
where it may be served with summons."
On 21 March 1990, the trial court issued an order
granting the application for the issuance of the writ of
preliminary attachment and fixing the attachment
bond at P24,266,000.00. 12 VBC put up the required
bond and on 26 March 1990, the trial court issued the
writ of attachment, 13 which was served, together with
the summons, a copy of the complaint with annexes,
the bond, and a copy of the order of attachment, on 27
March 1990 in the manner described in the Sheriff's
Partial Return 14 of 29 March 1990:
upon defendant H.B. Zachry Company
(International) at its field office in U.S.
Naval Base, Subic Bay, Zambales thru
Ruby Apostol who acknowledged
receipt thereof. Mr. James M. Cupit,
defendant's authorized officer was in
their Manila office at the time of
service.
The return further states:
That on March 28, 1990, the
undersigned sheriff went to the office
of defendant H. B. Zachry Company
(International) at c/o A.M. Oreta & Co.
at 5th Floor, Ermita Building, Arquiza

corner Alhambra streets, Ermita, Manila


to serve the Court's processes but was
informed by Atty. Felix Lobiro of A.M.
Oreta & Co., that defendant H.B.
Zachry Company has its own office at
Room 600, 6th Floor of the same
building (Ermita Building). However,
said defendant's office was closed and
defendant company (ZACHRY) only
holds office during Mondays and
Tuesdays of the week as per
information gathered from the adjacent
office.
On 27 March 1990, VBC filed an Amended
Complaint 15 in Civil Case No. 90-772 to implead as
additional defendants the US Navy Treasury OfficeSubic Naval Base and Captain A.L. Wynn, an officer of
the US Navy, against whom VBC prayed for a
restraining order or preliminary injunction to restrain
the latter from preparing the treasury warrant checks
to be paid to Zachry and the former from signing the
said checks and to restrain both from making any
further payments to Zachry. It also amended paragraph
2 on the status and circumstances of Zachry as follows:
2.
Defendant,
H.B.
Zachry
Co.
(International) . . . is a foreign
corporation with address at 527
Longwood Street, San Antonio, Texas,
U.S.A. and may be served with
summons and all other legal processes
at the following addresses: a) H.B.
Zachry Company (International), U.S.
Naval Base, Subic Bay, Zambales; and
b) H.B. Zachry Company (International)
c/o A.M. Oreta & Co., 5th Floor Ermita
Building, Arquiza corner Alhambra
Streets, Ermita, Manila, through its
authorized officer James C. Cupit. 16
On 6 April 1990, Zachry filed a motion to dismiss the
complaint 17 on the ground of lack of jurisdiction over
its person because the summons was not validly
served on it. It alleges that it is a foreign corporation
duly licensed on 13 November 1989 by the Securities
and Exchange Commission to do business in the
Philippines 18 and, pursuant to Section 128 of the
Corporation Code of the Philippines, had appointed
Atty. Lucas Nunag 19 as its resident agent on whom any
summons and legal processes against it may be
served. Atty. Nunag's address is at the 10th Floor, Shell
House, 156 Valero St., Makati, Metro Manila.
Summons and a copy of the Amended Complaint were
served on 24 April 1990 on Zachry through Atty. Nunag
as shown in the sheriff's return dated 24 April 1990. 20

On 26 April 1990, VBC filed a Manifestation 21 to inform


the court of the above service of summons on Zachry
which it claimed rendered moot and academic the
motion to dismiss.
On 24 May 1990, Zachry filed an Omnibus Motion 22 (a)
to dismiss the complaint for lack of jurisdiction over its
person since the subsequent service of summons did
not cure the jurisdictional defect it earlier pointed out
and, in the alternative, to dismiss the case or suspend
the proceedings therein for failure of the plaintiff to
submit the controversy in question to arbitration as
provided for in its contract with Zachry; and (b) to
dissolve the writ of attachment of 26 March 1990 "for
having been issued without jurisdiction, having been
issued prior to the service of summons." The
arbitration provision referred to is Section 27.B of the
Subcontract Agreement quoted earlier. In support of its
alternative prayer for the suspension of proceedings, it
cited Section 7 of R.A. No. 876, otherwise known as the
Arbitration Act which provides:
Sec. 7. Stay of Civil Action If any suit
or proceeding be brought upon an
issue, arising out of an agreement
providing for the arbitration thereof,
the Court in which such suit or
proceeding is pending, upon being
satisfied that the issue involved in such
suit or proceeding is referable to
arbitration, shall stay the action or
proceeding until an arbitration has
been had in accordance with the terms
of the agreement. . . .
This provision is almost identical with Section 3 of the
United States Arbitration Act.
As to the invalidity of the writ of attachment, Zachry
avails of the decision in Sievert vs. Court of
Appeals23 wherein this Court said:
Attachment is an ancillary remedy. It is
not sought for its own sake but rather
to enable the attaching party to realize
upon relief sought and expected to be
granted in the main or principal action.
A court which has not acquired
jurisdiction over the person of the
defendant, cannot bind that defendant
whether in the main case or in any
ancillary
proceeding
such
as
attachment proceedings. The service of
a petition for preliminary attachment
without the prior or simultaneous
service of summons and a copy of the
complaint in the main case and that
is what happened in this casedoes
not of course confer jurisdiction upon

the issuing court over the person of the


defendant. 24
VBC opposed the Omnibus Motion. Pleadings related to
the Omnibus Motion were subsequently filed. 25
In its Order of 19 September 1990, 26 the trial court
resolved the Omnibus Motion and the related incidents
by declaring that "the merits of the case can only [be]
reached after due presentation of evidence." Hence, it
denied the motion and directed the defendants to file
their answer within the period provided by law.
On 8 October 1990, Zachry filed a motion for the
reconsideration 27 of the above order assailing the
court's inaction on the second and third issues raised in
its Omnibus Motion, viz., the necessity of arbitration
and the invalidity of the writ of attachment. VBC
opposed the motion. 28 On 9 January 1991, the court
issued an order denying the motion for reconsideration
by ruling that the writ of preliminary attachment was
regularly issued and that the violations of the
Subcontract Agreement can be "tranced [sic] only after
the case is heard on the merits."
Dissatisfied with the denial, Zachry filed with the Court
of Appeals on 14 February 1991 a petition
forcertiorari and prohibition, 29 which was docketed as
CA-G.R. SP No. 24174. Zachry contends therein that:
1. The proceedings before respondent
trial court should be suspended,
pending submission of the dispute to
arbitration pursuant to Section 27-B of
the Subcontract Agreement;
2. Alternatively, the complaint should
be dismissed, pending arbitration
pursuant to Section 27-B of the
Subcontract Agreement;
3. As a third alternative, the complaint
should be dismissed, because the
dispute has been resolved with finality
under Section 27-B of the Subcontract
Agreement; and
4. The writ of preliminary attachment
should be dissolved, as having been
outside, or in excess of respondent
court's jurisdiction, having been issued
prior to the service of summons on
petitioner.
It then prays that (a) the orders of the trial court of 19
September 1990 and 9 January 1991 be annulled for
having been issued without or in excess of jurisdiction
or with grave abuse of discretion; and (b) the trial court

be directed to immediately suspend the proceedings in


Civil Case No. 90-772 pending arbitration proceedings
in accordance with the terms of Section 27.B of the
Subcontract Agreement or, alternatively, to dismiss the
amended complaint and dissolve the writ of
attachment. It also prays for the issuance of a
temporary restraining order and a writ of preliminary
injunction to restrain the trial court from proceeding
further in Civil Case No. 90-772.

decision of this Court of 29 November 1991 in Davao


Light & Power Co. vs. Court of Appeals 35 wherein this
Court ruled that a writ of preliminary attachment may
be issuedex-parte prior to the service of summons and
a copy of the complaint on the defendants. On the
other hand, Zachry insists that "[t]here is nothing
'vague' or 'ambiguous about' " the provision on dispute
procedures set forth in Subsections 27.B.1 to 27.B.3 of
the Subcontract Agreement.

On 18 February 1991, the Court of Appeals issued a


temporary restraining order. 30

In its Resolution of 2 September 1992, 36 the Court of


Appeals denied the above motions of the parties.

On 1 July 1991, the Court of Appeals promulgated the


challenged decision 31 dissolving the writ of preliminary
attachment issued by the trial court and ordering it to
conduct a hearing to determine the proper
interpretation of the provisions of the Subcontract
Agreement. As to the writ of attachment, the Court of
Appeals held that summons was served on Zachry only
on 24 April 1990; hence, applying Sievert vs. Court of
Appeals, 32the trial court "had no authority yet to act
coercively against the defendant" when it issued the
writ of attachment on 21 March 1990. As to arbitration,
it ruled:

Hence, these petitions which were given due course in


this Court's Resolution of 8 March 1993. 37

We are of the reasoned opinion that


unlike in the factual situation in the
cases cited by petitioner, the contract
involved in the case at bar is, with
respect to its arbitration clause, vogue
[sic] and uncertain. Section 27.B which
is the provision upon which petitioner
anchors its claims is ambiguous in its
terminology when it states that "if at
anytime any controversy should arise
between the contractor and the
subcontractor . . . which controversy is
not controlled or determined by Section
27.A above or other provision of this
subcontract . . . ." This provision states
that only when a controversy arises
between the contractor and the
subcontractor which is not covered by
Section 27.A or any provision of the
Subcontract Agreement will the parties
submit to arbitration. As to what
controversies fall under Section 27.B, it
is not clear from a mere perusal of the
provisions. It is therefore not correct for
petitioner to say that any and all
dispute
arising
between
the
contracting parties should be resolved
by arbitration prior to a filing of a suit
in court. 33
VBC and Zachry filed a motion for reconsideration and
a partial motion for reconsideration, respectively.34 The
former urged the Court of Appeals to consider the

In G.R. No. 106989, petitioner Zachry reiterates all the


issues it raised before the Court of Appeals, except that
regarding the validity of the writ of attachment which
was decided in its favor.
In G.R. No. 107124, petitioner VBC raises the following
issues:
A. WHETHER THE ISSUANCE OF THE
WRIT OF PRELIMINARY ATTACHMENT
PRIOR TO THE SERVICE OF THE
SUMMONS AND A COPY OF THE
AMENDED
COMPLAINT
ON
THE
RESPONDENT IS VALID.
B. WHETHER RESORT TO ARBITRATION
PRIOR TO FILING A SUIT IN COURT IS
REQUIRED BY THE SUBCONTRACT
AGREEMENT
UNDER
THE
FACTS
OBTAINING IN THE PRESENT CASES.
As to the first issue, VBC takes refuge in the ruling
in Davao Light & Power Co. vs. Court of Appeals 38and
argues that the issuance of the writ of attachment on
21 March 1990, although before the service of the
summons, was valid. Its issuance and implementation
are two different and separate things; the first is not
affected by any defect in the implementation which
may be corrected. Moreover, assuming arguendo that
the initial service of summons was defective, it was
cured by the numerous pleadings thereafter filed.
Finally, whatever doubts existed on the effectiveness of
the implementation of the writ was erased by its reservice on the resident agent of Zachry.
As to the issue on arbitration, VBC maintains that
arbitration is not required under the facts obtaining in
the present case because the applicable provision of
the Subcontract Agreement is Section 3 on Payment
and not Section 27.B on Arbitration. Zachry's
fraudulent actuations and gross violation of the
Subcontract Agreement render prior resort to

arbitration futile and useless. The preliminary


attachment, which was essential to secure the interest
of the petitioner, could not have been obtained through
arbitration proceedings.
Zachry, in its Comment, 39 contends that pursuant to
the Sievert and Davao Light rulings, the issuance of the
writ of attachment before the service of summons on
Zachry's resident agent was invalid and that the
various pleadings filed by the parties did not cure its
invalidity. It argues that the arbitration procedure is set
forth in Section 27.B of the Subcontract Agreement. It
further maintains that pursuant to General Insurance
vs.
Union
Insurance, 40 the
alleged
fraudulent
actuations which relate to the merits of the case may
be properly addressed to the arbitrators and that there
is no merit to the claim that arbitration would be
useless since the arbitration proceeding would be
presided over by an independent and competent
arbitral tribunal.
The issues in these petitions are properly defined by
VBC in G.R. No. 107124.
We find for petitioner VBC.
It was error for the Court of Appeals to declare, on the
ground of grave abuse of discretion, the nullity of the
writ of attachment issued by the trial court on 21
March 1990. In the first place, the writ was in fact
issued only on 26 March 1990 and served, together
with the summons, copy of the complaint, the Order of
21 March 1990, and the bond, on 27 March 1990 on
Zachry at its field office in Subic Bay, Zambales,
through one Ruby Apostol. What the Court of Appeals
referred to as having been issued on 21 March 1990 is
the order granting the application for the issuance of a
writ of preliminary attachment upon the posting of a
bond of P24,266,000.00. 41 In the second place, even
granting arguendo that the Court of Appeals had
indeed in mind the 26 March 1990 writ of attachment,
its issuance, as well as the issuance of the 21 March
1990 Order, did not suffer from any procedural or
jurisdictional defect; the trial court could validly issue
both.
However, the writ of attachment cannot be validly
enforced through the levy of Zachry's property before
the court had acquired jurisdiction over Zachry's
person either through its voluntary appearance or the
valid service of summons upon it. 42 To put it in another
way, a distinction should be made between
theissuance and the enforcement of the writ. The trial
court has unlimited power to issue the writ upon the
commencement of the action even before it acquires
jurisdiction over the person of the defendant, but
enforcement thereof can only be validly done after it
shall have acquired such jurisdiction. This is the rule

enunciated in Davao Light & Power Co. vs. Court of


Appeals. 43 In that case, this Court stated:
The question is whether or not a writ of
preliminary attachment may issue ex
parte against a defendant before
acquisition of jurisdiction of the latter's
person by service of summons or his
voluntary submission to the Court's
authority.
The Court rules that the question must
be answered in the affirmative and that
consequently, the petition for review
will have to be granted.
It is incorrect to theorize that after an
action
or
proceeding
has
been
commenced and jurisdiction over the
person of the plaintiff has been vested
in the court, but before the acquisition
of jurisdiction over the person of the
defendant (either by service of
summons or his voluntary submission
to the court's authority), nothing can
be validly done by the plaintiff or the
court. It is wrong to assume that the
validity of acts done during this period
should be dependent on, or held in
suspension until, the actual obtention
of jurisdiction over the defendant's
person. The obtention by the court of
jurisdiction over the person of the
defendant is one thing; quite another is
the acquisition of jurisdiction over the
person of the plaintiff or over the
subject-matter or nature of the action,
or the res or object thereof. 44
xxx xxx xxx
A preliminary attachment may be
defined, paraphrasing the Rules of
Court, as the provisional remedy in
virtue of which a plaintiff or other
proper
party
may,
at
the
commencement of the action or at any
time thereafter, have the property of
the adverse party taken into the
custody of the court as security for the
satisfaction of any judgment that may
be recovered. It is a remedy which is
purely statutory in respect of which the
law requires a strict construction of the
provisions granting it. Withal no
principle, statutory or jurisprudential,
prohibits its issuance by any court
before acquisition of jurisdiction over
the person of the defendant.

Rule 57 in fact speaks of the grant of


the remedy "at the commencement of
the action or at any time thereafter."
The phrase "at the commencement of
the action," obviously refers to the date
of the filing of the complaint which,
as above pointed out, is the date that
marks "the commencement of the
action;" and the reference plainly is to
a time before summons is served on
the
defendant,
or
even
before
summons issues. What the rule is
saying quite clearly is that after an
action is properly commenced by the
filing of the complaint and the payment
of all requisite docket and other fees
the plaintiff may apply for and obtain a
writ of preliminary attachment upon
fulfillment of the pertinent requisites
laid down by law, and that he may do
so at any time, either before or after
service of summons on the defendant.
And this indeed, has been the
immemorial practice sanctioned by the
courts: for the plaintiff or other proper
party to incorporate the application for
attachment in the complaint or other
appropriate pleading (counterclaim,
cross-claim, third-party claim) and for
the Trial Court to issue the writ exparte at the commencement of the
action if it finds the application
otherwise sufficient in form and
substance. 45
xxx xxx xxx
It goes without saying that whatever be
the acts done by the Court prior to the
acquisition of jurisdiction over the
person of the defendant, as above
indicated issuance of summons,
order of attachment and writ of
attachment (and/or appointment of
guardian ad litem, or grant of authority
to the plaintiff to prosecute the suit as
a pauper litigant, or amendment of the
complaint by the plaintiff as a matter of
right without leave of court) and
however valid and proper they might
otherwise be, these do not and cannot
bind and affect the defendant until and
unless jurisdiction over his person is
eventually obtained by the court, either
by service on him of summons or other
coercive process or his voluntary
submission to the court's authority.
Hence, when the sheriff or other proper
officer commences implementation of

the writ of attachment, it is essential


that he serve on the defendant not
only a copy of the applicant's affidavit
and attachment bond, and of the order
of attachment, as explicitly required by
Section 5 of Rule 57, but also the
summons addressed to said defendant
as well as a copy of the complaint and
order for appointment of guardian ad
litem, if any, as also explicitly directed
by Section 3, Rule 14 of the Rules of
Court. Service of all such documents is
indispensable
not
only
for
the
acquisition of jurisdiction over the
person of the defendant, but also upon
considerations of fairness, to apprise
the defendant of the complaint against
him, of the issuance of a writ of
preliminary
attachment
and
the
grounds therefor and thus accord him
the opportunity to prevent attachment
of his property by the posting of a
counterbond in an amount equal to the
plaintiff's claim in the complaint
pursuant to Section 5 (or Section 12),
Rule 57, or dissolving it by causing
dismissal of the complaint itself on any
of the grounds set forth in Rule 16, or
demonstrating the insufficiency of the
applicant's
affidavit
or bond
in
accordance with Section 13, Rule 57. 46
xxx xxx xxx
For the guidance of all concerned, the
Court reiterates and reaffirms the
proposition that writs of attachment
may properly issue ex parte provided
that the Court is satisfied that the
relevant requisites therefor have been
fulfilled by the applicant, although it
may, in its discretion, require prior
hearing on the application with notice
to the defendant; but that levy on
property pursuant to the writ thus
issued may not be validly effected
unless
preceded,
or
contemporaneously accompanied, by
service on the defendant of summons,
a copy of the complaint (and of the
appointment of guardian ad litem, if
any), the application for attachment (if
not incorporated in but submitted
separately from the complaint), the
order of attachment, and the plaintiff's
attachment bond. 47

We reiterated the rule laid down in Davao Light in the


subsequent
case
of Cuartero
vs.
Court
of
Appeals48 wherein we stated:
It must be emphasized that the grant
of
the
provisional
remedy
of
attachment practically involves three
stages: first, the court issues the order
granting the application; second, the
writ of attachment issues pursuant to
the order granting the writ; and third,
the writ is implemented. For the initial
two stages, it is not necessary that
jurisdiction over the person of the
defendant should first be obtained.
However, once the implementation
commences, it is required that the
court must have acquired jurisdiction
over the person of the defendant for
without such jurisdiction, the court has
no power and authority to act in any
manner against the defendant. Any
order issuing from the Court will not
bind the defendant.
The validity then of the order granting the application
for a writ of preliminary attachment on 21 March 1990
and of the issuance of the writ of preliminary
attachment on 26 March 1990 is beyond dispute.
However, the enforcement of the preliminary
attachment on 27 March 1990, although simultaneous
with the service of the summons and a copy of the
complaint, did not bind Zachry because the service of
the summons was not validly made. When a foreign
corporation has designated a person to receive service
of summons pursuant to the Corporation Code, that
designation is exclusive and service of summons on
any other person is inefficacious. 49 The valid service of
summons and a copy of the amended complaint was
only made upon it on 24 April 1990, and it was only
then that the trial court acquired jurisdiction over
Zachry's person. Accordingly, the levy on attachment
made by the sheriff on 27 April 1990 was invalid.
However, the writ of preliminary attachment may be
validly served anew.
As to the second issue of arbitration, we find that
although the order of the trial court denying the motion
to dismiss did not clearly state so, it is evident that the
trial court perceived the ground of the motion to be not
indubitable; hence, it could defer its resolution thereon
until the trial of the case. In deciding a motion to
dismiss, Section 3, Rule 16 of the Rules of Court grants
the court four options: (1) to deny the motion, (2) to
grant the motion, (3) to allow amendment of pleadings,
or (4) to defer the hearing and determination of the
motion until the trial, if the ground alleged therein does
not appear to be indubitable. Under the fourth option,
the court is under no obligation to immediately hold a

hearing on the motion; it is vested with discretion to


defer such hearing and the determination of the
motion until the trial of the case. 50 The lack of
indubitability of the ground involved in Zachry's motion
to dismiss is confirmed by the Court of Appeals when it
declared:
Section 27. B which is the provision
upon which petitioner [Zachry] anchors
its
claim
is
ambiguous
in
its
terminology when it states that "if at
any time any controversy should arise
between the contractor and the
subcontractor . . . which controversy is
not controlled or determined by Section
27.A above or other provisions of this
subcontract' . . . . This provision states
that only when a controversy arises
between
the
contractor
and
subcontractor which is not covered by
Section 27.A or any provision of the
Subcontract will the parties submit to
arbitration. As to what controversies
fall under Section 27.B, it is not clear
from a mere perusal of the provisions.
Indeed, the parties could not even agree on what
controversies fall within Section 27.B, and, perhaps,
rightly so because the said Section 27.B excludes
controversies controlled or determined by Section 27.A
and other provisions of the Subcontract Agreement,
which are themselves unclear. For that reason, VBC
insists that its cause of action in Civil Case No. 90-772
is based on Section 3 of the Subcontract Agreement. It
may further be emphasized that VBC's complaint was
precipitated by Zachry's refusal to comply with the
Supplemental Agreement. Evidently, Section 3 of the
Subcontract Agreement and the Supplemental
Agreement are excluded by Section 27.B. The trial
court was, therefore, correct in denying Zachry's
motion to dismiss.
However, we cannot give our assent to the Court of
Appeals' order directing the trial court to conduct a
hearing for the determination of the proper
interpretation of the provisions of the Subcontract
Agreement. It would re-open the motion to dismiss
which, upon the trial court's exercise of its discretion,
was properly denied for lack of indubitability of the
ground invoked and thereby unduly interfere with
the trial court's discretion. The proper interpretation
could only be done by the trial court after presentation
of evidence during trial on the merits pursuant to the
tenor of its order denying the motion to dismiss. If the
trial court should find that, indeed, arbitration is in
order, then it could apply Section 7 of R.A. No. 876
which reads as follows:

Sec. 7. Stay of civil action. If any suit


or proceeding be brought upon an
issue arising out of an agreement
providing for the arbitration thereof,
the court in which such suit or
proceeding is pending, upon being
satisfied that the issue involved in such
suit or proceeding is referable to
arbitration, shall stay the action or
proceeding until an arbitration has
been had in accordance with the terms
of the agreement: Provided, That the
applicant for the stay is not in default
in proceeding with such arbitration.
WHEREFORE, the petition in G.R. No. 107124 is
GRANTED while that in G.R. No. 106989 is DENIED for
lack of merit. The challenged Decision of 1 July 1992
and Resolution of 2 September 1992 are hereby SET
ASIDE. The orders of Branch 142 of the Regional Trial
Court of Makati in Civil Case No. 90-772 of 19
September 1990 denying the motion to dismiss and of
8 October 1990 denying the motion to reconsider the
former are REINSTATED. However, the service of the
writ of preliminary attachment on 26 March 1990 is
hereby declared invalid. The writ may, nevertheless, be
served anew.
No pronouncement as to costs.
SO ORDERED.

G.R. No. L-42594 October 18, 1979


ELIGIO ROQUE and RODRIGO G.
MALONJAO, petitioners,
vs.
HON. COURT OF APPEALS, HON. JUDGE CARLOS
L. SUNDIAM, (CFI-Manila, Branch XXVIII)
ASSOCIATED BANKING CORPORATION FILEASTERN WOOD INDUSTRIES, INC., CITY SHERIFF
OF MANILA, DEPUTY SHERIFFS ADRIEL GARCIA
and BENJAMIN GARVIDA, respondents.
MELENCIO-HERRERA, J.:
Treating this Petition as a special civil action for
Certiorari, we affirm the Decision of the Court of
Appeals denying petitioners' prayer to set aside the
trial Court Order, dated April 14, 1975, to surrender the
barge in question under pain of contempt, and its
subsequent
Orders
denying
their
Motion
for
Reconsideration.
There is no dispute as to the following background
facts:
On January 31, 1973, respondent Associated Banking
Corporation (the Bank, for short) instituted an action,
Civil Case No. 89692, in the Court of First Instance of
Manila, Branch XXVIII, respondent Judge, presiding,
against private respondent Fil-Eastern Wood Industries,
Inc. (Fil-Eastern, for brevity), a domestic corporation,
for recovery of a sum of money.
Upon ex-parte application by the Bank for a Writ of
Preliminary Attachment, respondent Judge, after the
filing and approval of the required bond of
P220,000.00, issued, on February 4, 1974, an Order of
Attachment commanding the Sheriff to attach the
estate, real and personal, of Fil-Eastern. 1
On February 7, 1974, the Sheriff's "Notice of Levy
Pursuant to the Writ of Attachment" was registered in
the Office of the Commander of the First Coast Guard,
District of Manila, 2 pursuant to Sec. 805 of the Tariff
and Customs Code, as amended by Presidential Decree
No. 34, requiring the registration of documents
affecting titles of vessels with that entity. The said
notice read, "levy is hereby made upon all the rights,
titles, interest, shares and participation which the
defendant Fil-Eastern Wood Industries, Inc. has or
might have over a sea vessel or barge named FilEastern V.
It appears that prior to the issuance of said Writ of
Attachment, Fil-Eastern had delivered the barge to the
Cotabato Visayan Development Corporation sometime
in April, 1973, for repair. The job was completed in June
1973, but Fil-Eastern failed to pay the cost of repairs of

P261,190.59. Pursuant to the provisions of Article


2112 3in relation to Article 1731 4 of the Civil Code, the
Cotabato Visayan Development Corporation proceeded
before Notary Public Clemente R. Gonzales of Manila to
the sale of said barge. In the public auction sale
conducted by said Notary Public on April 24, 1974,
petitioner Eligio Roque acquired the barge as the
highest bidder, and was accordingly issued a
Certificate of Sale by the Notary Public. On the same
date, the Cotabato Visayan Development Corporation
issued an Affidavit of Release of mechanic's lien
against Fil-Eastern. The Certificate of Sale was received
in the office of the Philippine Coast Guard on May 3,
1974. 5 It wag not until December 24, 1974, however,
that Certificate of Ownership No. 8647, a Certificate. of
Philippine Register, a Certificate of Change of Name of
Vessel from Fil-Eastern V" to "Satellite I I, " as well as a
Coastwise License, were issued to Roque by the
Philippine Coast Guard. 6 These muniments of title
were issued only after counsel for Eligio Roque had
assured the Philippine Coast Guard, in a letter dated
November 13, 1974, that "without touching on the
merit of the preference of our client's claim in relation
to the levy registered by other claimants, such levy is
not in any manner a legal obstacle to the registration
of the vessels in our client's name." 7 Acting thereon,
the Acting Commandant of the Philippine Coast Guard
in a letter dated November 23, 1974, authorized the
issuance of a new certificate of registration annotating
thereon any levy validly registered against said
vessel(s)." 8 However, neither the Certificate of
Ownership nor the Certificate of Philippine Register
appended as Annexes "C" and "D", respectively, to
petitioners' Urgent Manifestation and Motion filed
before the lower Court 9 carry that annotation.
On August 29, 1974, the Bank filed a "Motion for the
Issuance of Another Writ of Attachment" stating that at
the time of the issuance of the Writ on February 4,
1974, the barge in question could not be located within
the jurisdiction of the trial Court. having been anchored
somewhere in the Visayas, and that actual levy on the
barge could not be made as "the original Order of
attachment is allegedly in the possession of the Branch
Deputy Sheriff appointed by the Honorable Court, who
has not reported to the office since August 26, 1974,
and, therefore, could not implement the writ." 10 On the
same date, August 29, 1974, the trial Court (Judge
Rafael S. Sison, presiding) denied the issuance of
another Writ (apparently ' v because it was deemed
unnecessary), but instead ordered the Deputy Sheriff
of Branch XXVIII to coordinate with the City Sheriff of
Manila in the implementation of the Writ previously
issued. 11On August 30, 1974, Deputy Sheriff Garvida
actually seized and levied upon the vessel.
On October 7, 1974, respondent Bank and respondent
Fil-Eastern submitted a Compromise Agreement
whereby Fil-Eastern bound itself to pay to the Bank the

principal amount of P200,000.00, with 1417,9 interest,


plus other amounts stated therein. On October 9, 1974,
respondent Judge approved the Agreement and
rendered judgment accordingly. On November 6, 1974,
the Bank moved for the issuance of a Writ of Execution
for failure of Fil-Eastern to make payments within the
period stipulated in the Compromise Agreement.
Meanwhile, without prior authority from Deputy Sheriff
Garvida the barge in question was "spirited away" to
Bacolod City by a certain Captain Marcelino Agito, who
claimed to have been given the right to use the same
by Fil-Eastern. 12
On January 6, 1975, respondent Judge issued an Order
requiring Capt. Marcelino Agito, in coordination with
Deputy Sheriff Benjamin E. Garvida to bring back to
Manila the barge in question. 13
On March 7, 1975, respondent Judge issued a Writ of
Execution and ordered the sale of the barge at public
auction, as follows:
ORDER
The Decision rendered by this Court
under date of October 9, 1974 having
already become final and executory, let
a Writ of Execution be issued to be
enforced by Sheriff Adriel V. Garcia by
conducting an auction sale on the
vessel placed under attachment. The
satisfaction of the judgment in this
case shall be given preference and the
payment of the third party claim of
Alfredo H. Maligaya for and in behalf of
Leonardo M. Canoso shall be satisfied
from whatever remaining proceeds of
the auction sale on the aforedsaid
vessel, if there be any.
SO ORDERED.

14

On April 7, 1975, Capt. Marcelino Aguito and Deputy


Sheriff Benjamin Garvida filed a Manifestation stating
that petitioner Rodrigo Malonjao, acting for and in
behalf of his co-petitioner Eligio Roque, refused tosurrender the barge on the ground I d that Eligio Roque
is now the new owner, having acquired the same by
purchase at public auction, and praying that
petitioners, and all persons claiming under them, be
directed to surrender the barge to the custody of the
Court through its duly authorized representative.
On April 14, 1975, respondent Judge issued the
following Order:

Upon motion filed by Capt. Marcelino


Agito and Deputy Sheriff Benjamin
Garvida and considering the absence of
a formal claim with this Court filed by
Eulogio Roque, personally or through
counsel,
relative
to
the
barge
SATELLITE
II,
EX-FIL-EASTERN
V',
subject of the writ of Attachment
issued by this Court on February 7,
1974, and in order to prevent further
delay in the implementation of the
Order of this Court dated March 7,
1975, Rodrigo Malonjao and Eulogio
Roque and an persons claiming right
under them over the aforesaid vessel,
including those acting under their
direction or supervision, are hereby
ordered under pain of being cited in
contempt of
Court to forthwith
surrender possession of the above said
vessel to Sheriff Adriel V. Garcia so that
the latter may be able to implement
fully and expeditiously the aforesaid
Order of this Court dated March 7,
1975. ... 15
On April 24, 1975, petitioners filed before the trial
Court an Urgent Manifestation and Motion seeking to
set aside the Order of April 14, 1975, claiming that
Roque is now the new owner of the barge having
acquired the same at a public auction sale arising from
a mechanic's lien. The Motion was denied by
respondent Judge on the ground that the records belied
petitioners' claim that the auction sale occurred very
much ahead of the notice of levy. Petitioners' first and
second Motion for Reconsideration were similarly
denied. On July 16, 1975, respondent Deputy Sheriff
Adriel V. Garcia submitted a report informing the Court
that the barge in question had been turned over to him
and was anchored along Pasig River, under guard.
On August 28, 1975, petitioners sought relief from the
Court of Appeals by filing a "Petition for certiorari and
Prohibition with Preliminary Injunction and Preliminary
Mandatory Injunction" assailing and asking to vacate
the Orders issued in Civil Case No. 89692 by
respondent Judge as well as the Writs, notices and
other processes emanating therefrom. The Court of
Appeals, * in denying the Petition in its Decision
promulgated on November 24, 1975, ruled that
certiorari did not lie as petitioner was not without
sufficient and adequate remedy to obtain relief from
the damaging effects of the Orders complained of.
Petitioner filed the present Petition on March 1, 1976
before this Court, claiming that they are purchasers in
good faith and for valuable consideration, having
actually paid the total amount of P354,689.00 to the
Cotabato Visayan Development Corporation for three

barges, one of which is the barge in question. They


have also raised the following legal issues:
1. The decision of the respondent Court
of Appeals sustaining the challenged
orders, writs and other processes
issued by the respondent Judge is
contrary to the provisions of Art. 1731
in relation to Art. 2112 of the New Civil
Code and to the ruling laid down in
Bank of P.I. vs. Walter A. Smith' & Co.,
55 Phil. 533 and Bachrach Motor Co.
vs. Mendoza, 43 Phil. 410.
2. If the levy and/or attachment by the
sheriff of the barge in question are
illegal, will herein petitioner be required
to avail of Section 14, Rule 57 and/or
Section 17, Rule 39 of the Revised
Rules of Court?
On July 19, 1976, we issued a Restraining Order
enjoining respondents from proceeding with the
projected sale at public auction of the barge, subject of
this litigation. We also declared the case submitted for
decision. On January 18, 1977, the Bank filed a Motion
for Authority to Sell the barge under attachment. This
was opposed, however, by petitioners and we resolved
to defer resolution until decision on the merits is
rendered.
On May 31, 1979, the Bank filed a Motion for Early
Resolution, but the same was agendaed only on
September 24, 1979. We take note of the BANK's
contention that ever since the Sheriff took custody of
the vessel on July 16, 1975, the same has been lying
Idle, moored at the Muelle de la Industrial, Pasig River,
exposed to the elements, and has deteriorated rapidly,
hence the need for early resolution. It should be
reiterated that this is a special civil action for
Certiorari, the main requisites for the issuance of which
Writ are: 1) that the Writ be directed against a tribunal,
board or officer exercising judicial functions; 2) that
such tribunal, board or officer has acted without or in
excess of jurisdiction or with grave abuse of discretion;
and 3) that there is no appeal, nor any plain, speedy
and adequate remedy in the ordinary course of
law. 16 While the first requisite has been met, the
second-hand the third have not.
We agree with the findings of the Court of Appeals that
petitioners were not without any plain, speedy and
adequate remedy in the ordinary course of law. For
one, upon the issuance of the Order, dated August 29,
1974, commanding the implementation of the Writ of
Attachment, petitioners could have availed themselves
of the remedy provided for in Section 14, Rule 57 of the
Rules of Court, which reads:

If the property taken be claimed by any


person other than the party against
whom attachment had been issued or
his agent, and such person makes an
affidavit of his title thereto or right to
the possession thereof, stating the
grounds of such right or title, and
serves such affidavit upon the officer
while the latter has possession of the
property, and a copy thereof upon the
attaching creditor, the officer shall not
be bound to keep the property under
attachment, unless the attaching
creditor or his agent, on demand of the
said officer, secures him against such
claim by a bond in a sum not greater
than the value of the property
attached. ...
For another, when respondent Sheriff seized the vessel
in question to be sold at public auction in accordance
with the Order of execution of March 7, 1975, petitioner
could have availed of the remedy under Section 17,
Rule 39 of the Rules of Court which provides:
If the property levied on be claimed by
any other person than the Judgment
debtor or his agent, and such person
make an affidavit of his title thereto or
right to the possession thereof, stating
the grounds of such right or title, and
serve the same upon the officer
making the levy, and a copy thereof
upon the judgment creditor, the officer
shall not be bound to keep the
property,
unless
such
judgment
creditor or his agent, on demand of the
officer, indemnify the officer against
such claim by a bond in a sum not
greater than the value of the property
levied on. ...
Petitioner Eligio Roque argues, however, that he could
not avail of the foregoing Rules inasmuch as the vessel
was not in the actual custody of the Sheriff nor of the
Court, since the supposed levy by the Sheriff on
February 7, 1974 was a mere paper levy which, in legal
contemplation, is no levy at an. It is a fact that
respondent
Sheriff
could
not
effect
seizure
immediately, first, because the barge could nowhere
be found in this vicinity, and subsequently when found,
because petitioners would not deliver possession to the
Sheriff. It was not until the trial Court granted the
Sheriff's Motion praying for an Order directing
petitioners or their agents to surrender the barge to
the custody of the Court, that the Sheriff was able to
take physical custody. As a general rule, however, a
levy of an attachment upon personal property may be
either actual or constructive. 17 In this case, levy had

been constructively made by the registration of the


same with the Philippine Coast Guard on February 7,
1974. Constructive possession should be held sufficient
where actual possession is not feasible, 18 particularly
when it was followed up by the actual seizure of the
property as soon as that could possibly be effected.
Petitioners further argue that the levy was illegal
because the Writ was implemented more than sixty
days after its issuance so that they need not have
complied with Section 14, Rule 57, supra. The Rules do
not provide any lifetime for a Writ of Attachment unlike
a Writ of Execution. But even granting that a Writ of
Attachment is valid for only sixty days, yet, since there
was constructive levy within that period the fact that
actual seizure was effected only thereafter cannot
affect the validity of that levy.
Neither can it be said that respondent Judge committed
grave abuse of discretion in issuing the challenged
Order of April 14, 1975, supra, whereby it commanded
the immediate implementation of the Order of
execution of March 7, 1975 and ordered petitioners to
surrender possession of the barge to the Sheriff under
pain of contempt. A trial Court is enjoined by law to
bring about a prompt dispatch of the controversy
pending before it. As it was, it took the trial Court more
than a year to cause the enforcement of its Writs and
processes. Moreover, its Decision of October 9, 1974
had become final and executory, and execution then
became purely a ministerial phase of adjudication. It
had no jurisdiction to pass upon petitioners' claim of
ownership not only because trial in that, case had
already been terminated but also considering that
petitioners were not parties in the case below nor had
they filed any third-party claim for the enforcement of
their rights.
Verily, petitioners' remedy was to ventilate their claims
of ownership in a separate and independent
reivindicatory action, as even then suggested by the
Court of Appeals. That was the arena where the
question of preferential rights, if any, impliedly raised
in the first assigned error, could have been fully
threshed out.
...a third person claiming to be the
owner of the property attached or
levied upon is required to file a
separate or independent action to
determine whether the property should
answer for the claim of the attaching or
judgment creditor instead of being
allowed to raise that issue in the case
where the writ of attachment or
execution was issued (Sec. 17, Rule 39
and sec. 14, Rule 57, Rules of Court;
Bayer Philippines, Inc. vs. Agana, L38701, April 8, 1975, 63 SCRA 355). 19

In the interest of justice, petitioners can still file an


independent civil action to establish their ownership
over the barge, if they have not yet done so.
WHEREFORE, in the absence of jurisdictional errors,
this Petition is dismissed, and the Restraining Order,
heretofore issued, hereby lifted effective immediately.
No costs.
SO ORDERED.

G.R. No. L-13281

August 31, 1960

SIARI VALLEY ESTATES, INC., petitioner,


vs.
FILEMON LUCASAN, ET AL., respondents.
BAUTISTA ANGELO, J.:
On January 30, 1952, the Court of First Instance of
Zamboanga del Norte rendered decision ordering
Filemon Lucasan to deliver to the Siari Valley Estates,
Inc. the cattle inside the former's pasture or pay its
value amounting to P40,000.00 and damages in
another sum of P40,000.00, This decision was affirmed
in toto by the Supreme Court, and when the same
became final and executory, a writ of execution was
issued. In carrying out this writ, the sheriff proceeded
to levy on certain parcels of lands belonging to
defendant. These lands were sold by the sheriff at
public auction to the corporation as the highest bidder
on January 14, 1956. The judgment debtor having
failed to redeem the land within the period of one year,
on January 26, 1957, the sheriff issued in favor of the
purchaser the final certificate of sale, copy of which
was registered in the Office of the Register of Deeds of
Zamboanga. On February 16, 1957, upon petition of
the corporation, a writ of possession was issued
directing the sheriff to place said corporation in
possession
thereof.
Notwithstanding
said
writ,
however, the corporation failed to take possession of
the lands, hence it filed a motion reiterating its petition
that it be placed in their possession.
This time judgment debtor Filemon Lucasan filed an
opposition alleging that he was in possession of one of
the parcels of land sold at public auction on which he
has erected a house and which he has extra judicially
constituted as a family home, the rest being in
possession of third parties. On April 30, 1957, the
court, overruling the opposition, issued an order
directing the sheriff to place the corporation in
possession of the lands sold to it. On August 7, 1957,
debtor Lucasan filed a motion for reconsideration which
was denied, the court reiterating its previous order with
little amendment, but on August 23, 1957 issued
another order allowing the corporation to take
possession of all lands sold, with the exception of
parcel 1 on which the family home was constituted,
holding that the levy and sale made by the sheriff with
regard to said parcel were not made in accordance with
law and so are null and void. Having failed to have this
last order reconsidered, the corporation interposed the
present petition for certiorari.
It appears that parcel 1 is a registered land covered by
Certificate of Title No. OCT-2492, Patent No. 50967,
duly registered in the Office of the Register of Deeds of
Zamboanga del Norte in the name of Filemon Lucasan.
On this land stands a big house of mixed materials

which is asserted in the amount of P23,270.00 as


evidenced by Tax Declaration No. 7653. It also 37 3
appears that Filemon Lucasan and his wife constituted
this house and the lot on which stands into a family
home, the pertinent document having been registered
in the office of the register of deeds on June 21, 1955.
In opposing the petition of the corporation for a writ of
possession insofar as this property is concerned,
Lucasan contended that said lot and house having
been constituted as a family home are beyond the
reach of judicial execution. He contended that the levy
made by the sheriff on said property is legally
ineffective because it was not effected in accordance
with what is prescribed in Section 14, Rule 39, in
relation to Section 7, Rule 59, of the Rules of Court.
There is merit in this contention. The evidence shows
that when this property was levied on execution by the
sheriff to satisfy the judgment rendered against
Filemon Lucasan in favor of petitioner corporation the
notice of levy merely described the property as
unregistered land and the same was registered under
Act 3344 in the office of the register of deeds. It also
appears that in the notice of sale the property was
merely described according to the boundaries and area
appearing in the tax declaration and not according to
what appears in the certificate of title. On the other
hand, the rule provides that real property shall "be
levied on in like manner and with like effect as under
an order of attachment" (Section 14, Rule 39), and the
provision regarding attachment of real property
postulates that the attachment shall be made "by filing
with the register of deeds a copy of the order, together
with the description of the property attached, and a
notice that it is attached, and by leaving a copy of said
order, description, and notice with the occupant of the
property, if any there be," and that "Where the
property has been brought under the operation of the
Land Registration Act, the notice shall contain a
reference to the number of the certificate of title and
the volume and page in the registration book where
the certificate is registered" (Section 7 [a], Rule 59).
These provisions should be strictly construed if their
purpose has to be accomplished. The requirement that
the notice of levy should contain a reference to the
number of the certificate of title and the volume and
page in the registration book where the certificate is
registered is made in order that the debtor as well as a
third person may be properly informed of the particular
land or property that is under the custody of the court.
This can only be accomplished by making a reference
to the certificate of title covering the property. The
situation differs if the land is unregistered in which
case it is enough that the notice be registered under
Act 3344. This conclusion finds support in the following
authorities:

An attachment levied on real estate not duly


recorded in the registry of property is not an
encumbrance on the attached property, nor
can such attachment, unrecorded in the
registry, serve as a ground for decreeing the
annulment of the sale of the property, at the
request
of
another
creditor.
(Gonzales
Diez vs.Delgado and Imperial, 37 Phil., 389)
... In conformity with the provisions of section
71 of the Land Registration Act, the sheriff of
the City of Manila filed a notice of the levy with
the register of deeds, which notice was entered
in the primary entry book of the register's
office, but was afterwards, on May 20, 1920,
returned to the sheriff with the information that
the property was registered in the name of
Buenaventura Dizon, having been conveyed to
the latter by the defendant in execution,
Celerino Arellano, and that, therefore, no
memorandum of the notice had been entered
upon the outstanding certificate of title. It may
be noted that the notice contained no
"reference to the number of the certificate of
title of the land to be effected and the volume
and page in the registry book where the
certificate is registered, and that t that extent,
the notice did not meet the requirements of
said section 71. (De Ocampo vs. Treasurer of
the Philippine Islands, 50 Phil., 140, 141;
Emphasis supplied).
Since the notice of levy made by the sheriff as regards
parcel number 1 which is a registered land contains no
reference to the number of its certificate of title and
the volume and page in the registry book where the
title is registered, it follows that said notice is legally
ineffective and as such did not have the effect of
binding the property for purposes of execution.
Consequently, the sale carried out by virtue of said
levy is also invalid and of no legal effect.
The second issue raised is: Is the family home extra
judicially established by respondent on the lot and
house in question exempt from execution?
Respondent sustains the affirmative considering that
the money judgment rendered against him was
appealed to the Supreme Court in which event, he
contends, the same could not be considered as a debt
at the time the family home was constituted for it was
still inchoate and as such cannot come under the
provisions of Article 243 (2) of the new Civil Code.
The article above referred to provides that "The family
home extra judicially formed shall be exempt from
execution" except "for debts incurred before the
declaration was recorded in the Registry of Property."
What if the meaning of the word debt used in this

article? Does it refer to a debt that is undisputed, or


may it also refer to any pecuniary obligation even if the
same has not yet been finally determined? In other
words, can a judgment for a sum of money be
considered a debt within the meaning of this provision
even if said judgment is still pending appeal?
We are inclined to uphold the affirmative considering
the real purpose of the law. The reason why a family
home constituted after a debt had been incurred is not
exempt from execution is to protect the creditor
against a debtor who may act in bad faith by resorting
to such declaration just to defeat the claim against
him. If the purpose is to protect the creditor from fraud
it would be immaterial if the debt incurred be
undisputed or inchoate, for a debtor acting in good
faith would prefer to wait until his case is definitely
decided before constituting the family home. Indeed, it
may result, as in this case, that the Supreme Court
may affirm the judgment of the lower court. If the
contention of respondent be sustained a debtor may be
allowed to circumvent this provision of the law to the
prejudice of the creditor. This the Court cannot
countenance. Hence, we are persuaded to conclude
that the money judgment in question comes within the
purview of the word debt used in Article 243 (2) of the
new Civil Code.
WHEREFORE, the order appealed from is hereby
affirmed, without prejudice of the part of petitioner to
file a new petition for execution following strictly the
requirements of the rule on the matter. No
pronouncement as to costs.

G.R. No. L-34657 October 23, 1979


ERLINDA RAVANERA and husband OSCAR
RAVANERA, petitioners,
vs.
FELIPE I. IMPERIAL, respondent.
DE CASTRO, J.:
Appeal by certiorari taken by petitioners from (a) the
decision of the Court of Appeals in CA-G.R. No. SP00080, entitled "Felipe I. Imperial, petitioner versus
Hon. Delfin Vir. Sunga, Judge, Court of First Instance of
Camarines Sur, Erlinda Ravanera and husband Oscar
Ravanera, respondents" promulgated on November 16,
1971 setting aside the orders dated March 18, 1971
and March 30, 1971 issued by the Court of First
Instance of Camarines Sur in Civil Case No. 5292,
entitled "The Roman Catholic Archbishop of Caceres,
plaintiff, versus Felipe I. Imperial, defendant," and from
(b) the former's resolution of January 10, 1972 denying
petitioners' motion for reconsideration.
The facts found by the Court of Appeals are as follows:
It appears that on October 17, 1961
the Roman Catholic Archbishop of
Caceres filed an action for Rescission of
Contract and Recovery of Possession
against the herein petitioner before the
respondent court. Said case was
decided by the respondent court in
favor of the plaintiff on January 28,
1966.
On February 17, 1966 pending
approval of the Record on Appeal,
plaintiff Archbishop of Nueva Caceres
filed a Motion for Execution of the
decision or to order defendant to file
supersedeas bond and to deposit the
amount of P500.00 every month as
rentals.
On May 6, 1966 the respondent Court
granted the motion for execution
pending appeal and at the same time
ordered that to stay the execution, the
defendant put up a supersedeas bond
in the amount of P40,000.00 for the
rents due as of February, 1966, for the
amount of moral damages, and for the
expenses of suit and to deposit the
amount of P500.00 as monthly rental of
the property. This order became the
subject of a Special Civil Action for
certiorari and prohibition before the
Supreme Court and by reason of the

pendency of said special civil action


the order of execution was not
enforced by the plaintiff.
On December 10, 1966, the record on
appeal was approved and the appealed
case is now docketed as CA-G.R. No.
39115-R, in this Court.
On May 22, 1968, the Supreme Court
dismissed the petition for certiorari on
the ground that the order of execution
being incidental to the appeal, the
same should be addressed to the Court
of Appeals. So on June 21, 1968, the
plaintiff filed another motion for
execution. On July 16, 1968 the
respondent Court ordered the issuance
of a writ of execution, but the
petitioner was given fifteen (15) days
from receipt of the order to put up the
P40,000.00 supersedeas bond and to
deposit the monthly rental of P500.00
in order to stay the execution.
Inspite of his receipt of the order on
July 23, 1968, petitioner failed to post
the required supersedeas bond and to
deposit the P500.00 monthly rental.
Thus, on November 20, 1968, the
plaintiff Archbishop filed a motion for
the issuance of a writ of execution. On
December 20, 1968 the respondent
Court granted the motion for execution
requiring however the plaintiff to put
up a bond in the amount of P20,000.00
to answer for any judgment that may
be awarded to petitioners should the
decision be reversed on appeal.
The plaintiff Archbishop posted the
required bond of P20,000.00 and on
February 14, 1969 a writ of execution
was issued. Said writ was not enforced
upon instance of the counsel for
plaintiff as an amicable settlement was
proposed and after the 60 days period
had lapsed the Sheriff made a return of
the writ stating therein:
This is to certify that
this writ was not acted
upon at the instance of
counsel for the plaintiff
for the reason that
amicable
settlement
between parties was
proposed.

Upon
request
of
counsel for the plaintiff
let this writ be returned
and an alias writ be
issued for the proposed
amicable
settlement
abovestated failed to
materialize.
Naga City, Philippines,
July 14,1969.
SGD.
MAURO
B.
FAJARDOEx Oficio City
Sheriff
Pursuant to this return, the Clerk of
Court of the respondent Court, issued
an alias writ of execution on August 24,
1969. On September 24, 1969 the
Sheriff issued a notice of Levy by which
certain properties of the petitioner
were attached or levied upon. On
September 25, 1969 the alias writ was
personally served by the Sheriff upon
the petitioner. On October 7, 1969, the
Sheriff issued a Notice of Public Auction
sale of the properties levied upon
which was published in the "Bicol Star"
a weekly newspaper of general
circulation on October 11, 18 and 25,
1969. Private respondent alleges that
copies of the Notice of Levy and the
Notice of Sale were sent by Registered
Mail which according to the certificate
of the Postmaster was received on
October 15, 1969. Receipt of the Notice
of Levy is denied by petitioner.
On November 7, 1969 the public
auction sale was held, and the
respondent Erlinda Ravanera being the
highest bidder a Provisional Deed of
Sale was issued in her favor. Within the
one-year period of redemption, the
petitioner redeemed some of the
properties bought at auction sale, but
he failed to redeem some others on
account of which at the end of the
redemption period or on December 8,
1970 the Sheriff executed a Definite
Deed of Sale of said unredeemed
properties in the name of respondent
Erlinda Ravanera. She likewise paid the
arrears in real estate taxes of said
properties, redeemed a mortgage on
one of them and caused the property
to be declared in her name.

On February 9, 1971 respondent


Erlinda Ravanera filed a motion for a
writ of possession of the properties
covered by the Definite Deed of Sale,
to which motion petitioner filed his
opposition alleging that the notice of
levy was null and void and hence the
provisional as well as the definite deed
of sale were likewise void, and that
respondent
Ravanera
had
no
personality in the case, she not being a
party thereto.
On March 18, 1971, the respondent
Court issued an order granting the
motion for a writ of possession and on
March 27, 1971 the petitioner filed a
motion for reconsideration on the
ground that there was no formal
hearing and reception of evidence on
the motion and that the order did not
state the finding of facts which could
be the basis for the grant of the
motion. On March 30, 1971 the
respondent Court issued an order
denying the motion for reconsideration,
however, it suspended the effectivity of
the writ of possession to April 25, 1971.
Hence this petition.
The petitioner attacks the order of
March 15, 1971 granting the motion for
a writ of possession on the following
grounds:
1. That the writ of execution issued by
the Court on December 30, 1968 is
void defendant having on December
10, 1966 perfected his appeal;
2. That the Alias writ of Execution
issued by the Deputy Provincial Sheriff
is void there having been no order
corning from the Court granting such
issuance of an Alias Writ;
3. Notice of Levy Null and Void;
4. That Erlinda Ravanera has no
personality to file Motion for Writ of
Possession;
5. That there was no formal hearing or
reception of evidence from the parties;
6. That there is a pending appeal
before the Court of Appeals under G.R.
No. 39-115-R;

7. That order issuing the Writ of


Possession did not state findings of
facts as basis for the order or issuance
of the writ;
8. That the price for which the
properties have been bidded is grossly
inadequate
and
is
therefore
unconscionable amounting to lack of
consideration.
From the facts recited in the complaint,
the answer as well as the decision of
the respondent court appears that the
main case partakes more of the nature
of an unlawful detainer and damages
case rather than one for recission of
contract as it is admitted by the parties
that the contract of lease had already
expired and there is no showing that
the same had been expressive or
impliedly renewed. Hence there was
actually no contract to be rescinded
and
subsequent
orders
of
the
respondent court reveal that it
considered the case as one for
ejectment and damages. 1
On November 16, 1971, the Court of Appeals rendered
a decision setting aside the orders dated March 18,
1971 and March 30, 1971 issued by the Court of First
Instance of Camarines Sur and making the preliminary
injunction previously issued permanent. 2
Petitioners filed a motion for reconsideration of the
decision which was denied by the Court of Appeals in
its resolution of January 10, 1972. 3
From the above-mentioned decision and resolution,
petitioners seek in this petition to correct errors
committed by the Court of Appeals as follows:
1. The Court of Appeals erred in
annulling the Notice of Levy merely
because it did not comply with some of
the formal requirements of the Rules of
Court which were not shown to have
prejudiced any substantial rights of the
respondent Imperial;
2. The Court of Appeals erred in
applying to one unregistered parcel of
land
and
the
one
unregistered
residential house described in the
Notice of Levy the formal requirements
of the Rules of Court which are
applicable
only
to
registered
properties;

3. The Court of Appeals erred in


requiring service upon respondent
Imperial of the Notice of Levy before
the publication of the Notice of Public
Auction Sale considering that the Rules
of Court does not so require;
4. That the Court of Appeals erred in
not applying to the case at bar the
presumption of regularity in the official
acts and proceedings of the Sheriff,
particularly in the matter of leaving
with the occupant of the land, copy of
the Notice of Levy, considering that
there is no evidence to the contrary;
5. The Court of Appeals erred in not
applying against respondent Imperial
the principle of estoppel or waiver of
whatever procedural defects there
were in the Levy when he repurchased
part of the properties levied upon by
the Sheriff but failed to repurchase
properties which are now in question
herein;
6. That the Court of Appeals erred in
not considering against respondent
Imperial undisputed facts which show
bad faith and intent to delay the
proceedings and to thwart a fair
administration of justice,
7. The Court of Appeals erred in not
considering in favor of the petitioners
undisputed facts showing that they
were innocent purchasers for value,
and therefore, should not be made to
suffer the prejudice caused by the
alleged invalidity or ineffectiveness of
the levy. (pp. 9-1 0, Rollo)
The main issue raised before Us in this petition is
whether or not there was a valid levy upon the
properties of respondent Felipe I. Imperial.
The Court of Appeals annulled the levy and all the
proceedings subsequent thereto on two grounds, to
wit: 1) The occupants or possessors of the properties
levied upon were not furnished with a notice of levy
and as Section 7 of Rule 57, paragraph (a) makes this a
requirement for the validity of the levy, noncompliance therewith has made the levy ineffective,
and 2) The Notice of levy made by the sheriff did not
contain the volume and the page in the Registry where
the certificates registered. 4

Anent the first ground, the Court of Appeals, in support


thereof, cited the case of Philippine Surety vs.
Zabal 5wherein this Court held:
In the case at bar, no notice of the levy
was given to the occupant of the land.
There was, therefore, no valid levy on
the land, and its registration in the
registry of deeds and annotation in the
title were invalid and ineffective. The
fact that the person in whose name the
land was registered was duly notified of
the attachment does not cure the
defect, because personal service of the
copy of the writ, description of the
property and notice to the owner, who
is not the occupant, does not constitute
compliance with the statute.
The evident purpose of the law in
imposing these requirements is to
make the levy public and notorious, to
prevent liens from attaching secretly
and by surreptitious entries and
endorsements, and to enable the
affected party to inquire into the date
and circumstances surrounding the
creation of the encumbrance, as well
as to give him ample opportunity to file
timely claims to the property levied
upon.
The ruling relied upon by the Court of Appeals has
already been modified by the case of Pamintuan vs.
Muoz, 22 SCRA 1109 wherein tills Court briefly stated:
Petitioners finally argue that they had
not been served a notice of the levy
nor a notice of the sale as required by
the Rules. The sheriffs return, however
shows that the notice of levy had been
registered with the Register of Deeds
pursuant to Rule 57, Section 7 in
connection with Rule 39, Section 15 of
the Rules, and that the notice of sale
had been sent by registered mil on
December 28, 1964, to petitioners.
Even assuming then that petitioners
were not served a copy of the notice of
levy, yet We have already ruled in
Philippine Bank of Commerce vs.
Macaraeg, L-14174, October 31, 1960,
that this defect is cured by service of
notice of sate upon the judgment
debtors prior to the sale, which was
done here. The levy was validly
effected then.

It appears in this case that the notice of levy was


registered with the Register of Deeds on September 29,
1969. From a certification of the Postmaster at Naga
City, it also appears that registered letter No. 13681
containing the notice of levy and the notice of auction
sale addressed to respondent Felipe Imperial was
delivered on October 15, 1969 to Pelaguia Comba,
member of the household of the addressee.
Respondent Imperial was, therefore, notified by
registered mail of the levy and the auction sale long
before November 3, 1969, the date of the auction sale.
What is required is that the judgment debtor must be
notified of the auction sale before the actual date of
sale which was done in the case at bar. 6
It cannot be gainsaid that if it were only to afford an
opportunity to respondent Imperial to avoid the auction
sale, he had ample opportunity to file his objection to
such sale because the auction sale took place on
November 3, 1969. The respondent had nineteen days
after he received the notice of levy and the notice of
auction sale on October 15, 1969 and thirty-nine (39)
days from September 25, 1969 when he was served
personally by the Sheriff a copy of the writ of execution
to avoid the sale had he wanted to. Moreover, he had
exactly one year from November 27, 1969 when the
provisional Deed of Sale executed in favor of the
petitioner was registered with the Register of Deeds to
redeem the property.
Regarding the second ground, We are constrained to
make a distinction for the levy of property registered
under Act 496 (Land Registration Act) and the property
not brought under the operation of said Act.
The Court of Appeals concluded in its Resolution dated
January 10, 1972 that the requirements of Section 7 of
Rule 57 do not make distinction whether the property is
under the operation of the Land Registration Act or not.
Petitioners contend otherwise and such contention is
not without merit, under the provisions of Section 15
(Paragraph 2) of Rule 39 and Section 7 (Paragraph a) of
Rule 57, which are pertinent.
Section 15 (Paragraph 2) of Rule 39 expressly provides:
xxx xxx xxx
Real property, stocks, shares, debts,
credits and other personal property, or
any interest in either real or personal
property, may be levied on in like
manner and with like effect as under a
writ of attachment.
Section 7 (paragraph a) of Rule 57 also provides the
following:

Attachment of real and personal


property, recording thereof.- Properties
shall be attached by the officer
executing the order in the following
manner:
(a) ... Where the property had been
brought under the operation of the
Land Registration Act, the nonce shall
contain a reference to the number of
the certificate of title and the volume
and page in the registration book
where the certificate is registered. The
registrar must index attachments filed
under this paragraph in the names
both of the plaintiff and of the
defendants.
Section 7 (paragraph a) of Rule 57 is so explicit that
only as to property which has been brought under the
operation of the Land Registration Act should the
notice of levy contain the volume and page in the
registration book where the certificate is registered,
impliedly, the requirement does not apply to property
not registered under the said Act. It is enough that the
notice of levy upon unregistered land be registered
under Act 3344, as was done in this case.
In the case of Siari Valley Estates vs. Lucasan, 7 which
clearly applies to this case, it was held by this Court:
The requirement that the notice of levy
should contain a reference to the
number of the certificate of title and
the volume and page in the registration
book where the certificate is registered
is made in order that the debtor as well
as a third person may be properly
informed of the particular land or
property that is under the custody of
the
court.
This
can
only
be
accomplished by making a reference to
the certificate of title covering the
property. The situation differs if the
land is unregistered, in which case it is
enough that the notice be registered
under Act 3344. This conclusion finds
support in the following authorities:
An attachment levied on real estate not
only recorded in the registry of
property is not an encumbrance on the
attached property, nor can such
attachment, unrecorded in the registry,
serve as a ground for decreeing the
annulment of the sale of the property,
at the request of another creditor.
(Gonzalez Diez v. Delgado and
Imperial, 37 Phil. 389)

... In conformity with the provisions of


Section 71 of the Land Registration Act,
the sheriff of the City of Manila filed a
notice of the levy with the register of
deeds, which notice was entered in the
primary entry book of the register's
office, but was afterwards, on May 20,
1920, returned to the sheriff with the
information that the property was
registered
in
the
name
of
Buenaventura Dizon, having been
conveyed to the latter by the
defendant
in
execution,
Celerino
Arellano, and that, therefore, no
memorandum of the notice had been
entered
upon
the
outstanding
certificate of title. It may be noted that
the notice contained no reference to
the number of the certificate of title of
the land to be effected, and the
volume and page in the registry book
where the certificate is registered, and
that to that extent the notice did not
meet the requirements of said section
71. (De Ocampo v. Treasurer of the
Philippine Islands, 50 Phil. 140, 141;
Emphasis supplied.)
The properties which were acquired by the petitioners
as the highest bidders in the auction sale on November
3, 1969 are as follows:
1. A parcel of land located at Naga City
registered under Act 496 and covered
by Transfer Certificate of Title No. 257;
2. A two-storey residential house
located at Naga City not registered
under Act 496 but covered by Tax
Declaration No. 14276; and
3. A parcel of residential land located
at Naga City not registered under Act
496 but covered by Tax Declaration No.
8732. (Annex J to Petition, pages 39
and 40, Rollo.)
From the records of the case, the notice of levy made
by the sheriff as regards the registered land contains
reference to the number of its certificate of title but not
to the volume and page in the registry book where the
title is registered. Nevertheless from what was stated
in the case of Siari Valley Estate vs. Lucasan, supra, it
would seem that the purpose of the requirement of
Section 7(a), Rule 39 of the Revised Rules of Court is
substantially complied with. This is more so where as in
this case, there appears in the notice of levy the
following certification:

It is hereby certified that this


instrument has been duly registered
proper memorandum hereof made on
transfer Certificate of Title No. 257 &
258 and on its owner's duplicate Reg.
Book No. 3; File No. 1-248.
Naga City, Sept. 29, 1969.
Reference to the number of the certificate of title of
every registered land in the notice of levy, together
with the technical description thereof, would certainly
suffice to inform the debtor, as well as third persons
what particular land or property is brought to the
custody of the court, as is the purpose of the aforecited
provision of the Rules of Court. Incidentally, no third
person appears, to be interested in the matter now
before this Court. From the fact that respondent
Imperial was able to exercise his right of redemption
with reference to three registered parcels of land, it can
be easily deduced that insofar as respondent Imperial
is concerned, the purpose of the requirement of
reference having to be made to the number of the
certificate of title, and also the volume and page in the
registration book where the certificate is registered,
has been fully served or attained.
It may also be pertinent to note that in the Siari Valley
case, heavily relied upon by the respondent court in
voiding the notice of levy in the instant case, the land
involved which was actually registered with OCT No.
2492 was described in the notice of levy
as unregistered land, which was thus a misleading
information.
We, therefore, find no substantial defect in the notice
of levy on all the properties levied upon and sold to
petitioners in the auction sale, that should be a basis,
as the respondent court deemed it to be, for annulling
the sale made pursuant to the levy.
Respondent Imperial also brands the levy as irregular
for failure of the occupants of the attached or levied
properties to be left with copy of the order, notice of
levy and description of the properties. The finding of
facts of the respondent Court of Appeals which was
quoted in full above, fails to disclose the existence of
occupants of the properties levied upon other than the
owner, respondent Imperial. It was incumbent on said
respondent to prove by evidence duly submitted to the
Court a fact that would tend to support his claim that
the levy is void or otherwise illegal. The levy being an
official act of a government functionary its regularity is
presumed.
The alleged inadequacy of the purchase price of the
properties sold in the execution sale is no ground to
assail the validity of the sale, for the judgment debtor

has the right to redeem the property, and the smaller


the price, the easier is it for him to buy back the
property. 8
Respondent Imperial goes back to the issuance of the
order of execution on December 30, 1968 to show that
the order is invalid because it was issued after he has
perfected his appeal on December 10, 1966 (p. 22,
Respondent's Brief). What the Court of Appeals,
however, stated in its decision is that "on February 17,
1966, pending approval of the Record on Appeals,
plaintiff Archbishops of Nueva Caceres filed a Motion
for Execution of the decision or to order defendant to
file supersedeas bond and to deposit the amount of
P500.00 every month as rentals," and that on May 6,
1966, the respondent court (CFI of Camarines Sur)
granted the motion for execution pending appeal. This
order was brought up by respondent Imperial to the
Supreme Court on certiorari as a special civil action,
resulting in the stay of the enforcement of the order of
the execution. The special civil action, however, was
dismissed on May 22,1968, by the Supreme Court, and
the dismissal merely reactivated the order of execution
pending appeal issued on May 6,1966.
Clearly, the original order of execution pending appeal
was perfectly valid, and the issuance of alias writ when
the original writ was not acted upon at the instance of
the plaintiff for the reason that amicable settlement
between the parties was proposed but failed to
materialize, did not affect the validity of either the
original or alias writ of execution. Accordingly, We rule
that contrary to the contention of respondent Imperial
(see pages 22-23, Brief for the Respondent), the writ of
execution that gave rise to the levy of the properties in
question and their sale in a public auction is valid and
regular in all respects. 'That the alias writ of execution
was issued by the Clerk of Court and not by the judge
is no ground for holding invalid said alias writ,
considering that the Clerk of Court is not without
authority to issue ordinary writs and processes, under
the seal of the Court (Session 4, Rule 136, Revised
Rules of Court).
In any event, respondent Imperial as judgment debtor
is in estoppel by his failure to seasonably make an
objection to the allegedly defective notice of levy and
notice of sale before the actual sale, or before
redeeming some of his properties despite the supposed
defect of the notice of levy. He should have interposed
objection to the levy and the sale from the very
beginning, from October 15, 1969 when he received
notice of levy and notice of sale. A waiver on his part to
question the validity of the auction sale may also be
said to arise from his failure to pay the arrears in real
estate taxes, or to redeem the mortgage of one of the
properties sold at public auction, during the period of
redemption. These are omissions which are clearly an
indication of acquiescence in the sale, or his awareness

that the execution sale was valid and legally


unassailable. To allow him to turn back on his manifest
conformity to the levy and sale on execution of his
properties, after petitioners have bought the property
as the highest bidder during the auction sale, would be
patently unjust to the said petitioners, who had every
reason to rely on the presumed regularity of the
proceedings as official acts of both the judge and his
own court officer, the sheriff.
WHEREFORE the decision appealed from is hereby
reversed. The notice of levy and the sale of the
properties
in
question,
both
registered
and
unregistered in favor of the petitioners are hereby
declared valid. No pronouncement as to cost.
SO ORDERED.

G.R. No. 78635 April 27, 1989


LEONORA OBAA, petitioner,
vs.
COURT OF APPEALS, RAFAEL G. SUNTAY,
REGISTER OF DEEDS OF QUEZON CITY, and the
EX-OFICIO SHERIFF OF QUEZON CITY, respondents.
GUTIERREZ, JR., J.:
This is a petition to review on certiorari the decision of
the Court of Appeals which set aside the trial court's
decision, dismissed herein petitioner Leonora Obaa's
complaint and ordered her to pay Rafael G. Suntay the
amount of P5,000.00 as attorney's fees with costs
against her.
The facts of the case as stated in the Court of Appeals'
decision are as follows:
Records show that defendant-appellant
(Rafael G. Suntay) was the former
counsel of Liberty H. Dizon and her
minor children, Nicolas and Noel
Patrick, both surnamed Torio, in an
intestate proceeding docketed as No.
142 and in the petition for guardianship
over said minors in Sp. Proc. No. C00565. On April 28, 1972, said
defendant-appellant as such counsel in
Sp. Proc. No. C-00565, filed an
'Explanation and Motion' for the
approval of attorney's fees. The
defunct JDRC of Quezon City, acting on
said motion, issued an order dated May
9, 1972, the pertinent portion of which
reads:
Considering
the
foregoing, the Court
believes
that
P10,000.00 attorney's
fees is too burdensome
for
the
wards
to
shoulder alone and that
the guardian should be
able to be responsible
for half of it.
WHEREFORE, further to
order dated April 11,
1972, counsel is hereby
authorized to collect
P5,000.00, from the
ward's
guardianship
estate.
(p.
3,
Appellant's Brief).

On August 24, 1972, appellant filed in


the same proceedings a 'Motion to
Order the Guardian To Pay The
Attorney's Fees,' with prayer that the
guardian
be
ordered
to
pay
immediately the amount of P5,000.00
out of the ward's guardianship estate
(Exh. W). Acting upon said motion, the
JDRC of Quezon City issued an order
dated September 14, 1972, requiring
Liberty B. Dizon to show proof of
payment
of
attorney's
fees
in
accordance with Order of May 9, 1972
and to submit a new a bond releasing
her former counsel as surety; failing
which, she shall be declared in
contempt of court (Exh. X).
It would appear that the above order
was not complied with by Liberty H.
Dizon because on November 9, 1972,
defendant-appellant Atty. Suntay, filed
with the defunct CFI of Bulacan an
action for a sum of money (Civil Case
No. 4238-M) against said Liberty M.
Dizon, Nicolas Torio, Jr. and Noel Patrick
Torio (pp. 28, Record). In his complaint,
defendant-appellant averred among
others: that his attorney's fees in Sp.
Proceedings Nos. C-412. and QC-00565
was (sic) not paid by his former clients,
despite
repeated
demands.
In
connection
with
said
complaint,
appellant moved for the issuance of an
order of attachment upon a certain
parcel of land covered by TCT No.
173792
together
with
the
improvements belonging to Liberty H.
Dizon and her wards, located at 48
Damar Village, Balintawak, Quezon
City. On December 1, 1972, by virtue of
the Writ of Attachment issued in Civil
Case No. 4238-M, a levy was made on
said
property,
which
levy
was
annotated at the back of TCT No.
173792 of the Register of Deeds of
Quezon City, to wit:
'PE-5839\T173792

NOTICE OF LEVY
Affecting the rights,
interests
and
participation
of
the
registered
owners
hereof,
the
same
having been levied by
the Sheriff of Q. City by
virtue of an order of
attachment issued by

the CFI of Bulacan in


Civil Case No. 4238-M,
entitled 'Rafael
G.
Suntay, Pltf v. Liberty
H. Dizon, Nicolas Torio,
Jr. and Joel Patrick
Torio, defs. to the
amount of P10,000.00.
Date of Instrument
Nov. 29, 1972
Date of Inscription
Dec. 1, 1972.
(Exh. 1-A)'
Due to the failure of the sheriff to serve
the summonses issued in Civil Case
4238 for the reason that Mrs. Dizon
and her wards no longer resided at the
last known address at 34-H Road,
Cypress Village, Quezon City, and that
their present address cannot be
ascertained appellant as plaintiff in
said civil case filed a Motion for Service
of Summons by Publication (Exh. H)
which was granted by the court in its
Order dated February 12, 1973 (Exh.
1). Accordingly, summons were served
upon Mrs. Dizon and her wards through
publication.
Meanwhile, pursuant to a Deed of
Absolute Sale dated May 16, 1973
executed by and between Liberty H.
Dizon, et al., and appellee Leonora
Obaa involving the attached property
(Exh. S) the register of deeds of
Quezon City cancelled TCT No. 173792
in the name of Liberty H. Dizon and her
wards, and, in lieu thereof, executed in
favor of Leonora Obaa a new TCT No.
191069 necessarily transferring in the
process the encumbrance consisting of
notice of levy in favor of appellant.
On August 10, 1973, after summons by
publication had been effected in Civil
Case No. 4238-M, upon motion of
appellant Atty. Suntay, the court
declared
the
defendants
therein,
Liberty H. Dizon and her wards, in
default and allowed plaintiffs evidence
to
be
presented ex-parte.
Consequently, a decision was rendered
on September 28, 1973 awarding to
appellant Atty. Suntay the amount of

P10,000.00 representing his claim for


attorney's
fees
relative
to
the
prosecution of said case (Exhibit K).
Pursuant to said decision, a writ of
execution was issued per order of the
court, and then followed by a Notice of
Levy on Execution dated August 7,
1974, issued by the sheriff of Quezon
City. Thereafter, a certificate of sale
(Exh. M) over the subject property (now
covered by TCT 191059 in the name of
Leonora Obaa) was issued in favor of
the appellant, being the highest bidder.
For failure of Mrs. Dizon and her wards
or by appellee Leonora Obaa to
redeem the property on or before
October 15, 1975, a 'Sheriffs Final Deed
of Sale' (Exh. N) was issued in favor of
appellant. Both certificates of sale were
registered in the Register of Deeds of
Quezon City and was annotated at the
back of TCT No. 191059 (Exh. A).
Appellant then filed a petition in the
then CFI of Rizal, Quezon City, for the
cancellation; of TCT No. 191059 which
was opposed by appellee Leonora
Obaa. On April 28, 1977, said CFI of
Quezon City in LRC-750 issued an order
cancelling TCT No. 191059 and
directing the Register of Deeds of
Quezon to issue a new title covering
the subject land in the name of Rafael
G. Suntay married to Victoria J. Suntay.
To stop the registration of the subject
land in the name of appellant, appellee
filed an action on August 28, 1978
before the court a quo for annulment of
judgment rendered in Civil Case No.
4238-M. In her complaint, appellee as
plaintiff, contended that the decision
rendered in Civil Case No. 4238-M by
the then CFI of Bulacan is null and void
for the reason that said court did not
acquire jurisdiction over Liberty H.
Dizon and her wards, since they were
not properly served with summons.
Appellee also
claimed that the
proceedings before the sheriff were
defective in that the sheriff failed to
comply
with
the
jurisdictional
requirements on the manner of service
of notice in the New Rules of Court thus
rendering the proceedings void ab
initio.
The defendant-appellant, on the other
hand, countered in his answer that

LRC-750 granting the petition for the


cancellation of TCT No. 191059 in favor
of said appellant is res judicata to the
instant case; that plaintiffs recourse
under Rule 38 has long prescribed; that
insofar as the plaintiff is concerned,
when she bought the property in
question and title was transferred to
her on July 2, 1973, she is charged with
knowledge of the pendency of Civil
Case No. 4238-M thru the annotation at
the back of TCT No. 173792 of the
Registry of Deeds of Quezon City; and
that there was no-extrinsic fraud
committed by defendant-appellant that
may constitute a ground to nullify the
judgment in Civil Case No. 4238-M.
The court a quo in nullifying the
judgment in Civil Case No. 4238 held
that no jurisdiction was acquired over
the persons of defendants therein, the
action being strictly in personam and
summons by publication is insufficient;
and that no valid attachment and levy
were made by the sheriff as no
personal service of the copy of the
notice to the occupant of the property
was made. (Rollo, pp. 37-40).
There are, therefore, three cases which eventually led
to this petition. First was SP-C-00565, the guardianship
case before the Juvenile and Domestic Relations Court
of Quezon City where the attorney's fees for Suntay
were initially awarded. Second was CC 4238-M before
Branch VII of the Bulacan Court of First Instance where
Atty. Suntay filed his action for sum of money to collect
his fees and where a default judgment against Liberty
Dizon and the Torio children was rendered. The third is
the case now before us from the Court of Appeals
Civil Case No. 5418-M, the annulment of judgment case
filed in Branch VIII of the Regional Trial Court of
Bulacan to set aside as null and void the CFI decision in
Civil Case No. 4238-M.
There is actually a fourth case, No. LRC 750, a petition
for cancellation of the petitioner's TCT No. 191059 filed
by respondent Suntay with the Court of First Instance
of Quezon City.
On appeal in Civil Case No. 5418-M, the Court of
Appeals dismissed petitioner Obaa's complaint on the
grounds of lack of cause of action and res judicata.
Hence, this present petition.
Petitioner raises the following assignment of errors,
namely:

(T)hat the public respondent Court of


Appeals committed a grave abuse of
discretion amounting to a lack of or in
excess of jurisdiction, in REVERSING
and SETTING ASIDE, the appealed
decision of the Trial Court a quo,
despite the clear merits thereof, and
these errors of public respondent are
manifest in the following:
1. THAT PETITIONER
HAS NO CAUSE OF
ACTION, SINCE SHE
WAS
NOT
A
DEFENDANT NOR A
PARTY IN INTEREST IN
CC
NO.
4238-M
(BRANCH
VII,
CFI,
BULACAN);
2.
THAT
THE
COMPLAINT
FOR
ANNULMENT
OF
DECISION IS BARRED
FOR REASON OF RES
JUDICATA,
SINCE
BETWEEN LRC-750 AND
CC 5418-M, THERE IS
AN
IDENTITY
OF
PARTIES AND SUBJECT
MATTER, AND CAUSES
OF ACTIONS. (Rollo, pp.
10-11)
There are certain facts overlooked by the Court of
Appeals which call for the setting aside of its decision.
Civil Case No. 4238-M was an action for sum of money
filed by Atty. Suntay against liberty Dizon and her
minor children in an effort to collect attorney's fees in
the guardianship case he handled for them. The
guardianship court authorized the payment of
P5,000.00. According to the Court of Appeals, the
collection case was between Suntay on one hand and
Dizon and her children on the other. It ruled that
petitioner Obaa the buyer of the lot, is not a party in
interest and had neither personality nor cause of action
to ask for the annulment of the judgment in that case.
This may be so, if the facts end there. However, the
judgment in Civil Case No. 4238-M, while against Dizon
and her children was executed against property
belonging to petitioner Obaa.
The house and lot in Quezon City which Dizon sold to
Obaa for P150,000.00 was executed upon by the
Sheriff to satisfy the P10,000.00 attorney's fees in the
Dizon guardianship case and another P5,000.00

awarded to Suntay for his fees in prosecuting his own


collection case. The house and lot were sold for
P17,402.90 to respondent Suntay. According to the
petitioner, the Property she purchased for P150,000.00
on May 16, 1973 is now worth over Pl,000,000.00.
The sheriffs sale was affected without any personal
notice to Liberty H. Dizon on the ground that she had
moved out of her old address and her "present
address" was unknown. No notice was served on
Obaa because she was not a party in the collection
case. All notices and summonses in the collection case
filed on November 9, 1972 including the copy of the
complaint, the original summons, the alias summons,
the notice of levy on attachment of the disputed
property, the notice of levy on execution and the notice
of sheriffs sale were served through mail to defendant
Dizon at 34-H Caingin Road, Cypress Village, Quezon
City. As earlier stated, because the Sheriff could not
serve the complaint and the summons on Dizon who
had moved out of the above address, service by
publication upon Dizon was authorized by the court in
the collection case.
In the annulment of judgment case which led to this
petition, the trial court ruled:
On the question as to whether the
Bulacan Court of First Instance had
acquired
jurisdiction
over
the
defendants in the civil case in question
thru summons by publication, the
latest case law on the matter is to the
affect that in an action strictly in
personam personal
service
of
summons within the forum is essential
to the acquisition of jurisdiction over
the person of the defendant who does
not voluntarily submit to the authority
of the court. In other words by
publication cannot consistently with
the due process clause in the Bill of
Rights confer upon the court
jurisdiction
over
said
defendants
(Magdalena Estate, Inc. v. Nieto, et al.
G. R. No. 54242, November 25, 1983,
citing Citizens Surety & , Inc. v. Judge
Melencio Herrera, et al. 38 SCRA 369
[1971]; see also Pantaleon v. Asuncion,
105 Phil. 761 [1059]; contra Fontanillal
v. Dominguez, 73 Phil. 579 [1042]).
There is no question that Civil Case No.
4238-M filed before the Court of First of
Bulacan was a personal action being
one for the recovery of a sum of money
as it prayed for judgment ordering the
defendants jointly and severally to pay
plaintiff the sum of P10,000.00 with
legal interest thereon from the date of

the filing of this complaint; the sum of


P5,000.00 as attorney's fees plus
actual, moral and exemplary damages
upon such amounts as this Honorable
Court may deem just and equitable and
the costs of suit. The creditor, however,
in an action in personam can take the
recourse to locate properties, real or
personal of the resident defendantdebtor with unknown address and
causing said properties to be attached
under Rule 57 of Section l(f) in which
case the attachment converts the
action
into
a
proceeding in
rem or quasi in rem and the summons
by publication may then be deemed
valid and effective. (Ibid) In the at bar,
it appears on record that the plaintiff
who is supposed to be the creditor
availed of this remedy of attachment.
This would have converted the action
into a proceeding in rem and thus
rendered as proper the summons by
publication. But the validity of the
attachment is now contented by the
herein plaintiff on the ground that the
proceedings before the sheriff in
connection with Civil Case No. 4238-M
especially the notice of levy of
attachment of the property subject
matter of the action were defective and
invalid for not having been in
accordance with the provisions of Rule
57 of the Rules of Court on attachment.
(pp. 27-29, Rollo)
In Venturanza v. Court of Appeals (156 SCRA 305, 312
[1987}), this Court ruled:
There is no question that the case at
bar which is an action for collection of a
sum of money is an action in
personam thereby requiring personal
service of summons on the defendants.
It should be noted that Section 7 of Rule 57 requires
that in attaching real property a copy of the order,
description, and notice must be served on the
occupant, in this case the occupant at 48 Damortiz
Street, Damar Village, Quezon City. The trial court in
the annulment case ruled that the attachment was
void from the beginning. The action in personam which
required personal service was never converted into an
action in rem where service by publication would have
been valid.
In Baltazar v. Court of Appeals (G.R. No. 78728,
December 8, 1988) we stated that the propriety of
service of summons by publication is not dependent

upon the technical characterization of the action as


one in rem or quasi in rem but upon compliance with
the requirements for the situations found in Sections
16, 17, and 18 of Rule 14 of the Rules of Court. We
declared the service of summons by publication as
"legally and constitutionally vitiated." In the present
case, however, the action was one in personam. The
service was equally void and of no effect.
The Court of Appeals reversed the trial court principally
on the ground that Leonora Obaa was neither a
defendant nor a party-in-interest in the collection case.
It ignored the fact that property already sold to her was
attached and then bedded out to Atty. Suntay without
any notice to her. And because the notice of lis
pendens in the collection case was secured ex-parte
without the defendant Dizon and petitioner Obaa who
were never brought to court, having any inkling about
it, the notice was not annotated on the owner's
duplicate copy of Transfer Certificate of Title No.
173792.
Respondent Suntay cannot claim ignorance of the sale
to petitioner Obaa as a ground for not bringing her
into the picture. As stressed by the petitioner, Liberty
Dizon filed her motion for the approval of the sale of
the disputed house and lot in the guardianship case SPC-00565
through
her
counsel, herein
private
respondent Suntay (Exh. Q, original records). He could
not have been unaware that the house and lot he was
attaching had been sold to Obaa because the sale of
the Dalmar property was authorized by the
guardianship court in the case where he was counsel
for the guardian.
Considering all the foregoing circumstances, the order
in LRC 750 which is based on irregular proceedings in
the prior case and which directed the cancellation of
Obaa's transfer certificate of title cannot assume
finality. The respondent court committed reversible
error in using it as a basis for res judicata. There is the
added factor that a land registration court in a
cancellation of title case could not possibly inquire into
the controversial matters raised in the annulment of
judgment case. (See Register of Deeds of Iloilo v.
Hodges, 7 SCRA 149 [1963]; Sunpongco v. Heirs of
Nicolas Ronquillo, 36 SCRA 395 [1970] and
Development Bank of the Philippines v. Jimenez, 36
SCRA 426 [1976]).
The respondent court ruled that Liberty H. Dizon and
her wards should have been joined as plaintiffs by
petitioner Obaa in the action to annul the judgment in
the collection case. This ruling ignores the fact that
Dizon could not even be summoned in the collection
case; her whereabouts are unknown: the judgment
against her was a default judgment; she has
apparently no more interest whatsoever in the house

and lot she sold to Obaa and she still owes Atty.
Suntay P10,000.00.
And finally in our capacity as a court of equity in
addition to being a court of law, we cannot close our
eyes to the rank injustice whereby the owner of a
minion peso house and lot is compelled to give up her
property to answer for a P10,000.00 attorney's fee
incurred by its former owner and which the lawyer
cannot apparently collect from his own client.
WHEREFORE, the petition is hereby GRANTED. The
questioned decision of the Court of Appeals is
REVERSED and SET ASIDE. The decision of the trial
court in Civil Case No. 5418-M which reads:
"Premises considered, the judgment
issued in Civil Case No. 4238-OM as
well as the proceedings, orders and
notices issued therein including the
writ of attachment, levy and execution
sale are hereby declared null and void.
The Register of Deeds is therefore
permanently restrained from effecting
the cancellation of title in the name of
herein plaintiff. For moral damages, the
said plaintiff is hereby awarded the
amount of P10,000.00, and for
attorney's
fees,
the
amount
of
P15,000.00.
Costs
against
the
defendant." (p. 35, Rollo)
is REINSTATED.
SO ORDERED.

[G.R. No. 156580. June 14, 2004]


LUZ DU, petitioner, vs. STRONGHOLD INSURANCE
CO., INC., respondent.
DECISION
PANGANIBAN, J.:
Preference is
given to
a
duly
registered
attachment over a subsequent notice of lis pendens,
even if the beneficiary of the notice acquired the
subject property before the registration of the
attachment. Under the torrens system, the auction sale
of an attached realty retroacts to the date the levy was
registered.
The Case
Before us is a Petition for Review[1] under Rule 45
of the Rules of Court, seeking to nullify the March
19, 2002 Decision[2] and
the December
5,
2002 Resolution[3] of the Court of Appeals (CA) in CAGR CV No. 50884. The CA disposed as follows:
Parenthetically, when the decision in Civil Case No. 901848 became final and executory, levy on execution
issued and the attached property sold at public
auction, the latter retroacts to the date of the levy.Said
the High Court:
In line with the same principle, it was held that where a
preliminary attachment in favor of A was recorded on
November 11, 1932, and the private sale of the
attached property in favor of B was executed on May
29, 1933, the attachment lien has priority over the
private sale, which means that the purchaser took the
property subject to such attachment lien and to all of
its consequences, one of which is the subsequent sale
on execution (Tambao v. Suy, 52 Phil. 237). The auction
sale being a necessary sequel to the levy, it enjoys the
same preference as the attachment lien enjoys over
the private sale. In other words, the auction sale
retroacts to the date of the levy. [Were] the rule be
otherwise, the preference enjoyed by the levy of
execution
would
be
meaningless
and
illusory (Capistrano v. Phil. Nat. Bank, 101 Phil. 1117).
(Underscoring supplied)
By and large, We find no reversible error in the
appealed decision.
IN VIEW OF ALL THE FOREGOING, the instant appeal is
ordered DISMISSED. No pronouncement as to cost.[4]

The questioned Resolution, on the other hand,


denied petitioners Motion for Reconsideration.
The Facts
The CA narrated the facts as follows:
x x x Aurora Olarte de Leon was the registered owner
of Lot No. 10-A (LRC Psd 336366) per Transfer
Certificate of Title No. 582/T-3. Sometime in January
1989, De Leon sold the property to Luz Du under a
Conditional Deed of Sale wherein said vendee paid a
down payment of P75,000.00 leaving a balance
of P95,000.00.
Then again, on April 28, 1989, Aurora de Leon sold
[the] same property to spouses Enrique and Rosita
Caliwag without prior notice to Luz Du. As a result,
Transfer
Certificate
of
Title
No.
582/T-3 was
cancelled and Transfer Certificate of Title No. 2200 was
issued in favor of the Caliwag spouses.
Meanwhile, Stronghold Insurance Corp., Inc. x x x
commenced Civil Case No. 90-1848 against spouses
Rosita and Enrique Caliwag et al., for allegedly
defrauding Stronghold and
misappropriating
the
companys fund by falsifying and simulating purchases
of
documentary
stamps. The
action was
accompanied by a prayer for a writ of preliminary
attachment duly annotated at the back of Transfer
Certificate of Title No. 2200 on August 7, 1990.
On her part, on December 21, 1990, Luz Du initiated
Civil Case No. 60319 against Aurora de Leon and the
spouses Caliwag for the annulment of the sale by
De Leon in favor of the Caliwags, anchored on the
earlier mentioned Deed of Conditional Sale.
On January 3, 1991, Luz Du caused the annotation of a
Notice Of Lis Pendens at the back of Transfer Certificate
of Title No. 2200.
On February 11, 1991, the decision was handed down
in Civil Case No. 90-1848 in favor of Stronghold,
ordering the spouses Caliwag jointly and severally to
pay the plaintiff P8,691,681.60, among others.When
the decision became final and executory, on March 12,
1991, a notice of levy on execution was annotated on
Transfer Certificate of Title No. 2200 and the attached
property was sold in a public auction. On [August] 5,
1991,[5] the certificate of sale and the final Deed of
Sale in favor of Stronghold were inscribed and
annotated leading to the cancellation of Transfer
Certificate of Title No. 2200 and in lieu thereof, Transfer
Certificate of Title No. 6444 was issued in the name
of Stronghold.

It came to pass that on August 5, 1992, Luz Du too was


able to secure a favorable judgment in Civil Case No.
60319 and which became final and executory
sometime in 1993, as well.
Under the above historical backdrop, Luz Du
commenced the present case (docketed as Civil Case
No. 64645) to cancel Transfer Certificate of Title No.
6444 in the name of Stronghold with damages
claiming priority rights over the property by virtue of
her Notice Of Lis Pendens under Entry No. 13305 and
inscribed on January 3, 1991, and the final and
executory decision in Civil Case No. 60319 she filed
against spouses Enrique and Rosita Caliwag. According
to Luz Du, despite her said notice of lis pendens
annotated, Stronghold still
proceeded
with
the
execution of the decision in Civil Case No. 90-1848
against the subject lot and ultimately the issuance of
Transfer Certificate of Title No. 6444 in its
(Strongholds) name.[6]
The trial court ruled that Stronghold had superior
rights over the property because of the prior
registration of the latters notice of levy on attachment
on Transfer Certificate of Title (TCT) No. 2200. For this
reason, it found no basis to nullify TCT No. 6444, which
was issued in the name of respondent after
the latter had purchased the property in a public
auction.
Ruling of the Court of Appeals
Sustaining the trial court in toto, the CA held that
Strongholds notice of levy on attachment had been
registered almost five (5) months before petitioners
notice of lis pendens. Hence, respondent enjoyed
priority in time. Such registration, the appellate court
added, constituted constructive notice to petitioner
and all third persons from the time of Strongholds
entry, as provided under the Land Registration Act -now the Property Registration Decree.
The CA also held that respondent was a purchaser
in good faith. The necessary sequels of execution and
sale retroacted to the time when Stronghold registered
its notice of levy on attachment, at a time when there
was nothing on TCT No. 2200 that would show any
defect in the title or any adverse claim over the
property.
Hence, this Petition.[7]
Issues
Petitioner submits the following issues for our
consideration:
I.

Whether a Notice of Levy on Attachment


on the property is a superior lien over that
of the unregistered right of a buyer of a
property in possession pursuant to a Deed
of Conditional Sale.
II.
Whether the acquisition of the subject
property by Respondent Stronghold was
tainted with bad faith.[8]
The Courts Ruling
The Petition has no merit.
Main Issue:
Superiority of Rights
Petitioner submits that her unregistered right over
the property by way of a prior conditional sale in 1989
enjoys preference over the lien of Stronghold -- a lien
that was created by the registration of respondents
levy on attachment in 1990. Maintaining that the ruling
in Capistrano v. PNB was improperly applied by the
Court of Appeals, petitioner avers that unlike the
circumstances in that case, the property herein had
been sold to her before the levy. We do not agree.
The preference given to a duly registered levy on
attachment or execution over a prior unregistered sale
is well-settled in our jurisdiction. As early as Gomez v.
Levy Hermanos,[9] this Court has held that an
attachment that is duly annotated on a certificate of
title is superior to the right of a prior but unregistered
buyer. In that case, the Court explained as follows:
x x x. It is true that she bought the lots with pacto de
retro but the fact of her purchase was not noted on the
certificates of title until long after the attachment and
its inscription on the certificates. In the registry,
therefore, the attachment appeared in the nature of a
real lien when Apolonia Gomez had her purchase
recorded. The legal effect of the notation of said lien
was to subject and subordinate the right of Apolonia
Gomez, as purchaser, to the lien. She acquired the
ownership of the said parcels only from the date of the
recording of her title in the register, which took place
on November 21, 1932 (sec. 51 of Act No. 496; LiongWong-Shih vs. Sunico and Peterson, 8 Phil. 91;
Tabigue vs. Green, 11 Phil. 102; Buzon vs. Lucauco, 13
Phil. 354; and Worcester vs. Ocampo and Ocampo, 34
Phil. 646), and the right of ownership which she
inscribed was not an absolute but a limited right,
subject to a prior registered lien, by virtue of which
Levy Hermanos, Inc. was entitled to the execution of
the judgment credit over the lands in question, a right

which is preferred and superior to that of the plaintiff


(sec, 51, Act No. 496 and decisions cited above). x x
x[10]
Indeed, the subsequent sale of the property to the
attaching creditor must, of necessity, retroact to the
date of the levy. Otherwise, the preference created by
the levy would be meaningless and illusory, as
reiterated in Defensor v. Brillo:[11]
x x x. The doctrine is well-settled that a levy on
execution duly registered takes preference over a prior
unregistered sale; and that even if the prior sale is
subsequently registered before the sale in execution
but after the levy was duly made, the validity of the
execution sale should be maintained, because it
retroacts to the date of the levy; otherwise, the
preference created by the levy would be meaningless
and illusory.
Even assuming, therefore, that the entry of appellants
sales in the books of the Register of Deeds on
November 5, 1949 operated to convey the lands to
them even without the corresponding entry in the
owners duplicate titles, the levy on execution on the
same lots in Civil Case No. 1182 on August 3, 1949,
and their subsequent sale to appellee Brillo (which
retroacts to the date of the levy) still takes precedence
over and must be preferred to appellants deeds of sale
which were registered only on November 5, 1949.
This result is a necessary consequence of the fact that
the properties herein involved were duly registered
under Act No. 496, and of the fundamental principle
that registration is the operative act that conveys and
binds lands covered by Torrens titles (sections 50, 51,
Act 496). Hence, if appellants became owners of the
properties in question by virtue of the recording of the
conveyances in their favor, their title arose already
subject to the levy in favor of the appellee, which had
been noted ahead in the records of the Register of
Deeds.[12] (Citations omitted, italics supplied)
The Court has steadfastly adhered to the
governing principle set forth in Sections 51 and 52 of
Presidential Decree No. 1529:[13]
SEC. 51. Conveyance and other dealings by registered
owner. - An
owner
of
registered
land
may
convey, mortgage, lease, charge or otherwise deal with
the same in accordance with existing laws. He may use
such forms of deeds, mortgages, leases or other
voluntary instruments as are sufficient in law. But no
deed, mortgage, lease, or other voluntary instrument,
except a will purporting to convey or affect registered
land shall take effect as a conveyance or bind the land,
but shall operate only as a contract between the

parties and as evidence of authority to the Registry of


Deeds to make registration.
The act of registration shall be the operative act to
convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the
registration shall be made in the office of the Register
of Deeds for the province or the city where the land
lies.
SEC. 52. Constructive notice upon registration. - Every
conveyance, mortgage, lease, lien, attachment, order,
judgment, instrument or entry affecting registered land
shall, if registered, filed or entered in the office of the
Register of Deeds for the province or city where the
land to which it relates lies, be constructive notice to
all persons from the time of such registering, filing or
entering.(Italics supplied)
As the property in this case was covered by
the torrens system, the registration of Strongholds
attachment[14] was the operative act that gave validity
to the transfer and created a lien upon the land in
favor of respondent.[15]
Capistrano Ruling
Correctly Applied
The preference created by the levy on
attachment is not diminished even by the subsequent
registration of the prior sale.[16] That was the import
of Capistrano
v.
PNB,[17] which
held
that
precedence should be given to a levy on attachment or
execution, whose registration was before that of the
prior sale.
In Capistrano, the sale of the land in question -though made as far back as 1946 -- was registered only
in 1953, after the property had already been subjected
to a levy on execution by the Philippine National
Bank. The present case is not much different. The
stipulation of facts shows that Stronghold had already
registered its levy on attachment before petitioner
annotated her notice of lis pendens. As in Capistrano,
she invokes the alleged superior right of a prior
unregistered buyer to overcome respondents lien.
If either the third-party claim or the subsequent
registration of the prior sale was insufficient to defeat
the previously registered attachment lien, as ruled by
the Court in Capistrano, it follows that a notice of lis
pendens is likewise insufficient for the same
purpose. Such notice does not establish a lien or an
encumbrance on the property affected.[18] As the name
suggests, a notice of lis pendens with respect to a
disputed property is intended merely to inform third
persons that any of their transactions in connection

therewith -- if entered into subsequent to the notation


-- would be subject to the result of the suit.
In view of the foregoing,
applied Capistrano, as follows:

the

CA

WHEREFORE, the Petition is DENIED, and the


assailed Decision and Resolution AFFIRMED. Costs
against petitioner.

correctly

x x x the rule now followed is that if the attachment or


levy of execution, though posterior to the sale, is
registered before the sale is registered, it takes
precedence over the latter.
The rule is not altered by the fact that at the time of
the execution sale the Philippine National Bank had
information that the land levied upon had already been
deeded by the judgment debtor and his wife to
Capistrano. The auction sale being a necessary sequel
to the levy, for this was effected precisely to carry out
the sale, the purchase made by the bank at said
auction should enjoy the same legal priority that the
levy had over the sale in favor of plaintiff. In other
words, the auction sale retroacts to the date of the
levy. Were the rule otherwise, the preference enjoyed
by the levy of execution in a case like the present
would be meaningless and illusory.[19] (Citations
omitted, italics supplied)
Second Issue:
Taking in Bad Faith
We now tackle the next question of petitioner:
whether Stronghold was a purchaser in good
faith. Suffice it to say that when Stronghold registered
its notice of attachment, it did not know that the land
being attached had been sold to petitioner. It had no
such knowledge precisely because the sale, unlike the
attachment, had not been registered. It is settled that a
person dealing with registered property may rely on
the title and be charged with notice of only such
burdens and claims as are annotated thereon. [20] This
principle applies with more force to this case, absent
any allegation or proof that Stronghold had actual
knowledge of the sale to petitioner before the
registration of its attachment.
Thus, the annotation of respondents notice of
attachment was a registration in good faith, the kind
that made its prior right enforceable.[21]
Moreover, it is only after the notice of lis
pendens is inscribed in the Office of the Register of
Deeds that purchasers of the property become bound
by the judgment in the case. As Stronghold is deemed
to have acquired the property -- not at the time of
actual purchase but at the time of the attachment -- it
was an innocent purchaser for value and in good faith.

SO ORDERED.

[G.R. No. 133303. February 17, 2005]


BERNARDO VALDEVIESO, petitioner, vs.
CANDELARIO DAMALERIO AND AUREA C.
DAMALERIO, respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review under
Rule 45 of the Rules of Court, seeking to set aside the
25 September 1997 Decision and the 10 February 1998
Resolution of the Court of Appeals in CA-G.R. SP No.
43082 entitled, Candelario Damalerio and Aurea
Damalerio v. Honorable Antonio S. Alano, et al.[1]
There is no dispute as to the following facts:
On 05 December 1995, Bernardo Valdevieso
(petitioner) bought from spouses Lorenzo and Elenita
Uy a parcel of land consisting of 10,000 square meters,
more or less, located at Bo. Tambler, General Santos
City, and covered by Transfer Certificate of Title (TCT)
No. T-30586.[2]
The deed of sale was not registered, nor was the
title of the land transferred to petitioner.[3]
On 07 December 1995, the said property was
immediately declared by petitioner for taxation
purposes as Tax Declaration No. l6205 with the City
Assessors Office.[4]
It came to pass that on 19 April 1996, spouses
Candelario and Aurea Damalerio (respondents) filed
with the Regional Trial Court (RTC) of General Santos
City, a complaint for a sum of money against spouses
Lorenzo and Elenita Uy docketed as Civil Case No. 5748
with application for the issuance of a Writ of
Preliminary Attachment.[5]
On 23 April 1996, the trial court issued a Writ of
Preliminary Attachment by virtue of which the property,
then still in the name of Lorenzo Uy but which had
already been sold to petitioner, was levied. The levy
was duly recorded in the Register of Deeds of General
Santos City and annotated upon TCT No. T-30586. [6]
On 06 June 1996, TCT No. T-30586 in the name of
Lorenzo Uy was cancelled and, in lieu thereof, TCT No.
T-74439 was issued in the name of petitioner.[7] This
new TCT carried with it the attachment in favor of
respondents.

On 14 August 1996, petitioner filed a third-party


claim in Civil Case No. 5748 to discharge or annul the
attachment levied on the property covered by TCT No.
T-74439 on the ground that the said property belongs
to him and no longer to Lorenzo and Elenita Uy.[8]
In a resolution dated 21 October 1996, the trial
court ruled for the petitioner.[9] Citing Manliguez v.
Court of Appeals[10] and Santos v. Bayhon,[11] it held that
the levy of the property by virtue of attachment is
lawful only when the levied property indubitably
belongs to the defendant. Applying the rulings in the
cited cases, it opined that although defendant Lorenzo
Uy remained the registered owner of the property
attached, yet the fact was that he was no longer the
owner thereof as it was already sold earlier to
petitioner, hence, the writ of attachment was unlawful.
Respondents sought reconsideration thereof which
was denied by the trial court in a resolution dated 03
January 1997.[12]
From the unfavorable resolution of the trial court
in the third-party claim, respondents appealed to the
Court of Appeals. The appellate court reversed the
resolution and by judgment promulgated on 25
September 1997, it declared that an attachment or
levy of execution, though posterior to the sale, but if
registered before the sale is registered, takes
precedence over the sale.[13] The writ of attachment in
favor of the respondents, being recorded ahead of the
sale to petitioner, will therefore take precedence.
Petitioner moved for reconsideration but this was
denied by the Court of Appeals in its Resolution of 10
February 1998.[14]
Hence, this Petition for Review on Certiorari.
The sole issue in this case is whether or not a
registered writ of attachment on the land is a superior
lien over that of an earlier unregistered deed of sale.
Petitioner maintains that he has a superior right
over the questioned property because when the same
was attached on 23 April 1996, this property was no
longer owned by spouses Uy against whom attachment
was issued as it was already sold to petitioner on 05
December 1995. The ownership thereof was already
transferred to petitioner pursuant to Article 1477 [15] in
relation to Article 1498[16] of the Civil Code.
Dismissing the allegation that he slept on his
rights by not immediately registering at least an
adverse claim based on his deed of sale, petitioner
avers that he promptly worked out for the transfer of
registration in his name. The slight delay in the

registration, he claims was not due to his fault but


attributable to the process involved in the registration
of property such as the issuance of the Department of
Agrarian Reform clearance which was effected only
after compliance with several requirements.

The act of registration shall be the operative act to


convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the
registration shall be made in the office of the Register
of Deeds for the province or city where the land lies.

Considering the peculiar facts and circumstances


obtaining in this case, petitioner submits it would be in
accord with justice and equity to declare him as having
a superior right to the disputed property than the
respondents.

It is to be noted that though the subject land was


deeded to petitioner as early as 05 December 1995, it
was not until 06 June 1996 that the conveyance was
registered, and, during that interregnum, the land was
subjected to a levy on attachment. It should also be
observed that, at the time of the attachment of the
property on 23 April 1996, the spouses Uy were still the
registered owners of said property. Under the cited law,
the execution of the deed of sale in favor of petitioner
was not enough as a succeeding step had to be taken,
which was the registration of the sale from the spouses
Uy to him. Insofar as third persons are concerned, what
validly transfers or conveys a persons interest in real
property is the registration of the deed. Thus, when
petitioner bought the property on 05 December 1995,
it was, at that point, no more than a private transaction
between him and the spouses Uy. It needed to be
registered before it could bind third parties, including
respondents. When the registration finally took place
on 06 June 1996, it was already too late because, by
then, the levy in favor of respondents, pursuant to the
preliminary attachment ordered by the General Santos
City RTC, had already been annotated on the title.

Respondents maintain the contrary view. They


aver that registration of a deed of sale is the operative
act which binds the land and creates a lien thereon.
Before the registration of the deed, the property is not
bound insofar as third persons are concerned. Since
the writ of attachment in favor of respondents was
registered earlier than the deed of sale to petitioner,
respondents were of the belief that their registered writ
of attachment on the subject property enjoys
preference and priority over petitioners earlier
unregistered deed of sale over the same property. They
also contend that Articles 1477 and 1498 of the Civil
Code as cited by petitioner are not applicable to the
case because said provisions apply only as between
the parties to the deed of sale. These provisions do not
apply to, nor bind, third parties, like respondents,
because what affects or binds third parties is the
registration of the instrument in the Register of Deeds.
Furthermore, respondents argue that petitioner cannot
invoke equity in his favor unless the following
conditions are met: (a) the absence of specific
provision of a law on the matter; and (b) if the person
who invokes it is not guilty of delay. Both conditions
have not been met, however, since there is a law on
the subject matter, i.e., Section 51 of Presidential
Decree No. 1529, and that petitioner allegedly slept on
his rights by not immediately registering an adverse
claim based on his deed of sale.
We agree with the respondents.
The law applicable to the facts of this case is
Section 51 of P.D. No. 1529. Said Section provides:
Sec. 51. Conveyance and other dealings by registered
owner. - An owner of registered land may convey,
mortgage, lease, charge, or otherwise deal with the
same in accordance with existing laws. He may use
such forms of deeds, mortgages, leases or other
voluntary instruments as are sufficient in law. But no
deed, mortgage, lease, or other voluntary instrument,
except a will purporting to convey or affect registered
land, shall take effect as a conveyance or bind the
land, but shall operate only as a contract between the
parties and as evidence of authority to the Register of
Deeds to make registration.

The settled rule is that levy on attachment, duly


registered, takes preference over a prior unregistered
sale.[17] This result is a necessary consequence of the
fact that the property involved was duly covered by the
Torrens system which works under the fundamental
principle that registration is the operative act which
gives validity to the transfer or creates a lien upon the
land.[18]
The preference created by the levy on attachment
is not diminished even by the subsequent registration
of the prior sale. This is so because an attachment is a
proceeding in rem.[19] It is against the particular
property, enforceable against the whole world. The
attaching creditor acquires a specific lien on the
attached property which nothing can subsequently
destroy except the very dissolution of the attachment
or levy itself.[20] Such a proceeding, in effect, means
that the property attached is an indebted thing and a
virtual condemnation of it to pay the owners debt.
[21]
The lien continues until the debt is paid, or sale is
had under execution issued on the judgment, or until
the judgment is satisfied, or the attachment discharged
or vacated in some manner provided by law.
Thus, in the registry, the attachment in favor of
respondents appeared in the nature of a real lien when
petitioner had his purchase recorded. The effect of the
notation of said lien was to subject and subordinate the

right of petitioner, as purchaser, to the lien. Petitioner


acquired ownership of the land only from the date of
the recording of his title in the register, and the right of
ownership which he inscribed was not absolute but a
limited right, subject to a prior registered lien of
respondents, a right which is preferred and superior to
that of petitioner.[22]
Anent petitioners reliance on the rulings laid down
in Manliguez v. Court of Appeals and Santos v. Bayhon,
we find the same to be misplaced. These cases did not
deal at all with the dilemma at hand, i.e. the question
of whether or not a registered writ of attachment on
land is superior to that of an earlier unregistered deed
of sale. In Santos, what was involved were machinery
and pieces of equipment which were executed upon
pursuant to the favorable ruling of the National Labor
Relations Commission. A third party claimed that the
machinery were already sold to her, but it does not
appear in the facts of the case if such sale was ever
registered. Manliguez is similar to Santos, except that
the former involved buildings and improvements on a
piece of land. To stress, in both cited cases, the
registration of the sale, if any, of the subject properties
was never in issue.
As to petitioners invocation of equity, we cannot,
at this instance, yield to such principle in the presence
of a law clearly applicable to the case. We reiterate
that this Court, while aware of its equity jurisdiction, is
first and foremost, a court of law. [23] While equity might
tilt on the side of one party, the same cannot be
enforced so as to overrule positive provisions of law in
favor of the other. [24] Equity cannot supplant or
contravene the law.[25] The rule must stand no matter
how harsh it may seem. Dura lex sed lex.
WHEREFORE, the appealed Decision of the Court
of Appeals in CA-G.R. SP No. 43082 dated 25
September 1997, and its Resolution dated 10 February
1998, are hereby AFFIRMED. No costs.
SO ORDERED.

G.R. No. L-5534; December 23, 1909


HERBERT S. WALKER and W. J. ROHDE, plaintiffsappellees,
vs.
JOSE McMICKING, defendant-appellant.

purpose of showing that said attachment was valid.


Exhibit 1 was not made a part of the record in this
court. We can not, therefore, examine it for the
purpose of ascertaining just what its contents were.
The lower court, in discussing the validity of said
attachment and its effect upon the present action,
said:

OBrien and De Witt for appellant.


Roman Lacson for appellees.
JOHNSON, J.:
On the 5th day of February, 1909, the plaintiff
commenced an action in the Court of First Instance of
the city of Manila to recover the possession of certain
personal property mentioned in paragraph 1 of the
complaint, or in default thereof the sum of P1,500, its
value, and costs. The defendant filed a general denial.
After hearing the evidence adduced during the trial of
the cause, the lower court rendered a judgment
adjudging to Herbert S. Walker, the right to recover the
articles mentioned in paragraph 1 of the complaint, of
the defendant, or in default, the sum of P539, with
interest at the rate of 5 per cent per annum, from
February 6, 1909.

From this judgment the defendant appealed and made


the following assignments of error:
1. The court erred in holding that the
attachment of December 17, 1908, was null as
to this defendant.
2. The court erred in holding that the sale of
June 16, 1908, was rescinded in a way affecting
this defendant.
3. The court erred in holding that the rescission
does not involve a precedent condition to
return the amounts paid on account of the
purchase price.
4. The court erred in making an excessive
valuation of the goods in question.

Under the first above assignment of error, the


appellant contends that the lower court committed an
error in holding the attachment of the 17th of
December, 1908, was null and void. The appellant
relies upon Exhibit 1 (the writ of attachment) for the

The defendant is not sued in any official


capacity, nor does he, in answer, or elsewhere,
claim any such status. In fact his answer is only
a general denial. He offers in evidence,
however, a writ of attachment (Exhibit 1)
issued by one of the judges of this court on
December 16, 1908, on the back of which
appears an indorsement to the effect that the
sheriff of Manila delivered a copy of the writ
and affidavit upon the which the same was
founded, to Arenas & Co. and that said sheriff
attached certain articles therein mentioned,
some of which appear to be similar to those in
controversy, though the identity does not seem
to be clearly established. The indorsement
further recites that the goods are found
deposited . . . in the possession of the same
defendants according to a stipulation signed by
both parties which is attached to this writ. The
attached stipulation recites that all the goods
attached shall remain in the possession of the
same defendants, relieving the sheriff of all
responsibility as regards the care and custody
thereof. Plaintiff Rohde further testifies (p. 13)
that he never heard of the attachment until
about the 29th of January, that he continued in
possession from the time Arenas surrender to
him and that the latter was permitted to enter
only for the purpose of preparing the articles
for sale.

Section 428 of the Code of Civil Procedure


requires: The order of attachment shall be
served by the officer of the court by attaching,
and safely keeping all the movable property of
the defendant.

It will be seem from the recitals above quoted


that the sheriff never claims to have taken into
his keeping the articles in controversy, but,
on the contrary, left them with the attachment
defendants, expressly relieving himself of all
responsibility. This is clearly not a compliance

with the statute and did not effect a valid


attachment. A mere verbal declaration of
seizure or service of writ is insufficient.
(Hollister vs. Goodale, 21 Am. Dec., 674;
Jones vs. Howard, 59 Am. St. Rep., 231;
Miles vs. Brown, 38 N. Y. Supr. Ct., 400.) There
must be actual assumption of control (4 Cyc.,
484, 485.) This is not saying that a defendant
may not be custodian; but the possession and
responsibility must be the sheriffs and not the
defendants. If as stated in defendants brief,
such an arrangement is an everyday
occurrence in attachment levies, here the vice
of it can too soon be declared.

took possession of said factory with its contents. The


factory was located upon land belonging to the plaintiff
Rohde. The said company had failed for some months
to pay the rent for the land. The plaintiff Rohde claimed
that by virtue of the provisions of paragraph 7 of article
1922 of the Civil Code that he had a preferred claim
against the said factory and its contents for the
payment of the rent. The plaintiff Rohde, acting for
himself and for the plaintiff Walker, took possession of
said factory and its contents, on or about the first of
January, 1909. Mr. Rohde testified that at the time he
took possession of said factory, representing himself
and the said Walker, there was no one in possession of
said property except the said Arenas & Co., and that
Arenas & Co. turned said property over to him without
any objection whatever, in fact, that the delivery was
made by mutual consent and agreement.

The facts presented by a preponderance of the


evidence seem to be as follows:
The plaintiff, Walker, was the owner of a Filipino
carriage factory. The building in which the factory was
operated and its contents were, on the 30th of June,
1908, sold to a partnership known as Arenas & Co.,
by plaintiff, Walker, whose ownership, at the time of
the sale, was not disputed by any of the parties to this
action. The contract was evidenced by a writing
(Exhibit A), from which it appears that the said
company was to pay for the said factory and its
contents the sum of P3,200, P600 of which was paid at
the time of the sale (June 30, 1908) and the balance
was to be paid in three installments, due, respectively,
P600 on the 15th of July, 1908, P1,000 due on the 15th
of September, 1908, and P1,000 due on the 31st of
December, 1908. The said company paid the
installment due on the 15th of July, 1908, but failed to
pay said installments due in September and December.
Paragraph 4 of said contract (Exhibit A) contains the
following provision:

That, should the said firm of Arenas & Co. not


pay me the amounts agreed to on the dates
stated in the previous paragraph or within the
thirty days following any of said terms, the
present sale shall be rescinded, and I, Herbert
S. Walker, shall be entitled to take possession
of the building as well as of the business and
all the goods constituting the same.

The said company having failed to pay the second and


third installments due respectively in September and
December, as above indicated, the plaintiff Walker,
early in the month of January, 1909, by virtue of the
said provision of the contract, rescinded said sale and

It appears, however, that on or about the 16th of


December, 1908, the defendant, acting as sheriff of the
city of Manila, levied an attachment upon the said
factory and its contents, by virtue of a judgment
theretofore rendered against the said Arenas & Co. The
record does not disclose fully just what was done in
effecting said attachment. It appears, however, by an
indorsement upon said alleged writ of attachment, or
perhaps by a stipulation between the parties (to the
attachment), that the goods attached shall remain in
the possession of the same defendants, relieving the
sheriff of all responsibility as regards the care and
custody thereof.

The plaintiff Rohde testified that he had never heard of


said attachment until about the 29th of January, 1909;
that he continued in possession from the time (about
January 1) that Arenas & Co. surrendered possession to
him, and that Arenas & Co. was only permitted to enter
the premises thereafter for the purpose of preparing
the contents of said factory for sale.

The evident theory of the defendant and appellant is


that the attachment had the effect of defeating the
right of the plaintiffs in said factory and its contents. It
appears in the record, that in some way the defendant
obtained possession of the articles mentioned in
paragraph 1 of the complaint, and that some time early
in the month of February, 1909, they were sold for the
sum of P191, and a few cents. It is not suggested in the
record that the defendant, McMicking, is sued as
sheriff. The defendant does not pretend that what he
did was done as sheriff. The plaintiff does not attempt
to recover of the defendant as sheriff. The pretension

of the plaintiff is that the defendant, Jose McMicking,


took possession of certain personal property, and
retains the possession of the same, which belongs to
them. Even admitting that the defendant did, by virtue
of an attachment, as sheriff, pretend to take
possession of the property in question, the plaintiffs
contend that the attachment was void for the reason
that the defendant, as sheriff, did not comply with the
law in levying the said attachment.

exclusive of the attachment debtor, and such property


must be in substantial presence and possession.
(Corniff vs. Cook, 95 Ga., 61, 51 Am. St. Rep., 55, 61.)
Of course, this does not mean that the attaching officer
may not, under an arrangement satisfactory to himself,
put anyone in possession of the property for the
purpose of guarding it, but he can not in this way
relieve himself from liability to the parties interested in
said attachment.

The lower court, basing his conclusions upon the


provisions of section 428 of the Code of Procedure in
Civil Actions, held that the attachment was null for the
reason that the defendant did not comply with said
section. Section 428 provides that

We are of the opinion, and so hold, that the attachment


was not properly made in accordance with the
provisions of the Code of the Procedure in Civil Actions.
There is no pretension, however, in record, on the part
of the defendant, that he attached said property and
held the same by virtue of such attachment. Even
thought this defense had been made by the defendant,
which is only made by his attorney, it would be an
admission of the principal facts alleged by the plaintiffs
in their complaint to wit, that he had taken
possession of personal property belonging to them.
The defense made by the defendant is new matter to
which no reference whatever was made in the
pleadings, and it is, therefore, upon the whole,
inadmissible. Facts not alleged in the pleadings but
offered as evidence, which admit the facts alleged, but
tend to confess and avoid the facts alleged are not
admissible in evidence. (Bliss on Code Pleadings, 3d
ed., 427, and cases cited.) For example: A sues B on a
promissory note, setting up the necessary facts in his
petition. B answered by a general denial. Bs real
defense is prescription. B will not be permitted to prove
prescription for the reasons that (a) he denied the
existence of the debt, and (b) by his evidence tending
to show that the said debt is prescribed, he thereby
admits the existence of the debt, which is a confession
of his liability. In other words, the defense of
prescriptions is a confession and an avoidance of the
obligation.

The order of attachment shall be served by the


officer of the court by attaching and safely
keeping all the movable property of the
defendant in the Philippine Islands, or so much
thereof as may be sufficient to satisfy the
plaintiffs demands, unless the defendants
gives security by obligation to the plaintiff, with
sufficient surety, to be approved by the judge
who granted the order of attachment, in an
amount sufficient to satisfy such demands
besides costs, . . . . The property so attached
shall be held to await final judgment in
execution, unless released as provided in this
section or section four hundred and forty.

It will be noted, even admitting that the defendant is


here sued as sheriff, and that his responsibility in this
action is as sheriff, that he did not comply with said
section 428, in making said attachment. He did not
attach and safely keep the movable property attached.
A verbal declaration of seizure of service of a writ of
attachment is not sufficient. There must be an actual
taking of possession and placing the attached property
under the control of the officer or someone
representing him. (Hollister vs. Goodale, 8 Conn., 332,
21 Am. Dec., 674; Jones vs. Howard, 99 Ga., 451, 59
Am. St. Rep., 231.)

We believe that under said section 428 to constitute a


valid levy of an attachment, the officer levying it must
take actual possession of the property attached as far
as under the circumstances is practicable. He must put
himself in position to, and must assert and, in fact,
enforce a dominion over the property adverse to and

Under the second assignment of error the appellant


contends that the original sale of said factory and its
contents had not been rescinded by the plaintiffs
herein in a manner which in any way affected the
defendant. The fourth clause of the contract of sale
(Exhibit A) quoted above, gave the vendor of said
factory and contents the right to rescind the sale for a
failure to pay any of the subsequent installments. The
plaintiffs testified during the trial that the second
installment had not been paid, in accordance with the
terms of the contract and that he, therefore, rescinded
the contract of sale, to which rescission, the said
company (the purchaser) acceded and delivered to the
plaintiff Walker the said carriage factory and its
contents. No allegation is made by the defendant that

either the contract or the rescission of the contract was


corruptly made, or for the purpose of defrauding any of
the creditors. Exhibit A was the contract between the
said company and the plaintiff Walker. It constituted
that law covering the rights of the respective parties to
it. (Arts. 1254 and 1255, Civil Code.) The plaintiff
Walker did all that was necessary for him to do to
rescind said contract.

lost either his actual or constructive control over the


property itself.

Under the third assignment of error, the appellant


insists that the contract could not be rescinded by
Walker without returning to Arenas & Co. the amount of
money which Arenas & Co. had paid on said contract,
and cities several provisions of the Civil Code in
support of his contention, especially article 1295.
Arenas & Co. are not parties to this action. Arenas &
Co. have made no claim for the return of the money
which they paid on said contract. If they have a right to
a return of the money which they paid on said contract
upon a rescission by Walker, a question which we do
not now decide, they are the only ones which can insist
upon it. No such claim is here made. It is not a right
which the defendant in this action can insist upon. This
question is not involved in the present action for the
reason that Arenas & Co. make no such claim. They are
not parties to this action.

Third. That subsequent to the acquisition of the


possession by the plaintiffs, the defendant, in some
way which does not appear of record, acquired
possession of the property in question, and admits that
he subsequently sold it.

Under the fourth assignment of error, the defendant


insists or contends that the value allowed by the lower
court for the property in question was excessive. Upon
an examination of the evidence brought to this court,
relating to the value of the property in question, we are
of the opinion, and so hold, that the lower court
committed no error in fixing the value of said property
at the sum of P539. The price obtained for property
under a forced sale is not a fair criterion for the
purpose of ascertaining the true value of such property.

We have discussed at length assignments of error


made by the appellant, but in our opinion the whole
case may be stated briefly as follows:

First. The defendant attached certain property under a


writ of execution issued by one of the courts of the city
of Manila, which attachment, however, was levied upon
the property in question. This attachment, however,
was rendered invalid and of no effect for the reason
that the defendant did not maintain his control over
the same, either personally or by his representatives.
The attachment became invalid the moment the sheriff

Second. The plaintiffs herein, innocently and in good


faith and under a right, acquired possession of the
property in question.

Fourth. The plaintiffs allege that the defendant is in


possession of property belonging to them, and prays
that the same may be returned or its value. The
defendant denies (general denial) that he has the
possession of the property. The evidence clearly shows
that the defendant did take possession of property
which was rightfully in possession of the plaintiffs. He is
therefore liable, either to return said property or its
value.

For all of the foregoing reasons, we are of the opinion


and so hold that the judgment of the lower court
should be affirmed, with costs. So ordered.

[A.M. No. P-96-1184. March 24, 1997]


NATIONAL BUREAU OF INVESTIGATION and
SANTIAGO
N.
SALVADOR, complainants, vs. RODOLFO G.
TULIAO, Sheriff IV of the RTC of Cauayan,
Isabela, Branch 20, respondent.
DECISION
PANGANIBAN, J.:
Sheriffs
play
an important
role
in the
administration of justice. They form an integral part
thereof because they are called upon to serve court
writs, execute all processes, and carry into effect the
orders of the court with due care and utmost diligence.
[1]
As agents of the law, high standards are expected of
them. In the present case, respondent sheriff failed to
live up to these standards.
A complaint against Respondent Deputy Provincial
Sheriff Rodolfo G. Tuliao of the Regional Trial Court of
Cauayan, Isabela , Branch 20 was filed by Santiago N.
Salvador before the Tuguegarao Sub-Office (TUGSO) of
the National Bureau of Investigation (NBI).[2] An
investigation was conducted by Agent-in-Charge
Franklin Javier and Agent Raul A. Ancheta. On
November
24,
1994,
complainant
gave
his
statement[3] to Agent Paul Gino Rivera. Invoking his
right to remain silent, respondent sheriff refused to
submit himself to custodial investigation before Agent
Javier. Instead, he submitted a Compliance [4] dated July
22, 1995 and an Answer[5] dated August 4, 1995.
After the investigation, Agents Javier and Ancheta
recommended, inter alia, the filing of an administrative
case with the Office of the Court Administrator. [6] Atty.
Gerarda G. Galang, Chief of the NBI Legal and
Evaluation
Division,
concurred
with
said
recommendation.[7] On November 13, 1995, Director
Mariano M. Mison of the NBI transmitted to this Court a
copy of the evaluation with the recommendation that
appropriate action be taken against respondent.[8]
Hence, this administrative complaint now before
us.
The Facts
Complainant Salvador bought a passenger jeep
from Lito G. Ignacio to be paid in monthly installments
of P7,000.00 with a down payment of P50,000.00. After
remitting the down payment, complainant diligently
paid all monthly amortizations until March 1994 when,
in the absence of Ignacio, the complainant was forced
to pay to an unnamed brother of the seller the

amounts due for the months of April and May


1994. However, the brother failed to remit said amount
to the seller; thus, the latter filed with the Regional Trial
Court of Cauayan, Isabela, Branch 20[9] a suit for
collection, docketed as Civil Case No. 20-757,
entitled Pisces Motor Works, Represented by Lito D.
Ignacio vs. Santiago Salvador.
Subsequently, an order was issued by the RTC
directing respondent sheriff to attach the passenger
jeep. Complainant, through counsel, filed a motion to
discharge attachment upon filing of a counterbond for
the release of the vehicle in his favor. Due to some
defects in the aforementioned motion, a second motion
with counterbond was filed. On July 13, 1994, the trial
court issued an order, the decretal portion of which
reads, to wit:[10]
WHEREFORE, and in view of the foregoing, the
counterbond of the defendant, is hereby approved. The
Sheriff is hereby ordered to release to the defendant
the attached vehicle bearing Motor No. 6D-57-51813
with Plate No. UV BBR-127.
Respondent refused to comply with the said
order. Instead, he released the passenger jeep to
Ignacio after the latter had executed a receipt therefor
together with an undertaking that he would produce
the jeep whenever required by the court. Respondent
justified such release by saying that the court had no
storage building that would protect the jeep from
damage or loss.[11]
Despite the pendency of a motion for
contempt[12] filed by complainant against respondent,
the case was dismissed[13] on August 31, 1994 because
jurisdiction over the case had been transferred to the
municipal trial court as mandated by Republic Act No.
7691 which expanded said courts jurisdiction.
After receipt of respondents Comment dated April
20, 1996, the Court referred the case to the Office of
the Court Administrator for evaluation, report and
recommendation. In a memorandum to the Chief
Justice dated August 29, 1996, Acting Court
Administrator Reynaldo L. Suarez recommended a
finding of guilt and suspension of respondent for six (6)
months without pay.[14]
Issue
The main issue in this case is whether respondent
sheriff is administratively liable for failing to release
the property under custodia legis to the complainant in
accordance with the order of the regional trial court.

Respondent sheriff contends that his act of not


taking into his official custody the attached property
was not unlawful but was in fact reasonable because
the court had no facility for its storage. That it could no
longer be returned to complainants possession in
accordance with the courts order was not his fault but
that of the attaching creditor who had violated his
obligation to produce the same whenever required by
the court. He offers to pay a fine in the discretion of the
Honorable Court as he has not benefited any pecuniary
interest (sic).[15]

capacity. He cannot feign ignorance of this duty as he


himself correctly cited an early decision of this Court
explaining a sheriffs duty in attachment, as follows:[16]

The Courts Ruling

We believe that x x x to constitute a valid levy of an


attachment, the officer levying it must take actual
possession of the property attached as far as x x x
practicable (under the circumstances). He must put
himself in (a) position to, and must assert and, in fact,
enforce a dominion over the property adverse to and
exclusive of the attachment debtor, and such property
must be in his substantial presence and possession.
(Corniff vs. Cook, 95 Ga., 61, 51 Am. St. Rep., 55,
61.) Of course, this does not mean that the attaching
officer may not, under an arrangement satisfactory to
himself, put anyone in possession of the property for
the purpose of guarding it, but he can not in this way
relieve himself from liability to the parties interested in
said attachment.

Respondents contentions are without merit. We


agree with the Court Administrator that respondent
should be held administratively liable.
First Issue: Manner of Attachment
This Court finds respondent sheriffs manner of
attachment irregular and his reason therefor totally
unacceptable.
Rule 57 of the Rules of Court provides:
Sec. 5. Manner of attaching property.-- The officer
executing the order shall without delay attach, to await
judgment and execution in the action, all the properties
of the party against whom the order is issued in the
province, x x x.
xxx xxx xxx
Sec. 7. Attachment of real and personal property;
recording thereof.--Properties shall be attached by the
officer executing the order in the following manner:
xxx xxx xxx
(c) Personal property capable of manual delivery, by
taking and safely keeping it in his capacity, after
issuing the corresponding receipt therefor;
xxx xxx xxx
Clearly, respondents act of leaving the passenger
jeep in the possession and control of the creditor did
not satisfy the foregoing requirements of the Rules;
neither did it conform to the plainly worded RTC
order. The note in the receipt that imposed on Ignacio
the obligation to produce the same whenever required
by the court was no compliance either, because it did
not establish that the property was in respondent
sheriffs
substantial
presence
and
possession. Respondent fell short of his obligation to
take and safely keep the attached property in his

x x x A verbal declaration of seizure or service of a writ


of attachment is not sufficient. There must be an actual
taking of possession and placing of the attached
property under the control of the officer or someone
representing him. (Hollister vs. Goodale, 8 Conn., 332,
21 Am. Dec., 674; Jones vs. Howard, 99 Ga., 451, 59
Am. St. Rep., 231.)

That Ignacio was able to move the passenger jeep


to an unknown location is further proof that respondent
sheriff had not taken and safely kept it in his
substantial presence, possession and control.
His claim that the regional trial court did not have
any storage facility to house said property is no
justification. He could have deposited it in a bonded
warehouse.[17]
Contrary to respondent sheriffs contention,
compelling the attaching creditor to release the
property in question was not in order, because the
proper remedy provided by the Rules of Court was for
the party whose property had been attached to apply
for the discharge of the attachment by filing a
counterbond.[18] The effect of this remedy is the
delivery of possession of the attached property to the
party giving the counterbond. The attaching creditor
was not authorized to have possession of the attached
property, contrary to the insistence of respondent
sheriff.
Second Issue: Liability of a Sherif
A court employee should keep in mind that he is
an integral part of that organ of the government that is
involved in the sacred task of administering justice. His
conduct and behavior should perforce be circumscribed

with the heavy burden of responsibility and must at all


times be characterized by propriety and decorum.[19]
Section 4(c) of Republic Act No. 6713 requires of
every public official and employee justness and
sincerity in the discharge and execution of official
duties. It exacts from him at all times respect for the
rights of others and proscribes him from dispensing or
extending undue favors on account of his office.
The Court in Chan vs. Castillo held:[20]
Every officer or employee in the judiciary is duty
bound to obey the orders and processes of the court
without the least delay (Pascual vs. Duncan, 216 SCRA
786 [1992]), x x x.
Leaving the attached property in the possession of
the attaching creditor makes a farce of the
attachment. This is not compliance with the issuing
courts order. When a writ is placed in the hands of a
sheriff, it is his duty, in the absence of any instructions
to the contrary, to proceed with reasonable celerity
and promptness to execute it according to its mandate.
[21]
He is supposed to execute the order of the court
strictly to the letter.[22] If he fails to comply, he is liable
to the person in whose favor the process or writ runs.
[23]

Respondents pretense of having acted in utmost


good faith for the preservation of the attached property
is hardly credible because there was no reason for his
having acted thus. In sum, he is unable to satisfactorily
explain why he failed to take such movable in his
control.
By acceding to the request of Ignacio, respondent
sheriff actually extended an undue favor which
prejudiced the complainant as well as the orderly
administration of justice. He exceeded his powers
which were limited to the faithful execution of the
courts orders and service of its processes. [24] His
prerogatives did not give him any discretion to
determine who among the parties was entitled to
possession of the attached property.
That he exerted efforts in going to the creditors
residence in Tuguegarao, Cagayan to obtain possession
of the attached property was an act of compliance with
the writ of attachment.This action, belated as it was,
did not mitigate his liability. Much less did it exculpate
him from penalty.
IN VIEW OF THE FOREGOING, respondent
sheriff is hereby found administratively liable as
charged and is SUSPENDED for six (6) months without
pay with a warning that the commission of the same or

similar acts in the future shall be dealt with more


severely by this Court.
SO ORDERED.

[A.M. No. MTJ-04-1518. January 15, 2004]


Attys. VILMA HILDA D. VILLANUEVA-FABELLA and
WILMAR
T.
ARUGAY, complainants, vs.
Judge
RALPH
S.
LEE
and
Sheriff
JUSTINIANO C. DE LA CRUZ JR., both of the
Metropolitan
Trial
Court,
Branch
38, Quezon City, respondents.
DECISION
PANGANIBAN, J.:
Once more, we remind members of the judicial
branch judges and judicial personnel alike -- to be
conscientious,
diligent
and
thorough
in
the
performance of their functions. At all times they must
observe the high standards of public service required
of them.
The Case and the Facts
In an administrative Complaint[1] dated November
12,
2002,
Attys. Vilma Hilda
D.
VillanuevaFabella and Wilmar T. Arugay charged Judge Ralph S.
Lee
of
the Metropolitan Trial Court
(MeTC)
of Quezon City (Branch 38) with manifest partiality,
incompetence and gross ignorance of the law; and
Sheriff Justiniano C. de la Cruz Jr. of the same MeTC,
with unjust, oppressive, irregular and excessive
enforcement of a writ of attachment. The factual
antecedents of the matters are summarized by the
Office of the Court Administrator (OCA) as follows:
The complainants are counsels for the defendants in
Civil Case No. [38]-28457 entitled Star Paper
Corporation vs. Society of St. Paul and Fr.
Leonardo Eleazar for Sum of Money with Prayer for
Preliminary Attachment. They narrated that on 19 June
2002, their clients were served a copy of the complaint
and a Writ of Attachment by Sheriff Dela Cruz based on
the plaintiffs allegation that the defendants contracted
a debt in bad faith with no intention of paying the
same.
On the aforementioned day, a printing machine was
levied and delivered to the plaintiffs warehouse,
although there was an offer by the defendants to pay
right there and then P223,457.75, the amount fixed in
the order of attachment, but the plaintiff denied the
defendants plea not to attach the machine, saying that
[it] had already set [its] mind on attaching the same.
Atty. Fabella, together with three (3) priests, asked the
sheriff to levy on a less expensive machine but to no
avail. She then told the sheriff that he [would]
unnecessarily levy on the machinery because a cash

deposit to discharge the attachment could be filed that


same afternoon but he just dismissed the same, saying
that it takes time before the court could approve
the counterbond.
The complainants claim[ed] that Sheriff Dela Cruz
violated x x x Rule 57, Section 7, 1997 Rules of Civil
Procedure which provide[d] that in the attachment of
personal property capable of manual delivery, [the
property should] be taken and safely kept in the
sheriffs
custody. The
machinery,
according
to
complainants, [was] brought to [the] plaintiffs
warehouse
in
San
Francisco
del
Monte, Quezon City. The foregoing show[ed] that the
implementation of the writ of attachment was marred
by excessiveness, irregularity and oppressiveness.
xxxxxxxxx
On 3 July 2002, Judge Lee granted the defendants
Urgent Motion to Discharge Attachment filed 19 June
2002. Thereafter, on 9 July 2002, an Urgent ExParte Motion to Withdraw Cash Deposit was filed,
without notice to the defendants and despite failure of
the plaintiff to set such litigious motion for hearing and
contrary to existing laws and jurisprudence. Judge Lee
granted the same in his Order of 17 July
2002. Defendants only learned of the withdrawal when
they received a copy of the said Order.
A Motion for reconsideration of the 17 July 2002 Order
was filed on 30 August 2002. Defendants stressed that
the Motion to Withdraw Cash Deposit has no basis,
shows no urgency, lacks notice and hearing, and is
already a prejudgment of the case even before the pretrial stage which is tantamount to the taking of
property without due process of law.
For failure of the plaintiff to appear at the pre-trial
conference, the court granted the motion to declare
the plaintiff as non-suited as well as the prayer to allow
the ex parte presentation of the defenses evidence on
its counterclaim.
The plaintiff then filed a Verified Motion for
Reconsideration of the Order declaring it as nonsuited[,] which was set for hearing in the morning of 24
October 2002, the same day the aforementioned
ex partepresentation of evidence was supposed to
commence.
Judge Lee was not around in the morning so the
hearing on the motion did not materialize with the exparte presentation of evidence in the afternoon
because the Clerk of Court refused to proceed for the
reason that a motion for reconsideration had been filed
the day before. The Clerk of Court then conferred with

the respondent Judge in his chambers who produced a


handwritten note granting the said motion.She
explained to complainant Atty. Arugay that she did not
notice that Judge Lee had already issued the Order
granting such motion[;] thus, the ex parte presentation
of evidence could not proceed.
According to complainants, the Clerk of Court could not
explain the irregularity in the granting of the plaintiffs
Motion for Reconsideration and the fact that the same
was swiftly resolved[,] while the defendants similar
motion [had] not been resolved for more than two (2)
months already.[2]
In
his
Comment[3] dated January
9,
2003,
respondent judge claimed that the Complaint was
fatally defective, because complainants did not have
legal personality to file it; neither did they present
affidavits, verified statements or any authority to
represent their clients. Further, the Complaint did not
contain a certification of non-forum shopping, but
instead had a handwritten verification not sworn to or
subscribed before an administering officer.
He likewise assailed complainants allegations as
hearsay. As to what had allegedly transpired during the
implementation of the subject Writ of Attachment, he
adopted the averments in respondent sheriffs
Comment[4] alleging the presumption of regularity in
the discharge of official functions.
Respondent judge admitted that he had
committed a procedural error when he released the
counter-bond[5] to the plaintiff in the said civil
case. However, when the defendants therein, through
their Motion for Reconsideration, called his attention to
the mistake, he immediately ordered [6] the return[7] of
the counter-bond to the custody of the Office of the
Clerk of Court. He cited jurisprudence to defend his
acts and asserted his good faith and lack of
malice. Moreover, he averred that he had not delayed
the resolution of the Motion. Finally, he urged the Court
to dismiss the instant Complaint outright for being
instituted without basis and merely to harass him.
In his Comment,[8] respondent sheriff claimed that
after receiving the Writ of Preliminary Attachment, he
sought its implementation through the assistance of
the clerk of court of the MTC-Makati, Sheriff
Ernesto Adan, and the Makati police. He allowed the
parties in the civil case to negotiate for a settlement,
but when the negotiations bogged down, he attached a
printing machine that was not in use at the time.
He denied that there was abuse in the levy,
claiming that the machine was an old 1970
model. Moreover,
he
said
that,
contrary
to
complainants allegation that the machine was

valuable, no receipt to prove its true value was ever


shown.
Respondent sheriff added that it was in his own
belief and best judgment to temporarily place the
delicate printing machine in the warehouse of the
plaintiff for safekeeping. The machine was eventually
returned to the defendants by virtue of the Order
discharging the Writ. In fact, one of the complainants
personally acknowledged receipt of the machine.
As to the allegation that he was arrogant,
respondent sheriff claimed that he waited for more
than three hours before exercising his ministerial
function. Lastly, he adopted the averments in the
Comment of respondent judge on other events that
had transpired during the pendency of the civil case,
the subject of the instant Complaint.
Evaluation and Recommendation of the OCA
The OCA opined that the provisions cited by
complainants -- those in Sections 12 and 18 of Rule 57
of the 1997 Rules of Civil Procedure [9] -- did not require
the adverse party to be first notified and then heard
before
an
attachment
bond
may
be
released. Considering that the bond posted by the
attaching creditor would answer for the damages and
costs the court may award the adverse party by reason
of the attachment, the better practice was for the latter
to be notified and heard before the motion to discharge
attachment could be resolved.
According to the OCA, the error was corrected
when respondent judge, on Motion for Reconsideration,
reversed himself before the adverse party incurred any
damage. The OCA emphasized that before the full
disciplinary powers of this Court could befall a judge,
the erroneous act should have been committed with
fraud, dishonesty, corruption, malice or bad faith. It
opined that such fact had not been clearly and
convincingly shown in the instant case.[10]
The OCA found that respondent sheriff had erred
when he deposited the plaintiffs levied property in the
warehouse and thereby lost actual or constructive
possession thereof. The OCA said that this legal
violation could not be justified by the weight and the
condition of the machine, which could have been
deposited in a rented private warehouse where it could
have been guarded under his strict supervision.
Consequently, the OCA recommended that
respondent judge be REMINDED to be more
circumspect in the performance of his duties and to
keep abreast with the law and jurisprudence; and that
respondent sheriff be SUSPENDED for one (1) month
without pay for violation of Rule 57, Section 7(b) of the

1997 Rules of Civil Procedure with a WARNING that a


repetition of the same or similar act(s) shall be dealt
with more severely in the future.[11]
The Courts Ruling
We
agree
with
the
recommendation of the OCA.

findings

and

the

Administrative Liability
With respect to the charges against respondent
judge, we find that his grant of the withdrawal of the
cash deposit -- an Order he later reversed by ruling
that the deposit be returned to the clerk of court -- was
a mere error of judgment, not an act revealing gross
ignorance of the law or procedure.
Attachment is a juridical institution intended to
secure the outcome of a trial -- specifically, the
satisfaction of a pecuniary obligation.[12] Such order is
enforced through a writ that may be issued at the
commencement of an action, [13] commanding the
sheriff to attach property, rights, credits or effects of a
defendant to satisfy the plaintiffs demand.[14] Hence,
the property of a defendant, when taken, is put
in custodia legis.[15]
In order to prevent the sheriff from levying an
attachment on property, the defendant (also called the
adverse party) may make a deposit or give a counterbond in an amount equal to that fixed in the order of
attachment. Such deposit or counter-bound is intended
to secure the payment of any judgment that the
plaintiff (also called the attaching party or the
applicant to the writ) may recover in the action. [16] After
a writ has been enforced, however, the adverse party
may still move for the discharge of the attachment,
wholly or in part, by also making a deposit or giving a
counter-bond to secure the payment of any
judgment[17] the attaching party may recover in the
action.[18] The property attached shall then be released
and delivered to the adverse party; and the money
deposited shall be applied under the direction of the
court to the satisfaction of any judgment that may be
rendered in favor of the prevailing party.[19]
In the instant case, respondent judge had
ordered[20] the withdrawal of the cash deposit of the
defendant and released it in favor of the plaintiff, even
before judgment was rendered.This action was clearly
in violation of the Rules mandating that after the
discharge of an attachment, the money deposited shall
stand in place of the property released. [21] However, the
inadvertence[22] of respondent judge was not gross
enough to merit sanction.

First, he rectified himself within the period given


for deciding motions. Section 15(1) of Article VIII of the
Constitution mandates all trial courts to resolve all
matters filed within three months from date of
submission.[23] The Motion for Reconsideration [24] of the
July 17, 2002 Order granting the withdrawal of the
deposit was filed on August 30, 2002, and submitted
for resolution on September 5, 2002,[25] the date of
hearing.[26] The Order[27] granting this Motion was then
issued on November 4, 2002, well within the threemonth period. The money was returned, and no
prejudice was suffered by any of the parties.
Second, respondent judge owned up to his
mistake[28] in his Comment. This is an admirable
act. Under the Code of Judicial Conduct, judges should
be the embodiment of competence [29] and should so
behave at all times as to promote public confidence in
the integrity of the judiciary. [30] They must be faithful to
the law.[31] That respondent judge admitted his mistake
shows his recognition of his fallibility and his openness
to punishment, the imposition of which restores public
confidence in the judicial system. His July 17, 2002
Order was merely an honest mistake of judgment -- an
innocent error in the exercise of discretion -- but not a
display of gross incompetence or unfaithfulness to the
law.
We have already ruled that as long as the
judgment remains unsatisfied, it would be erroneous to
order the cancellation of a bond filed for the discharge
of a writ of attachment. [32] In like manner, it would be
erroneous to order the withdrawal of a cash deposit
before judgment is rendered. Be that as it may, a
[judge] may not be held administratively accountable
for
every
erroneous
order
x x x he
renders.
[33]
Otherwise, a judicial office would be untenable,
[34]
for no one called upon to try the facts or interpret
the law in the administration of justice can be infallible.
[35]
For liability to attach for ignorance of the law, the
assailed order of a judge must not only be erroneous;
more important, it must be motivated by bad faith,
dishonesty, hatred or some other similar motive.
[36]
Certainly, mere error of judgment is not a ground for
disciplinary proceedings.[37]
Complainants alleged that respondent judge
committed another violation of the Rules of Court when
he granted[38] the plaintiffs Urgent Ex-Parte Motion to
Withdraw Cash Deposit.[39]The Rules mandate that,
except for motions that the court may act upon without
prejudicing the rights of the adverse party, every
written motion shall be set for hearing by the
applicant.[40]The notice of hearing shall be addressed to
the defendants therein and shall specify the time and
date of the hearing, which must not be later than ten
(10) days after the filing of the motion. [41] The motion
and notice shall be served at least three days before

the date of hearing.[42] Without proof of its service, the


court cannot act upon it.[43]

certification against forum shopping is not needed in


this case; Rule 140 makes no such requirement.

Indeed, the plaintiffs Motion to withdraw the cash


deposit lacked notice of hearing and proof of
service. Respondent judge should not have acted upon
it. However, because he had erroneously thought that
the rights of the defendants would not be prejudiced
thereby, he took action. His poor judgment obviously
resulted in his issuance of the erroneous Order that
granted the release of the deposit.

We find that the charges against respondent


sheriff have bases. Verily, he blatantly violated Section
7(b) of Rule 57 of the Rules of Court when he deposited
the machine in the warehouse of the plaintiff. In
enforcing a writ of attachment, a sheriff who takes
personal property capable of manual delivery shall
safely keep it in custody after issuing the
corresponding receipt therefor.[54] Respondent sheriff
failed to do so.

Similarly, the verified Motion for Reconsideration


of the Order declaring plaintiff as non-suited and
allowing the ex-parte presentation of evidence by the
defense should have been heard in open court, not
granted in chamber. Respondent judge must have
thought that this Motion, which had been filed by the
plaintiff, required immediate action; and so the former
granted it by ordering -- through a handwritten note
which we do not approve of -- the deferment of the
scheduled presentation.[44] This Order should not have
been issued, because the Motion had been filed only a
day before the scheduled hearing.[45] The rules on
notice of hearing and proof of service should have
been observed by both the plaintiffs counsel and
respondent judge. Unfortunately, the latters poor
judgment likewise prevailed, but still fell short of gross
ignorance of the law or procedure.
Specious is the argument of respondent judge that
complainants have no legal personality to file the
instant Administrative Complaint against him. His
contention that the allegations contained therein are
hearsay[46] also deserves scant consideration. Rule 140
allows the institution of disciplinary proceedings
against judges, not only upon a verified complaint -supported by affidavits of persons who have personal
knowledge of the facts alleged therein or by
documents substantiating the allegations -- but even
upon an anonymous one.[47]Complainants herein have
the requisite personal knowledge and have, in fact,
executed a joint Complaint-Affidavit and substantiated
their allegations with pertinent documents.
The verification[48] in their Complaint, albeit
handwritten after the jurat, is sufficient in form and
substance.[49] Such verification is a clear affirmation
that they are prepared to establish the truth of the
facts pleaded.[50] In fact, the lack of it is merely a formal
defect that is neither jurisdictional nor fatal. [51] This
Court may order the correction of a pleading, if the
attending circumstances are such that strict
compliance with the rule may be dispensed with in
order to serve the ends of justice. [52] The jurat that
preceded the verification simply evidences the fact
that the Affidavit was properly made and sworn to
before the officer certifying it. [53] Furthermore, a

To constitute a valid levy of attachment, the officer


levying it must have actual possession of the property
attached.[55] He must put himself in [a] position to, and
must assert and, in fact, enforce a dominion over the
property adverse to and exclusive of the attachment
debtor.[56] To this rule we add that the officer cannot
even deliver the property to the attachment creditor,
as the parties must await the judgment in the
action. The levied property must be in the substantial
presence and possession[57] of the levying officer, who
cannot act as special deputy sheriff of any party
litigant.[58] The officer may put someone in possession
of the property for the purpose of guarding it, but the
former cannot be relieve[d] x x x from liability to the
parties interested in said attachment.[59]
Sheriffs are officers of the court[60] who serve and
execute writs addressed to them by the court, and who
prepare and submit returns of their proceedings.
[61]
They also keep custody of attached properties. [62] As
officers of the court, they must discharge their duties
with great care and diligence. [63] They have to perform
faithfully and accurately what is incumbent upon
[them][64] and show at all times a high degree of
professionalism in the performance of [their] duties.[65]
The duty of sheriffs to execute a writ issued by a
court
is
purely
ministerial, [66] not
discretionary.
[67]
Clearly, they must keep the levied property safely in
their custody, not in that of any of the parties. They
exercise no discretion in this regard, for attachment is
harsh, extraordinary and summary in nature -- a
rigorous remedy which exposes the debtor to
humiliation and annoyance.[68] Contrary to the claim of
respondent sheriff, his unusual zeal and precipitate
decision to give possession of the machine to the
plaintiff effectively destroys, the presumption of
regularity in his performance of official duties. [69] Any
method of execution falling short of the requirement of
the law deserves reproach and should not be
countenanced.[70]
In implementing the Writ, respondent sheriff
cannot afford to err without adversely affecting the
proper dispensation of justice.[71]

Sheriffs play an important role in the administration of


justice. As agents of the law, high standards are
expected of them. x x x His conduct, at all times, must
not only be characterized by propriety and decorum
but must, and above all else, be above suspicion. [72]
As a public officer who is a repository of public
trust, respondent sheriff has the obligation to perform
the duties of his office honestly, faithfully and to the
best of his ability.[73] He must be circumspect and
proper in his behavior. [74] Reasonable skill and diligence
he must use in the performance of official duties,
especially when the rights of individuals may be
jeopardized by neglect.[75]
Sheriffs must always hold inviolate and invigorate
the tenet that a public office is a public trust. [76] As
court personnel, their conduct must be beyond
reproach and free from any suspicion that may taint
the judiciary.[77] In view of their exalted position as
keepers of public faith, court personnel are indeed
saddled with a heavy burden of responsibility [78] to the
public.Hence, they must thoroughly avoid any
impression of impropriety, misdeed or negligence in
the performance of official duties.[79] We have held
thus:
x x x [T]his Court condemns and would never
countenance such conduct, act or omission on the part
of all those involved in the administration of justice
which would violate the norm of public accountability
and diminish or even just tend to diminish the faith of
the people in the Judiciary.[80]
Once again we emphasize that [a]t the grassroots
of
our
judicial
machinery,
sheriffs
x x x are
indispensably in close contact with the litigants, hence,
their conduct should be geared towards maintaining
the prestige and integrity of the court, for the image of
a court of justice is necessarily mirrored in the conduct,
official or otherwise, of the men and women who work
thereat, from the judge to the least and lowest of its
personnel;[81] hence, it becomes the imperative sacred
duty of each and everyone in the court to maintain its
good name and standing as a temple of justice.
[82]
Dismissed for lack of basis, however, is the charge
of excessive enforcement of a writ filed against
respondent sheriff.
Applying Section 8 of Rule 140 of the Rules of
Court, respondent judge is found wanting in the
exercise of good discretion only. His errors of judgment
fall short of gross ignorance of the law or procedure,
yet reflect poorly on his esteemed position as a public
officer in a court of justice. Judges must be
conscientious, studious and thorough,[83] observing
utmost diligence in the performance of their judicial
functions.[84] They have to exhibit more than just
cursory acquaintance with statutes and procedural

rules.[85] Moreover, they must require court personnel


to observe at all times high standards of public service
and fidelity.[86]
Applying the Uniform Rules on Administrative
Cases in the Civil Service, [87] we find respondent sheriff
guilty of simple neglect of duty for violating Section
7(b) of Rule 57 of the Rules of Court. Simple neglect of
duty is the failure x x x to give proper attention to a
task expected[88] of an employee, thus signifying a
disregard of a duty resulting from carelessness or
indifference.[89] Classified as a less grave offense, it is
punishable by a suspension of one month and one day
to six months. Considering that the failure of
respondent sheriff to fulfill his duty seems to be his
first infraction during his stint in the judiciary, the Court
considers the recommended sanction appropriate.
WHEREFORE,
the
Court
reiterates
its REMINDER[90] to Judge Ralph S. Lee of the
Metropolitan Trial Court of Quezon City (Branch 38) to
evince due care in the exercise of his adjudicative
functions. On the other hand, Sheriff Justiniano C. de la
Cruz Jr. of the same branch is found GUILTY of simple
neglect of duty and is hereby SUSPENDED for one
month and one day without pay, with a warning that a
repetition of the same or of a similar act in the future
shall be dealt with more severely.
SO ORDERED.

A.M. No. P-91-549 July 5, 1993


REYNALDO SEBASTIAN, complainant,
vs.
SHERIFF ALBERTO A. VALINO, respondent.
QUIASON, J.:
Marblecraft, Inc., represented by its Assistant General
Manager, Reynaldo Sebastian, charges Alberto A.
Valino, Senior Deputy Sheriff, Office of the Regional
Sheriff, Pasig, Metro Manila, with (1) gross abuse of
authority
committed
in
connection
with
the
implementation of the writ issued by the Regional Trial
Court, Makati, Metro Manila, in Civil Case No. 89-3368,
and (2) refusal to enforce the trial court's for the return
of the seized items.
Complainant alleges that:
1. On March 3, 1989, Private Development Corporation
of the Philippines (PDCP) filed a replevin suit against
Marblecraft, Inc., in Civil Case No. 89-3368, in order to
foreclose the chattels mortgaged by Marblecraft. On
March 30, 1989, the Regional Trial Court, Makati, issued
a writ of seizure directed against Marblecraft covering
the chattels sought to be replevied.
2. The enforcement of the writ of seizure was delayed
because of the writ of preliminary injunction enjoining
PDCP from proceeding with the foreclosure sale issued
by the Regional Trial Court, Pasig, Metro Manila in Civil
Case No. 58006, It was only on October 31,1990, when
the Regional Trial Court, Pasig, dissolved the writ of
preliminary injunction.
3. On November 9, 1990, at around 10:37 A.M.,
respondent, accompanied by several policemen and
PDCP employees, went to the office of Marblecraft at
Barrio Santolan, Pasig, to implement the writ of seizure.
Respondent and his companions forcibly opened the
lockers and desk drawers of the employees of
complainant and took their personal belongings, as
well as some office equipment issued to them. The
employees filed with the Office of the Provincial
Prosecutor of Rizal two criminal complaints for robbery
against respondent and his companions.
4. Respondent only showed to complainant's counsel a
copy of the writ but did not furnish him with a copy of
the application for the writ, the supporting affidavit and
the bond.
5. In the course of the implementation of the writ,
which lasted for four days, several pieces of machinery
and equipment were destroyed or taken away by
respondent.

6. Respondent turned over the seized articles to the


counsel of PDCP and allowed these items to be stored
in PDCP's warehouse in Taguig, Metro Manila.
7. On November 14, 1990, complainant posted a
counterbond. In an order issued on the same day, the
Regional Trial Court, Makati, approved the bond and
directed the immediate return of the seized items.
After denying PDCP's motion to set aside the November
14 Order, the trial court reiterated the directive for the
return of the seized items in its November 26 Order.
Respondent did not implement the orders.
8. PDCP filed a motion for reconsideration of the
November 26 Order, which was denied in an Order
dated December 11, 1990.
In
his
comment,
respondent
branded
the
administrative complaint against him as pure
harassment filed by Marblecraft after he had refused to
defer the implementation of the writ of seizure. He said
that if he did not implement the writ, he would have
been accused by PDCP of non-performance of his
duties as a sheriff. He pointed out that the criminal
complaints for theft filed against him by the employees
of complainant were dismissed by the Provincial
Prosecutor of Rizal.
The administrative complaint was referred to Judge
Martin S. Villarama Jr. of the Regional Trial Court, Pasig,
for investigation, report and recommendation.
In his report, Judge Villarama, found respondent guilty
of partiality when he immediately turned over the
seized items to PDCP, and of willful refusal to enforce
the November 14, 26 and December 11, 1990 Orders
of the Regional Trial Court, Makati.
Under the Revised Rules of Court, the property seized
under a writ of replevin is not to be delivered
immediately to the plaintiff. The sheriff must retain it in
his custody for five days and shall return it to the
defendant, If the latter, as in the case, requires its
return and files a counterbond (Sec. 4, Rule 60, Revised
Rules of Court). In violation of said Rule, respondent
immediately turned over the seized articles to PDCP.
His claim that the Office of the Regional Sheriff did not
have a place to store the seized items, cannot justify
his violation of the Rule. As aptly noted by the
Investigating Judge, the articles could have been
deposited in a bonded warehouse.
Respondent must serve on Marblecraft not only a copy
of the order of seizure but also a copy of the
application, affidavit and bond (Sec. 4, Rule 60, Revised
Rules of Court). Respondent did not furnish defendant
with a copy of the application, affidavit and bond. By

his own admission, he only served it with a copy of the


order of seizure (Rollo, p. 37).
The more serious infraction of respondent is his refusal
to implement the order of the Regional Trial Court,
Makati for him to return to complainant the articles
seized pursuant to the writ of seizure dated March 30,
1990.
The Order dated November 14, 1990 directed him "to
immediately return to defendant all its properties
seized and taken from its premises pursuant to the writ
of seizure of March 30, 1989, from receipt of this Order
(sic)"
(Rollo,
p. 42)
The Order dated November 26, 1990 directed him "to
implement the Order of this Court dated November 14,
1990 and to immediately return to defendant all its
properties seized and taken from its premises pursuant
to the writ of seizure dated March 30, 1989 from
receipt
of
this
Order
(sic)"
(Rollo,
p. 44).
The Order dated December 11, 1990 directed him "to
implement the Order of this Court dated November 26,
1990, within three (3) days from the receipt hereof,
otherwise this Court will be constrained to appoint and
deputize another sheriff to implement the order dated
November 26, 1990" (Rollo, p. 47).
The only action taken by respondent to implement the
Order dated December 11, 1990 was to write a letter
on December 12, 1990, addressed to the counsel of
PDCP, requesting the turnover of seized articles. As
expected, PDCP's counsel refused to part with the
possession of the seized articles and to issue a letter of
authorization to withdraw the same from the
warehouse. Instead of taking possession of the articles,
respondent merely reported to the Regional Trial Court
that "[i]t is now clear that the undersigned cannot
implement the Court order dated December 11, 1990
by reason of the refusal of PDCP to accept or to honor
said Court order" (Rollo, p.48).
The petition for certiorari of PDCP to question the
orders of the Regional Trial Court, Makati, was filed with
the Court of Appeals only on December 17, 1990. The
Court of Appeals issued a temporary restraining order
only on December 21, 1990. Respondent therefore had
more than seven days within which to enforce the
orders of the trial court if he was minded to do so.
Respondent could have avoided getting into his
present predicament had he not turned over the
possession of the seized goods prematurely to the
PDCP.

The complainant cannot be blamed if it harbored the


suspicion that respondent was beholden to PDCP. The
zeal with which respondent enforced the order of
seizure in favor of PDCP was in sharp contrast with his
inaction in enforcing the three orders of the trial court
directing him to return the seized items to
complainant.
It is not for respondent to question the validity of the
orders of the trial court. It is for him to execute them.
As observed by the Investigating Judge, "[t]here is
therefore no excuse for respondent's wilfull refusal to
implement the Order of the Court" (Report and
Recommendation, p. 10). Disobedience by court
employees of orders of the court is not conducive to
the orderly administration of justice. The display of
partially in favor of a party as against the other party
erodes public confidence in the integrity of the courts.
IN VIEW OF THE FOREGOING, the Court finds
respondent guilty of serious misconduct and RESOLVED
to impose upon him the penalty of FOUR (4) MONTHS
SUSPENSION without pay, the period of which should
not be charged to his accumulated leave, with a
WARNING that a repetition of the same or of acts
calling for disciplinary action will be dealt with more
severely. This resolution is IMMEDIATELY EXECUTORY,
and respondent is hereby ordered to forthwith desist
from performing any further official functions
appertaining to said office.
SO ORDERED.

A.M. No. P-94-1108 August 23, 1995


MARIANETTE VILLAREAL, complainant,
vs.
ROLANDO T. RARAMA, RESTITUTO MADRAZO,
FIDEL CASUYON, and AGUINALDO DEL
CAMPO,respondents.
REGALADO, J.:
The present administrative case arose from a sworn
complaint 1 filed by Marianette Villareal against
respondents Rolando T. Rarama, Restituto Madrazo,
Fidel Casuyon, and Aguinaldo del Campo who are all
serving as Sheriff III in Branches V, VII, II, and III,
respectively, of the Municipal Trial Courts in cities
(MTCC), Davao City, for allegedly "conniving and
confederating in maliciously serving a writ of execution
intended for another person who is living in another
place." Pursuant to the First Indorsement of Deputy
Court Administrator Reynaldo L. Suarez dated August
24, 1994, 2 the complaint was referred to respondent
Sheriff Rolando T. Rarama, through Judge Roberto Q.
Canete, MTCC, Branch 5, Davao City, for comment.
Subsequently, respondents submitted their joint
counter-affidavit 3 to which a reply 4 was filed by herein
complainant. A rejoinder to complainant's reply 5 was
also submitted by respondents.
It appears that an action for collection of a sum of
money was filed by the Cooperative Rural Bank of
Davao City against the spouses Marianette (herein
complainant) and Roy Villareal, Lito Lacorda and
Felimon Cangrejo before the MTCC, Branch 5, of Davao
City docketed as Civil Case No. 548-E-M. The records
show that summons was served upon respondent
Cangrejo who, however, failed to file his answer, as a
consequence of which he was declared in default. On
April 19, 1989, judgment 6 was rendered against him in
favor of the plaintiff bank without prejudice to his right
to proceed against his co-debtors. On March 29, 1994,
an alias writ of execution 7 was issued by the trial court
against Cangrejo.
According to complainant, at around 1:30 P.M. of April
25, 1994, respondent Rarama arrived at her house in
Digos, Davao del Sur, together with the other
respondents and three employees of the Cooperative
Rural Bank of Davao City, Inc., including one Vic Belo
who is a collector of the bank. Respondent Rarama
introduced himself as a sheriff of Davao City and
informed her that they were going to attach her
properties because she lost in a case. Complainant
denied having been charged in court, much more of
having lost in a case, and that she did not owe
anything to the bank. When respondent Rarama
persisted in getting her properties, she demanded and
was shown the writ of execution. She objected thereto,
claiming that the same was not addressed to her but to

Felimon Cangrejo and that the writ was being served


after more than five years from the date the decision
was rendered. The reply given her was that she is the
principal borrower and the only one who is solvent.
Despite the pleas of complainant and a neighbor for
the postponement of the implementation of the writ
until she shall have consulted her lawyer, respondents
immediately proceeded to pull out from complainant's
house the following items, viz.: one VHS player, one
Singer sewing machine, one Chinese cabinet, and
another Chinese cabinet with glass shelves. Allegedly,
complainant was forced to sign an inventory receipt
because she would otherwise not be able to get back
her things. She hastened to add that when she signed
the receipt, the words "with my conformity" were not
written thereon.
The following day, complainant and her husband went
to the bank to inquire about the status of her loan and
she was informed that, unless she settled her account,
her properties would not be released. Complainant
avers that because of this she was constrained to pay
the
amount
of
P10,000.00
despite
earlier
representations made with the bank that she had fully
paid her loan to the bank collector. She further asserts
that she was thereafter forced to write a promissory
note as dictated by the assistant manager of the bank,
Gerry Alag, and the bank's lawyer, Atty. Herbert Arteg.
Eventually, after she presented the receipt of payment
and the promissory note to respondent Rarama, the
attached
properties
were
released
to
herein
complainant.
On the other hand, respondent Rarama claims that on
April 25, 1994, he went to Digos, together with Vic Belo
and Bading dela Fuente, employees of the bank, to
coordinate with Provincial Sheriff Andres regarding the
implementation of the alias writ of execution issued in
the aforementioned Civil Case No. 548-E-M. However,
he was informed that he would have to implement the
writ on his own because the other sheriffs were not
available. On their way out of the Hall of Justice, they
met respondents Madrazo, Casuyon and del Campo
who, upon learning that Rarama's group was going to
Digos where they all lived, decided to join the group so
they could get a free ride.
Upon the suggestion of Vic Belo, the bank collector, the
group first went to the house of complainant
purportedly to ask for the exact address of Felimon
Cangrejo against whom the writ was issued. When they
reached the house of complainant, respondent Rarama
introduced himself and his other companions, and then
inquired from the former about the address of
Cangrejo. When complainant asked why they were
asking her, Rarama showed her the writ of execution
and the court decision. It was then that complainant

stated that she was the principal defendant in the


case.
Respondents further allege that complainant requested
Rarama not to implement the writ against Cangrejo
because he was merely her co-maker who never
benefited from the loan extended to her by the Rural
Bank of Davao, after which she offered to pay her
obligations in monthly installments. Respondent
Rarama did not agree to the proposal since he was not
authorized to enter into that compromise but, at the
same time, he suggested that complainant deposit
some of her personal properties as security for the
settlement of her obligation, and the latter allegedly
agreed. Much later, the properties hereinbefore
mentioned were released to complainant by virtue of a
letter from the creditor bank.
In addition, respondents controvert the claims of
complainant that they forcibly entered her house and
took possession of her personal properties without her
consent. On the contrary, they insist that complainant
deposited her personal properties voluntarily and of
her own free will. They likewise contend that it is not
true that complainant has never been charged in court
for in fact there was a pending criminal case for
violation of the law on bouncing checks, as well as a
civil case for collection of a sum of money, filed against
her.
In her aforesaid reply to respondents' counter-affidavit,
complainant maintains her original stand that she did
not voluntarily deposit her personal properties with
respondents and declares as untrue respondents' claim
that they merely came to see her to ask for the
address of Felimon Cangrejo.
On January 16, 1995, this Court issued a resolution, 8 as
recommended by Deputy Court Administrator Reynaldo
L. Suarez, referring the case to Executive Judge
Augusto B. Breva of the Regional Trial Court of Davao
City for investigation, report and recommendation
within sixty (60) days from receipt of the records
thereof.
Thereafter, Judge Breva submitted his report dated July
12, 1995, with the recommendation that respondent
sheriff Rolando T. Rarama be declared guilty of an
administrative offense and that he be suspended for
three months, with a stern warning that a repetition of
a similar offense will be dealt with more severely. He
further recommended that the three other respondents
be exonerated.
We quote with approval the findings of the
investigating judge regarding the propriety of the
respective claims of the parties and the culpability, or

absence thereof, with


respondents herein:

respect

to

each

of

the

RATIONALIZATION: The defense of Sheriff


Rarama

that
he
along
with
the
representatives of the plaintiff bank went to
the house of the complainant only to ask for
the address of Felimon Cangrejo; that the four
items taken by them were offered as deposit by
the complainant after requesting Rarama not
to implement the alias writ against Cangrejo as
it was her loan and Cangrejo was only her comaker; and that two days after, she got the
items back upon making a partial payment of
P10,000.00 to said bank and promising in
writing to pay the balance within sixty days
cannot be accepted as true in view of the
followings points of the evidence:
(1) The alias writ of execution (Exh. "5"),
although directed against Felimon Cangrejo
only, was actually served by Sheriff Rarama on
the complainant as evidenced by her signature
at the bottom thereof along with the date "425-94" (Exh. "5-A"), the date of the taking of
the four items. Service of the writ on her was
indicative of the intent to implement it against
her personal interests.
(2) The RECEIPT (Exh. "6") issued by Rarama to
the complainant, for the four items, positively
shows that it was prepared in advance. The
opening paragraph is typewritten and reads:
"Received from defendants MARIANETTE & ROY
VILLAREAL the personal properties mentioned
and particularly described below, to wit:" Thus
the fact that the names "MARIANETTE & ROY
VLLLAREAL" had already been typewritten
beforehand is a further indication of said intent,
otherwise their names would have been
handwritten like the descriptions of the four
items appearing therein.
(3) There is nothing in the RECEIPT showing
that the items were only deposited. On the
contrary, it contains a typewritten paragraph
which reads: "That the above-mentioned
personal property/ies was/were levied and
attached by virtue of the Writ of Execution
issued by Honorable ROBERTO Q. CANETE,
Presiding Judge, MTCC, Branch 5, Davao City,
dated March 29, 1994".
(4) The four items were not brought to the
plaintiff bank (which would have been the case
if they were merely deposited by private
arrangement) but to the MTCC which issued
the alias writ and from which the complainant

recovered them after paying P10,000.00 to the


bank.
(5) Vic Belo the collector of the bank, when
asked in the course of his testimony in this
case why he did not inquire before proceeding
to Digos on April 25, 1994, (about) the address
of Felimon Cangrejo from the NFA in Davao
City, where the latter had been employed
answered ". . . my perception is that since Mrs.
Villareal is the principal borrower I focused
more my attention on her" (TSN 6-7-95 p. 100).

participation of each of the respondents except


as to Rarama and the writing of the RECEIPT by
Casuyon, referring to the respondents only as
Rarama, or as Rarama and the other sheriffs,
or the sheriffs. But Rarama was not only with
the other respondents sheriffs but with two
employees of the bank.
Hence, we believe that the evidence only
warrants
a
finding
of
administrative
accountability on the part of Rolando Rarama.

(a) She claims to have already fully paid her


loan account with the plaintiff bank but has not
produced any receipt to substantiate it other
than the official receipt for the P10,000.00 she
paid on April 27, 1994, two days after the
incident complained of in this case happened
(Exh. "G").

While there is evidence to show that indeed


complainant Marianette Villareal is the principal debtor
while Felimon Cangrejo is merely a co-maker, the fact
remains that Cangrejo was the sole debtor adjuged
liable for the loan obtained from the Cooperative Rural
Bank of Davao City, Inc. and the alias writ of execution
was directed only against him. Hence, respondent
Rarama had no authority to implement the same
against herein complainant considering that, although
she was named as a defendant in the collection case,
there was no judgment against her as of the date of
the incident.

(b) In her affidavit in support of her


administrative complaint she alleges that "I
and my husband have never been charged of
(sic) any criminal and/or civil case in Davao
City." But it turned out that she actually
received the summons issued in the same Civil
Case No. 548-E-M on September 27, 1990 as
evidenced by her signature thereon (Exh."2",
"2-A" & TSN 6-5-95 pp. 29-30). The decision
rendered in that case against Cangrejo alone is
dated April 19, 1989.

The sheriff, as an officer of the court upon whom the


execution of a final judgment depends, must
necessarily be circumspect and proper in his behavior.
Execution is the fruit and end of the suit and is the life
of the law. 9 Thus, when a writ is placed in the hands of
a sheriff it is his duty, in the absence of any
instructions to the contrary, to proceed with reasonable
celerity and promptness to execute it according to its
mandate. He is to execute the directives of the court
therein strictly in accordance with the letter thereof
and without any deviation therefrom.

The alias writ directed against Cangrejo was


issued on March 29, 1994, which was within
the five-year period.

Hence, a sheriff has no authority to levy on execution


upon the property of any person other than that of the
judgment debtor. If he does so, the writ of execution
affords him no justification, for such act is not in
obedience to the mandate of the writ. 10 As long as the
sheriff confines his acts to the authority of the process,
he is not liable, but all of his acts which are not justified
by the writ are without authority of law. This is so
because if an execution against one man would excuse
the sheriff for taking the property of another, every
citizen would be at his mercy and none could call his
estate his own. 11

On the other hand, the testimony of the


complainant cannot be entirely believed for the
following reasons:

There appears to be no clear positive evidence


that respondents Casuyon, Madrazo and del
Campo really knew that the alias writ was
directed only against Cangrejo. And in her
testimony the complainant for the most part
only named Sheriff Rarama, and named sheriff
Casuyon only in the re-direct examination as
the one who wrote down the descriptions of the
four items taken from her house, writing as the
things were accordingly being pulled out "by
the other sheriffs" without naming them (TSN
6-5-95 pp. 46-47). She did not even identify
them during the hearing, and she got the
names of Madrazo and del Campo only days
later from the Court upon instruction of her
adviser, then Provincial Prosecutor Aves (same
TSN p. 39). She did not particularize the

Respondent Rarama's improvidence in enforcing a


judgment against complainant who is not the judgment
debtor in the case calls for disciplinary action.
Considering the ministerial nature of his duty in
enforcing writs of execution, it is incumbent upon him
to ensure that only that part of a decision ordained or
decreed in the dispositive portion should be the subject
of execution, no more and no less. That the title of the
case specifically names complainant as one of the

defendants is of no moment as execution must


conform to that which is directed in the dispositive
portion and not what appears in the title of the case. 12
We find the recommended penalty of three month's
suspension proper and commensurate under the
circumstances obtaining in this case. However, the
policy adopted by the Court, a fine equivalent to the
salary of respondent for three months should instead
be imposed, but with some mitigation considering the
nominal extent of the damages sustained by
complainant who, to a certain extent, also contributed
in bringing about the situation which gave rise to the
incident.
ACCORDINGLY, respondent Sheriff Rolando T. Rarama is
hereby declared GUILTY of serious misconduct in the
enforcement of the alias writ of execution in Civil Case
No. 548-E-M of the Municipal Trial Courts in Cities,
Branch 5, Davao City and he is hereby ordered to pay a
FINE of ten thousand pesos (P10,000.00). He is further
sternly warned that the commission of the same or a
similar offense hereafter will be punished with a more
severe sanction.
The complaint against respondents Restituto Madrazo,
Fidel Casuyon and Aguinaldo del Campo is hereby
DISMISSED for lack of merit.
SO ORDERED.

A.M. No. MTJ-93-853 March 14, 1995


DOMINGO BALANTES, complainant,
vs.
JUDGE JULIAN OCAMPO III, Municipal Trial Court
in Cities, Branch I, Naga City, respondent.
A.M. No. P-94-1013 March 14, 1995
DOMINGO BALANTES, complainant,
vs.
LILIA S. BUENA, Clerk of Court, MTCC, Naga
City/Ex-officio Naga City Sheriff, respondent.
RESOLUTION
ROMERO, J.:
This resolution disposes of two related complaints of
Domingo Balantes, one of which is against respondent
Judge Julian Ocampo III (A.M. No. MTJ-93-853) and the
other against Clerk of Court Lilia S. Buena (A.M. No. P94-1013). 2
Records show that complainant is the defendant in an
ejectment case (Civil Case No. 8339) filed by plaintiff
Roberto Roco but which was decided by respondent
judge against complainant. Complainant appealed the
adverse decision to the RTC, Branch 23, Naga City
(docketed as RTC 88-1467). On motion of the plaintiffappellee, the RTC, on October 23, 1989 issued a Writ of
Execution and Demolition pending appeal, ordering the
removal of one-half (1/2) portion of complainant's
residential house found to be built inside the titled
property of the plaintiff. Subsequently, the decision on
appeal was affirmed by the same Regional Trial Court
and the records of the case were remanded to
respondent's sala for execution of the judgment. On
November 25, 1991, respondent Judge issued a writ
ordering the demolition of the remaining half portion of
complainant's residential house found standing on a
public property (legal easement). Complainant filed a
motion for reconsideration of the demolition order but
the same was denied on December 5, 1991.
It further appears that on August 19, 1992, a second
writ of demolition was issued by the respondent Judge,
followed by a third one dated February 3, 1993.
Complainant now alleges that respondent judge issued
the orders granting plaintiff's motion for issuance of
writ of demolition with precipitate haste, hence, he was
deprived of his right to oppose the same, that the
effect of these writs of demolition is to demolish
complainant's entire house, notwithstanding that the
appellate court's 3 writ of execution and demolition
issued pending appeal ordered the demolition only of

the half portion of his house found standing on


plaintiff's land.
Respondent Judge Julian Ocampo III filed his comment
on November 25, 1993 (A.M. No. MTJ-93-853, pp. 3034). He explained that after a series of appeals (to RTC,
Court of Appeals and the Supreme Court), and the
remand of records to court a quo, he issued the
questioned writs of demolition with respect to the
remaining portion of complainant's house situated
inside the property which court a quo found to be
owned by the plaintiff by right of accretion.
Respondent Judge argues that a writ of demolition,
being merely incidental to the execution of a final
judgment, is immediately enforceable after hearing the
arguments of both parties; that though the writ of
demolition was issued on the same day the court
issued its order of August 19, 1992, the writ was
implemented only on September 2, 1992; that a
motion for reconsideration was filed by herein
complainant on August 29, 1992 to forestall its
implementation but the same was submitted for the
court's consideration only on September 3, 1992 and
by that time the writ had already been implemented.
Respondent Judge further argues that the restraining
order issued on September 2, 1992 cannot be complied
with because by the time it was received by the City
Sheriff, the writ of demolition had already been
effected and the premises delivered to the plaintiff.
With respect to the complaint filed against respondent
Clerk of Court, complainant alleges that she
immediately proceeded to implement the writs of
demolition without giving him a chance to move for a
reconsideration of the order granting issuance thereof.
We find respondent judge to have grossly abused his
authority in issuing the questioned writs of demolition.
A precise determination of the total land area
encroached upon by complainant over subject property
in Civil Case No. 8339 has been ordered by Judge
Gregorio Manio, RTC, Branch 23, Naga City in the
course of the appeal thereof. Records show that
previous to the issuance of the writ of execution and
demolition pending appeal, said judge ordered the
deputy sheriff with the assistance of a geodetic
engineer to determine the metes and bounds of the
plaintiff's property. The Sheriff's Return clearly showed
that two (2) meters of plaintiff's property had been
more or less encroached upon by complainant's house
while it occupied three (3) meters, more or less, of the
legal easement formed by accretion. The writ of
demolition thus issued by the appellate court
contained specifications in accordance with such
findings and was returned fully satisfied on January 20,

1990. Moreover, the decision of the RTC, Branch 23,


Naga City which incorporated such findings was
successively affirmed by the Court of Appeals and the
Supreme Court.
Respondent Judge, therefore, was fully aware of the
previous delineation of the property of the plaintiff.
Nevertheless, when the records were remanded to him
and upon motion of the plaintiff's counsel, he issued
another writ of demolition which sought to demolish
the remaining portion of the defendant's house which,
as already found by the appellate court(s), was
standing upon a public property.
The order of demolition dated November 20, 1991
which he issued, in fact, was the subject of a petition
forcertiorari (SPL. Civil Action No. RTC 91-2467) before
the same RTC, Branch 23, Naga City where Judge
Gregorio A. Manio declared said order of demolition
and the writ issued pursuant thereto as null and void,
having been issued with grave abuse of discretion and
enjoined respondent Judge from issuing any further
writs of demolition in Civil Case No. 8339.
Despite this directive, respondent Judge exhibited a
defiant attitude by issuing another writ of demolition
dated August 19, 1992. Said order was the subject of
another petition for certiorari/prohibition (SPL. Civil
Action No. 92-2651) wherein Judge Antonio N. Gerona
of Branch 27, RTC, Naga City issued an order dated
September 2, 1992 restraining the implementation of
the aforesaid writ of demolition by the sheriff of MTC,
Naga City.
As regards the charge against respondent Clerk of
Court and Ex-Officio Sheriff Lilia S. Buena, the same is
dismissed, it appearing from the certification she
issued that the Temporary Restraining Order issued by
the RTC, Branch 27, Naga City was received by her on
September 2, 1992 at 2:15 p.m., after the demolition
had been completely effected and the premises
delivered to the plaintiff at 1:30 p.m. of same date. It
appears that respondent Buena was not aware of the
existing TRO which she received within the hour after
the demolition had taken place, thus rendering said
restraining order a fait accompli. The rule is that when
a writ is placed in the hands of a sheriff, it is his duty,
in the absence of instructions, to proceed with
reasonable celerity and promptness to execute it
according to its mandate. He may not apply his
discretion as to whether to execute it or not. 4
WHEREFORE, in view of the foregoing, respondent
Judge Julian Ocampo III, MTCC, Branch I, Naga City is
hereby ordered to pay a FINE of P5,000.00 with
WARNING that a repetition of the same or similar
infraction in the future will merit a stiffer penalty. The
complaint against respondent Clerk of Court and ExOfficio Sheriff Lilia S. Buena is hereby DISMISSED.

SO ORDERED.

A.M. No. P-94-1068 February 13, 1995


VICTOR ELIPE, complainant,
vs.
HONESTO FABRE, Deputy Sheriff, MTCC, Cagayan
de Oro City, respondent
RESOLUTION
MENDOZA, J.:
This is an administrative complaint filed against
respondent Honesto G. Fabre, charging him with
nonfeasance and incompetence in the performance of
his duties as Deputy Sheriff of Branch 3 of the
Municipal Trial Court in the Cities (MTCC) at Cagayan de
Oro City.
The complaint was referred to Judge Antonio A. Orcullo
of MTCC, Branch 3, Cagayan de Oro City who, in a
report dated November 15, 1993, found the charges to
be true and accordingly recommended that respondent
be reprimanded and given a stern warning that a
repetition of the same acts would be dealt with more
severely.
In its memorandum dated August 29, 1994, the Office
of the Court Administrator concurs with the findings of
the investigating judge and recommends that
respondent deputy sheriff be fined P1,000.00 and
given a stern warning.
The record discloses that on June 19, 1992, the MTCC,
Branch 3, at Cagayan de Oro issued a writ of execution
for the enforcement of a barangay agreement in Case
No. 91-144 for collection of unpaid rentals and
construction materials amounting to P100,000.00.
Complainant testified that on June 25, 1992, at nine
o'clock in the morning, respondent served the writ or
judgment debtors Michael dela Cerna and his wife but
the respondent was able to levy only upon a
dilapidated vehicle and an old piano. 1 Complainant
stated that at ten o'clock in the evening of the same
day, the judgment debtors surreptitiously removed
several pieces of furniture from the house which they
rented. 2 On June 26 and 30 and again on July 4, 11, 38
and 19, 1992, they removed appliances and other
personal properties and destroyed building fixtures on
the property owned by complainant. 3 On these
occasions, according to the complainant, respondent
did not make any effort to prevent the judgment
debtors from removing leviable properties to
implement the writ, despite the fact that he had been
told by complainant of the judgment debtors' activities.
Respondent Fabre denied the complainant's allegation.
He claimed that he levied on several properties of the
judgment debtors, but unfortunately the bid price paid

for
them
at
the
public
auction
was only
P10,000.00. 4 He justified his action in levying only on
the personal properties which he found at the business
establishment and in desisting from enforcing the writ
with respect to properties on the second floor of the
residence of the judgment debtors on two grounds: (1)
the judgment debtors refused to let him in; and (2) he
did not have any order from the MTCC to force open
the door which had been locked.
The records show that on July 10, 1992, respondent
sold to the complainant, as the highest bidder at public
auction, personal properties of the judgment debtors
for P10,000.00. On July 13, 1992, respondent levied on
a parcel of land owned by the judgment debtors which
on August 14, 1992 was also sold to complainant for
P15,006.00. 5 On December 17, 1992, personal
properties of the judgment debtors which had been
levied upon were sold, also to the complainant as the
highest bidder, for P2,001.00. 6 The result is that the
judgment debt of P100,000.00 was only partially
satisfied to the extent of P27,007.00.
In his memorandum report, Deputy Court Administrator
Juanito A. Bernad found that, because of respondent's
inaction and lack of diligence in enforcing the writ of
execution, the judgment debtors were able to cart
away properties which he could have levied upon
execution. There is merit in the following observations
contained in his memorandum:
Respondent Deputy Sheriff correctly
argued that he was not directed by any
Judge by court orders to stop the
carting away of properties or the
demolition
of
the
fixtures.
But
respondent Sheriff should understand
that by virtue of the writ of execution
issued in favor of herein complainant,
he (respondent Sheriff) was mandated
to levy upon properties of judgment
debtor
to
satisfy
an
obligation
amounting to P100,000.00. However, in
disregard of this Order, respondent
Sheriff chose to levy the properties of
the judgment debtor which amounted
only to P27,000.00.
If
indeed
respondent
Sheriff
is
dedicated in his work, respondent
Sheriff could have chosen to stop the
carting away of the valuable properties
of judgment debtor for the very
purpose of levying it and for the
purpose of complying with the Order.
If the arguments of respondent Sheriff
will be sustained, all judgment debtors
can easily circumvent the orders of the

court by carting away their properties


thinking that sheriffs have no authority
to stop them. This line of thinking and
reasoning will create chaos and
instability in the administration of
justice.
Furthermore,
respondent
Sheriff
exhibited an utter disregard of what is
incumbent upon him when he failed to
inform the complainant that in order to
levy properties of the defendant on the
second floor of the establishment, a
special order of the court is necessary
to force or break-open the closed door
in accordance with Section 14, Rule 39
of the Rules of Court. The respondent
Sheriff's duty was apparent but he did
not comply with it as he should have.
The attack on the complainant's moral
character was not necessary in this
case, as it would not justify the nonperformance of his duties.
When a writ is placed in the hands of a
sheriff, it is his duty, in the absence of
instructions,
to
proceed
with
reasonable celerity and promptness to
execute it according to its mandate. He
has no discretion whether to execute it
or not (Young vs. Momblan, A.M. No.
P89-367, 9 January 1992, Second
Division, Melencio-Herrera, J.).
Indeed, as clearly stated in the Manual for Clerks of
Court, a sheriff, to whom a valid writ or process is
delivered to be levied upon a property within his
jurisdiction, is liable to the person in whose favor the
process or writ runs if he fails to make a levy upon
property owned by the judgment debtor within his
jurisdiction and by reason thereof the judgment
creditor is injured. It is omission not dependent upon
intentional wrong or negligent omission to seize
property of judgment debtor. 7
In Eduarte v. Ramos 8 we said:
Respondent ought to have known the correct
procedure to be followed in order to ensure proper
administration of justice, especially in its concluding
stage. He failed observe that degree of dedication to
the duties and responsibilities required of him as a
sheriff. He is bound to discharge his duties with
prudence, caution and attention which careful men
usually exercise in the management of their affairs.
The sheriff, an officer of the court upon whom the
execution of a final judgment depends, must be
circumspect and proper in his behavior. Execution is
the fruit and end of the suit and is the life of the law.

In the case at bar, it is not that respondent did not


know what he should do, given the problem that he
was confronted with. In his answer 9 respondent tried to
excuse himself from what was his duty, claiming that
he did not force his way into the second floor where
the judgment debtors resided because a special court
order was needed to enable him to do this. Knowing
this to be the case, it was his duty to see to it that such
an order was secured from the court.
The fact is that he has shown himself to be less than
energetic and zealous in the performance of his duty.
His lackadaisical attitude betrays his inefficiency and
incompetence which in accordance with sec. 46(b)(8)
of the Civil Service Law is a ground for disciplinary
action. 10
WHEREFORE, a FINE of P2,000.00 is hereby imposed on
Deputy Sheriff Honesto G. Fabre, with a STERN
WARNING that a repetition of the same or of any act
calling for disciplinary action will be dealt with more
severely.
SO ORDERED.

G.R. No. L-60038 March 18, 1985


SUMMIT TRADING AND DEVELOPMENT
CORPORATION, petitioner,
vs.
JUDGE HERMINIO A. AVENDANO, Court of First
Instance of Laguna, Binan Branch I, SEGUNDO
PILIPINIA and EDGARDO MINDO, represented by
ERNESTO PILIPINIA, respondents.
AQUINO, J.:
This case is about the summons intended for
defendant
Summit
Trading
and
Development
Corporation. As background, it should be stated that
Segundo Pilipinia and Edgardo Mindo in 1973 acquired
under Land Authority Administrative Order No. 4 two
registered lots with a total area of 2 hectares located
at Barrio San Vicente, San Pedro, Laguna.
The titles of the lots contain the annotation that should
Pilipinia and Mindo sell the same, they have the right to
redeem the lots within five years from the date of the
sale (Exh. H and I).
Pilipinia and Mindo sold the lots for P16,000 and
P12,000 to Gavino Ortega on February 14 and April 19,
1977. They have retained possession of the lots which
are ricelands. They became tenants thereof.
At the instance of Ortega, the said annotation was
cancelled by Judge Avendao in his order of September
24, 1979 ostensibly because the lots would be
converted into commercial, industrial or residential
sites (Exh. M). That conversion has not taken place. At
present the two lots are still ricelands.
In a letter dated October 16, 1979, Ortega advised
Ernesto Pilipinia (attorney-in-fact of Segundo and
Mindo) that he and his father would have the right of
first refusal in case the lots were sold (Exh. E and O).
Ortega resold the two lots on November 14, 1979 for
P16,000 and P11,000 to Summit Trading through its
president, Virgilio P. Balaguer (Exh. N and N-1).
On August 10, 1981, or within the five-year period,
Pilipinia and Mindo filed a complaint against Ortega
and Summit Trading for the redemption or repurchase
of the two lots. They deposited P100,000 with the
Royal Savings and Loan Association for that purpose.
Ortega was duly summoned. He failed to answer the
complaint. He was declared in default. Summit Trading
was also declared in default. In his judgment by default
dated October 29, 1981, Judge Avendano (the same
judge who ordered the cancellation of the annotation)
gave plaintiffs Pilipinia and Mindo 15 days from notice

within which to redeem the lots for P16,000 and


P12,000 and ordered Summit Trading to execute the
corresponding deeds of sale and surrender the Torrens
titles. If it failed to do so, the clerk of court was
directed to perform that task. The register of deeds
was ordered to issue new titles to Pilipinia and Mindo.
The default judgment was rendered on the assumption
that Summit Trading was duly summoned through
Marina Saquilayan as secretary of Summit Trading. She
received the summons on August 28, 1981. A copy of
the judgment was also served on her on November 13,
1981 (Exh. B, pp. 31-32, 64, Record).
Actually, Saquilayan received the summons as
secretary of Balaguer, already mentioned as the
president of Summit Trading which purchased the lots
from Ortega. Bonifacio Tiongson was the corporate
secretary.
Nineteen days after Saquilayan received a copy of the
decision, Summit Trading filed a motion for
reconsideration on the ground that the trial court did
not acquire jurisdiction over it because summons was
not served upon it in accordance with Rule 14 of the
Rules of Court which provides:
SEC.
13.
Service
upon
private
domestic corporation or partnership.-If
the
defendant
is
a
corporation
organized under the laws of the
Philippines or a partnership duly
registered, service may be made on
the president, manager, secretary,
cashier, agent, or any of its directors.
It is true that Saquilayan is not among the persons
mentioned in section 13. However, she, being under
the control of Summit Trading, has not explained what
she has done with the summons and complaint. The
logical assumption is that she delivered it to her boss,
the president of Summit Trading. As already stated, she
received a copy of the decision and Summit Trading
became aware of it. Summit Trading's motion for
reconsideration was denied.
While Summit Trading is technically correct in
contending that there was no strict compliance with
section 13, we cannot close our eyes to the realities of
the situation. Under the facts of this case, Saquilayan,
being the secretary of the president (whose contact
with the outside world is normally through his
secretary), may be regarded as an "agent" within the
meaning of section 13.(See Villa Rey Transit, Inc. vs. Far
East Motor Corporation, L-31339, January 31, 1978, 81
SCRA 298; Filoil Marketing Corporation vs. Marine
Development Corporation of the Phil., L-29636,
September 30, 1982, 117 SCRA 86.)

Hence summons was validly served upon Summit


Trading. Its negligence in not answering the complaint
was inexcusable. In fact, up to this time, Summit
Trading has not bothered to state its defenses to the
action nor stated whether it has a meritorious case
warranting the setting aside of the default judgment.
The cases of Delta Motor Sales Corporation vs.
Mangosing, L-41667, April 30,1976, 70 SCRA 598 and
ATM Trucking Inc. vs. Buencamino, G.R. No. 62445,
August 31, 1983, 124 SCRA 434 are not in point
because the summons in the two cases was served
upon mere clerks or employees of the corporations
who cannot be relied upon to know what to do with the
legal papers served upon them.
In the instant case, service was made on the
president's secretary who could have easily notified the
president that an action was filed against the
corporation just as she had apprised him of the
judgment in this case.
The instant petition for certiorari, treated as an appeal
under Republic Act No. 5440, was filed out of time.
Considered as a special civil action under Rule 65 of
the Rules of Court, it is baseless because the trial court
had acquired jurisdiction over Summit Trading. As
already shown, summons was properly served on the
president's secretary.
We are not saying that service on such a secretary is
always proper. Generally, it is improper. The president
himself must be served personally with the summons if
it is desired to effect the service on that particular
officer. But, as already stated, under the facts of this
case, the president's secretary may be regarded as the
"agent" within the meaning of section 13 since service
upon her of the judgment itself came to the notice of
Summit Trading.
WHEREFORE, the petition is dismissed. The trial court's
judgment is affirmed. Its implementation is now in
order. The restraining order is dissolved. Costs against
the petitioner.
SO ORDERED.

G.R. Nos. 112438-39 December 12, 1995


CHEMPHIL EXPORT & IMPORT CORPORATION
(CEIC), petitioner,
vs.
THE HONORABLE COURT OF APPEALS JAIME Y.
GONZALES, as Assignee of the Bank of the
Philippine Islands (BPI), RIZAL COMMERCIAL
BANKING CORPORATION (RCBC), LAND BANK OF
THE PHILIPPINES (LBP), PHILIPPINE COMMERCIAL
& INTERNATIONAL BANK (PCIB) and THE
PHILIPPINE INVESTMENT SYSTEM ORGANIZATION
(PISO), respondents.
G.R. No. 113394 December 12, 1995
PHILIPPINE COMMERCIAL INDUSTRIAL BANK
(AND ITS ASSIGNEE JAIME Y.
GONZALES) petitioner,
vs.
HONORABLE COURT OR APPEALS and CHEMPHIL
EXPORT AND IMPORT CORPORATION
(CEIC),respondents.
KAPUNAN, J.:
Before us is a legal tug-of-war between the Chemphil
Export and Import Corporation (hereinafter referred to
as CEIC), on one side, and the PISO and Jaime Gonzales
as assignee of the Bank of the Philippine Islands (BPI),
Rizal Commercial Banking Corporation (RCBC), Land
Bank of the Philippines (LBP) and Philippine
Commercial International Bank (PCIB), on the other
(hereinafter referred to as the consortium), over
1,717,678 shares of stock (hereinafter referred to as
the "disputed shares") in the Chemical Industries of the
Philippines (Chemphil/CIP).
Our task is to determine who is the rightful owner of
the disputed shares.
Pursuant to our resolution dated 30 May 1994, the
instant case is a consolidation of two petitions for
review filed before us as follows:
In G.R. Nos. 112438-39, CEIC seeks the reversal of the
decision of the Court of Appeals (former Twelfth
Division) promulgated on 30 June 1993 and its
resolution of 29 October 1993, denying petitioner's
motion for reconsideration in the consolidated cases
entitled "Dynetics, Inc., et al. v. PISO, et al." (CA-G.R.
No. 20467) and "Dynetics, Inc., et al. v. PISO, et al.;
CEIC, Intervenor-Appellee" (CA-G.R. CV No. 26511).
The dispositive portion of the assailed decision reads,
thus:

WHEREFORE, this Court resolves in


these consolidated cases as follows:
1. The Orders of the Regional Trial
Court, dated March 25, 1988, and May
20, 1988, subject of CA-G.R. CV No.
10467, are SET ASIDE and judgment is
hereby rendered in favor of the
consortium
and
against
appellee
Dynetics, Inc., the amount of the
judgment, to be determined by
Regional Trial Court, taking into
account the value of assets that the
consortium
may
have
already
recovered and shall have recovered in
accordance with the other portions of
this decision.
2. The Orders of the Regional Trial
Court dated December 19, 1989 and
March 5, 1990 are hereby REVERSED
and SET ASIDE and judgment is hereby
rendered confirming the ownership of
the consortium over the Chemphil
shares of stock, subject of CA-G.R. CV
No. 26511, and the Order dated
September 4, 1989, is reinstated.
No pronouncement as to costs.
SO ORDERED.

In G.R. No. 113394, PCIB and its assignee, Jaime


Gonzales, ask for the annulment of the Court of
Appeals' decision (former Special Ninth Division)
promulgated on 26 March 1993 in "PCIB v. Hon. Job B.
Madayag & CEIC" (CA-G.R. SP NO. 20474) dismissing
the
petition
for certiorari,
prohibition
and mandamus filed by PCIB and of said court's
resolution dated 11 January 1994 denying their motion
for reconsideration of its decision. 2
The antecedent facts leading to the aforementioned
controversies are as follows:
On September 25, 1984, Dynetics, Inc. and Antonio M.
Garcia filed a complaint for declaratory relief and/or
injunction against the PISO, BPI, LBP, PCIB and RCBC or
the consortium with the Regional Trial Court of Makati,
Branch 45 (Civil Case No. 8527), seeking judicial
declaration, construction and interpretation of the
validity of the surety agreement that Dynetics and
Garcia had entered into with the consortium and to
perpetually enjoin the latter from claiming, collecting
and enforcing any purported obligations which
Dynetics and Garcia might have undertaken in said
agreement. 3

The consortium filed their respective answers with


counterclaims alleging that the surety agreement in
question was valid and binding and that Dynetics and
Garcia were liable under the terms of the said
agreement. It likewise applied for the issuance of a writ
of preliminary attachment against Dynetics and
Garcia. 4
Seven months later, or on 23 April 1985, Dynetics,
Antonio Garcia and Matrix Management & Trading
Corporation filed a complaint for declaratory relief
and/or injunction against the Security Bank & Trust Co.
(SBTC case) before the Regional Trial Court of Makati,
Branch 135 docketed as Civil Case No. 10398. 5
On 2 July 1985, the trial court granted SBTC's prayer
for the issuance of a writ of preliminary attachment
and on 9 July 1985, a notice of garnishment covering
Garcia's shares in CIP/Chemphil (including the disputed
shares) was served on Chemphil through its then
President. The notice of garnishment was duly
annotated in the stock and transfer books of Chemphil
on the same date. 6
On 6 September 1985, the writ of attachment in favor
of SBTC was lifted. However, the same was reinstated
on 30 October 1985. 7
In the meantime, on 12 July 1985, the Regional Trial
Court in Civil Case No. 8527 (the consortium case)
denied the application of Dynetics and Garcia for
preliminary injunction and instead granted the
consortium's prayer for a consolidated writ of
preliminary attachment. Hence, on 19 July 1985, after
the consortium had filed the required bond, a writ of
attachment was issued and various real and personal
properties of Dynetics and Garcia were garnished,
including the disputed shares. 8 This garnishment,
however, was not annotated in Chemphil's stock and
transfer book.
On 8 September 1987, PCIB filed a motion to dismiss
the complaint of Dynetics and Garcia for lack of
interest to prosecute and to submit its counterclaims
for decision, adopting the evidence it had adduced at
the hearing of its application for preliminary
attachment. 9
On 25 March 1988, the Regional Trial Court dismissed
the complaint of Dynetics and Garcia in Civil Case No.
8527, as well as the counterclaims of the consortium,
thus:

Resolving
defendant's,
Philippine
Commercial
International
Bank,
MOTION TO DISMISS WITH MOTION TO
SUBMIT
DEFENDANT
PCIBANK's
COUNTERCLAIM FOR DECISION, dated
September 7, 1987:
(1) The motion to dismiss is granted;
and the instant case is hereby ordered
dismissed pursuant to Sec. 3, Rule 17
of the Revised Rules of Court, plaintiff
having failed to comply with the order
dated July 16, 1987, and having not
taken further steps to prosecute the
case; and
(2) The motion to submit said
defendant's counterclaim for decision
is denied; there is no need; said
counterclaim is likewise dismissed
under the authority of Dalman vs. City
Court of Dipolog City, L-63194, January
21, 1985, wherein the Supreme Court
stated that if the civil case is
dismissed, so also is the counterclaim
filed therein. "A person cannot eat his
cake and have it at the same time" (p.
645, record, Vol. I). 10
The motions for reconsideration filed by the consortium
were, likewise, denied by the trial court in its order
dated 20 May 1988:
The Court could have stood pat on its
order dated 25 March 1988, in regard
to
which
the
defendants-banks
concerned
filed
motions
for
reconsideration. However, inasmuch as
plaintiffs commented on said motions
that: "3). In any event, so as not to
unduly foreclose on the rights of the
respective parties to refile and
prosecute their respective causes of
action,
plaintiffs
manifest
their
conformity to the modification of this
Honorable Court's order to indicate that
the dismissal of the complaint and the
counterclaims is without prejudice." (p.
2, plaintiffs' COMMENT etc. dated May
20, 1988). The Court is inclined to so
modify the said order.
WHEREFORE , the order issued on
March 25, 1988, is hereby modified in
the sense that the dismissal of the
complaint
as
well
as
of
the
counterclaims of defendants RCBC,
LBP, PCIB and BPI shall be considered

as without prejudice (p. 675, record,


Vol. I). 11
Unsatisfied with the aforementioned order, the
consortium appealed to the Court of Appeals, docketed
as CA-G.R. CV No. 20467.
On 17 January 1989 during the pendency of
consortium's appeal in CA-G.R. CV No. 20467, Antonio
Garcia and the consortium entered into a Compromise
Agreement which the Court of Appeals approved on 22
May 1989 and became the basis of its judgment by
compromise. Antonio Garcia was dropped as a party to
the appeal leaving the consortium to proceed solely
against Dynetics, Inc. 12 On 27 June 1989, entry of
judgment was made by the Clerk of Court. 13
Hereunder quoted are the salient portions of said
compromise agreement:
xxx xxx xxx
3. Defendants, in consideration of
avoiding an extended litigation, having
agreed to limit their claim against
plaintiff Antonio M. Garcia to a principal
sum of P145 Million immediately
demandable and to waive all other
claims to interest, penalties, attorney's
fees and other charges. The aforesaid
compromise amount of indebtedness of
P145 Million shall earn interest of
eighteen percent (18%) from the date
of this Compromise.
4. Plaintiff Antonio M. Garcia and herein
defendants have no further claims
against each other.
5. This Compromise shall be without
prejudice to such claims as the parties
herein may have against plaintiff
Dynetics, Inc.
6. Plaintiff Antonio M. Garcia shall have
two (2) months from date of this
Compromise within which to work for
the entry and participation of his other
creditor, Security Bank and Trust Co.,
into this Compromise. Upon the
expiration of this period, without
Security Bank and Trust Co. having
joined, this Compromise shall be
submitted to the Court for its
information and approval (pp. 27, 2831, rollo, CA-G.R. CV No. 10467). 14

It appears that on 15 July 1988, Antonio Garcia under a


Deed of Sale transferred to Ferro Chemicals, Inc. (FCI)
the disputed shares and other properties for
P79,207,331.28. It was agreed upon that part of the
purchase price shall be paid by FCI directly to SBTC for
whatever judgment credits that may be adjudged in
the latter's favor and against Antonio Garcia in the
aforementioned SBTC case. 15
On 6 March 1989, FCI, through its President Antonio M.
Garcia, issued a Bank of America Check No. 860114 in
favor of SBTC in the amount of P35,462,869.62. 16 SBTC
refused to accept the check claiming that the amount
was not sufficient to discharge the debt. The check was
thus consigned by Antonio Garcia and Dynetics with
the Regional Trial Court as payment of their judgment
debt in the SBTC case. 17
On 26 June 1989, FCI assigned its 4,119,614 shares in
Chemphil, which included the disputed shares, to
petitioner CEIC. The shares were registered and
recorded in the corporate books of Chemphil in CEIC's
name and the corresponding stock certificates were
issued to it. 18
Meanwhile, Antonio Garcia, in the consortium case,
failed to comply with the terms of the compromise
agreement he entered into with the consortium on 17
January 1989. As a result, on 18 July 1989, the
consortium filed a motion for execution which was
granted by the trial court on 11 August 1989. Among
Garcia's properties that were levied upon on execution
were his 1,717,678 shares in Chemphil (the disputed
shares) previously garnished on 19 July 1985. 19
On 22 August 1989, the consortium acquired the
disputed shares of stock at the public auction sale
conducted by the sheriff for P85,000,000.00. 20 On
same day, a Certificate of Sale covering the disputed
shares was issued to it.
On 30 August 1989, 21 the consortium filed a motion
(dated 29 August 1989) to order the corporate
secretary of Chemphil to enter in its stock and transfer
books the sheriff's certificate of sale dated 22 August
1989, and to issue new certificates of stock in the
name of the banks concerned. The trial court granted
said motion in its order dated 4 September 1989, thus:
For being legally proper, defendant's
MOTION TO ORDER THE CORPORATE
SECRETARY OF CHEMICAL INDUSTRIES
OF THE PHILS., INC. (CHEMPIL) TO
ENTER IN THE STOCK AND TRANSFER
BOOKS OF CHEMPHIL THE SHERIFF'S
CERTIFICATE OF SALE DATED AUGUST
22, 1989 AND TO ISSUE NEW
CERTIFICATES OF STOCK IN THE NAME

OF THE DEFENDANT BANKS, dated


August 29, 1989, is hereby granted.
WHEREFORE, the corporate secretary
of the aforesaid corporation, or
whoever is acting for and in his behalf,
is hereby ordered to (1) record and/or
register the Certificate of Sale dated
August 22, 1989 issued by Deputy
Sheriff Cristobal S. Jabson of this Court;
(2) to cancel the certificates of stock of
plaintiff Antonio M. Garcia and all those
which may have subsequently been
issued in replacement and/or in
substitution thereof; and (3) to issue in
lieu of the said shares new shares of
stock in the name of the defendant
Banks, namely, PCIB, BPI, RCBC, LBP
and PISO bank in such proportion as
their respective claims would appear in
this suit (p. 82, record, Vol. II). 22
On 26 September 1989, CEIC filed a motion to
intervene (dated 25 September 1989) in the
consortium
case
seeking
the
recall
of
the
abovementioned order on grounds that it is the rightful
owner of the disputed shares. 23 It further alleged that
the disputed shares were previously owned by Antonio
M. Garcia but subsequently sold by him on 15 July 1988
to Ferro Chemicals, Inc. (FCI) which in turn assigned the
same to CEIC in an agreement dated 26 June 1989.
On 27 September 1989, the trial court granted CEIC's
motion allowing it to intervene, but limited only to the
incidents covered by the order dated 4 September
1989. In the same order, the trial court directed
Chemphil's corporate secretary to temporarily refrain
from
implementing
the
4
September
1989
order. 24
On 2 October 1989, the consortium filed their
opposition to CEIC's motion for intervention alleging
that their attachment lien over the disputed shares of
stocks must prevail over the private sale in favor of the
CEIC considering that said shares of stock were
garnished in the consortium's favor as early as 19 July
1985. 25
On 4 October 1989, the consortium filed their
opposition to CEIC's motion to set aside the 4
September 1989 order and moved to lift the 27
September 1989 order. 26
On 12 October 1989, the consortium filed a
manifestation and motion to lift the 27 September
1989 order, to reinstate the 4 September 1989 order
and to direct CEIC to surrender the disputed stock
certificates of Chemphil in its possession within twenty-

four (24) hours, failing in which the President,


Corporate Secretary and stock and transfer agent of
Chemphil be directed to register the names of the
banks making up the consortium as owners of said
shares, sign the new certificates of stocks evidencing
their ownership over said shares and to immediately
deliver the stock certificates to them. 27
Resolving the foregoing motions, the trial court
rendered an order dated 19 December 1989, the
dispositive portion of which reads as follows:
WHEREFORE, premises considered, the
Urgent Motion dated September 25,
1989 filed by CEIC is hereby GRANTED.
Accordingly, the Order of September 4,
1989, is hereby SET ASIDE, and any
and all acts of the Corporate Secretary
of CHEMPHIL and/or whoever is acting
for and in his behalf, as may have
already been done, carried out or
implemented pursuant to the Order of
September 4, 1989, are hereby
nullified.
PERFORCE, the CONSORTIUM'S Motions
dated October 3, 1989 and October 11,
1989, are both hereby denied for lack
of merit.
The Cease and Desist Order dated
September 27, 1989, is hereby
AFFIRMED and made PERMANENT.
SO ORDERED. 28
In so ruling, the trial court ratiocinated in this wise:
xxx xxx xxx
After
careful
and
assiduous
consideration
of
the
facts
and
applicable law and jurisprudence, the
Court holds that CEIC's Urgent Motion
to Set Aside the Order of September 4,
1989 is impressed with merit. The
CONSORTIUM has admitted that the
writ of attachment/garnishment issued
on July 19, 1985 on the shares of stock
belonging to plaintiff Antonio M. Garcia
was not annotated and registered in
the stock and transfer books of
CHEMPHIL. On the other hand, the prior
attachment issued in favor of SBTC on
July 2, 1985 by Branch 135 of this
Court in Civil Case No. 10398, against
the same CHEMPHIL shares of Antonio
M. Garcia, was duly registered and

annotated in the stock and transfer


books of CHEMPHIL. The matter of nonrecording
of
the
Consortium's
attachment in Chemphil's stock and
transfer book on the shares of Antonio
M.
Garcia
assumes
significance
considering CEIC's position that FCI and
later CEIC acquired the CHEMPHIL
shares of Antonio M. Garcia without
knowledge of the attachment of the
CONSORTIUM. This is also important as
CEIC
claims
that it has been
subrogated to the rights of SBTC since
CEIC's predecessor-in-interest, the FCI,
had paid SBTC the amount of
P35,462,869.12 pursuant to the Deed
of Sale and Purchase of Shares of Stock
executed by Antonio M. Garcia on July
15, 1988. By reason of such payment,
sale with the knowledge and consent of
Antonio M. Garcia, FCI and CEIC, as
party-in-interest to FCI, are subrogated
by operation of law to the rights of
SBTC. The Court is not unaware of the
citation in CEIC's reply that "as
between two (2) attaching creditors,
the one whose claims was first
registered on the books of the
corporation enjoy priority." (Samahang
Magsasaka, Inc. vs. Chua Gan, 96 Phil.
974.)
The Court holds that a levy on the
shares of corporate stock to be valid
and binding on third persons, the
notice of attachment or garnishment
must be registered and annotated in
the stock and transfer books of the
corporation, more so when the shares
of the corporation are listed and traded
in the stock exchange, as in this case.
As
a
matter
of
fact,
in
the
CONSORTIUM's motion of August 30,
1989, they specifically move to "order
the Corporate Secretary of CHEMPHIL
to enter in the stock and transfer books
of CHEMPHIL the Sheriff's Certificate of
Sale dated August 22, 1989." This goes
to show that, contrary to the
arguments of the CONSORTIUM, in
order that attachment, garnishment
and/or encumbrances affecting rights
and ownership on shares of a
corporation to be valid and binding, the
same has to be recorded in the stock
and transfer books.
Since neither CEIC nor FCI had notice of
the CONSORTIUM's attachment of July

19, 1985, CEIC's shares of stock in


CHEMPHIL,
legally
acquired
from
Antonio M. Garcia, cannot be levied
upon in execution to satisfy his
judgment debts. At the time of the
Sheriff's levy on execution, Antonio M.
Garcia has no more in CHEMPHIL which
could be levied upon. 29
xxx xxx xxx
On 23 January 1990, the consortium and PCIB filed
separate motions for reconsideration of the aforestated
order
which
were
opposed
by
petitioner
CEIC. 30
On 5 March 1990, the trial court denied the motions for
reconsideration. 31
On 16 March 1990, the consortium appealed to the
Court of Appeals (CA-G.R. No. 26511). In its Resolution
dated 9 August 1990, the Court of Appeals
consolidated CA-G.R. No. 26511 with CA-G.R. No.
20467. 32
The issues raised in the two cases, as formulated by
the Court of Appeals, are as follows:
I
WHETHER OR NOT, UNDER THE
PECULIAR CIRCUMSTANCES OF THE
CASE, THE TRIAL COURT ERRED IN
DISMISSING THE COUNTERCLAIMS OF
THE CONSORTIUM IN CIVIL CASE NO.
8527;
II
WHETHER OR NOT THE DISMISSAL OF
CIVIL CASE NO. 8527 RESULTED IN THE
DISCHARGE
OF
THE
WRIT
OF
ATTACHMENT ISSUED THEREIN EVEN
AS THE CONSORTIUM APPEALED THE
ORDER DISMISSING CIVIL CASE NO.
8527;
III
WHETHER OR NOT THE JUDGMENT
BASED ON COMPROMISE RENDERED BY
THIS COURT ON MAY 22, 1989 HAD THE
EFFECT
OF
DISCHARGING
THE
ATTACHMENTS ISSUED IN CIVIL CASE
NO. 8527;
IV

WHETHER OR NOT THE ATTACHMENT


OF SHARES OF STOCK, IN ORDER TO
BIND THIRD PERSONS, MUST BE
RECORDED IN THE STOCK AND
TRANSFER
BOOK
OF
THE
CORPORATION; AND
V
WHETHER OR NOT FERRO CHEMICALS,
INC. (FCI), AND ITS SUCCESSOR-ININTEREST, CEIC, WERE SUBROGATED
TO THE RIGHTS OF SECURITY BANK &
TRUST COMPANY (SBTC) IN A SEPARATE
CIVIL ACTION. (This issue appears to be
material as SBTC is alleged to have
obtained an earlier attachment over
the same Chemphil shares that the
consortium seeks to recover in the
case at bar). 33
On 6 April 1990, the PCIB separately filed with the
Court of Appeals a petition for certiorari, prohibition
andmandamus with a prayer for the issuance of a writ
of preliminary injunction (CA-G.R. No. SP-20474),
likewise, assailing the very same orders dated 19
December 1989 and 5 March 1990, subject of CA-G.R.
No. 26511. 34
On 30 June 1993, the Court of Appeals (Twelfth
Division) in CA-G.R. No. 26511 and CA-G.R. No. 20467
rendered a decision reversing the orders of the trial
court and confirming the ownership of the consortium
over the disputed shares. CEIC's motion for
reconsideration was denied on 29 October 1993. 35
In ruling for the consortium, the Court of Appeals made
the following ratiocination: 36
On the first issue, it ruled that the
evidence offered by the consortium in
support of its counterclaims, coupled
with the failure of Dynetics and Garcia
to prosecute their case, was sufficient
basis for the RTC to pass upon and
determine
the
consortium's
counterclaims.
The Court of Appeals found no
application for the ruling in Dalman
v. City Court of Dipolog, 134 SCRA 243
(1985) that "a person cannot eat his
cake and have it at the same time. If
the civil case is dismissed, so also is
the counterclaim filed therein" because
the factual background of the present
action is different. In the instant case,
both Dynetics and Garcia and the

consortium presented testimonial and


documentary evidence which clearly
should have supported a judgment on
the merits in favor of the consortium.
As the consortium correctly argued, the
net atrocious effect of the Regional Trial
Court's ruling is that it allows a
situation where a party litigant is
forced to plead and prove compulsory
counterclaims only to be denied those
counterclaims on account of the
adverse party's failure to prosecute his
case. Verily, the consortium had no
alternative
but
to
present
its
counterclaims in Civil Case No. 8527
since its counterclaims are compulsory
in nature.
On the second issue, the Court of
Appeals opined that unless a writ of
attachment is lifted by a special order
specifically providing for the discharge
thereof, or unless a case has been
finally dismissed against the party in
whose favor the attachment has been
issued, the attachment lien subsists.
When the consortium, therefore, took
an appeal from the Regional Trial
Court's orders of March 25, 1988 and
May 20, 1988, such appeal had the
effect of preserving the consortium's
attachment liens secured at the
inception of Civil Case No. 8527,
invoking the rule in Olib v. Pastoral,188
SCRA 692 (1988) that where the main
action is appealed, the attachment
issued in the said main case is also
considered appealed.
Anent the third issue, the compromise
agreement between the consortium
and Garcia dated 17 January 1989 did
not result in the abandonment of its
attachment lien over his properties.
Said agreement was approved by the
Court of Appeals in a Resolution dated
22 May 1989. The judgment based on
the compromise agreement had the
effect
of
preserving
the
said
attachment lien as security for the
satisfaction of said judgment (citing BF
Homes, Inc. v. CA, 190 SCRA 262,
[1990]).
As to the fourth issue, the Court of
Appeals agreed with the consortium's
position that the attachment of shares
of stock in a corporation need not be
recorded in the corporation's stock and

transfer book in order to bind third


persons.
Section 7(d), Rule 57 of the Rules of
Court was complied with by the
consortium (through the Sheriff of the
trial court) when the notice of
garnishment over the Chemphil shares
of Garcia was served on the president
of Chemphil on July 19, 1985. Indeed,
to bind third persons, no law requires
that an attachment of shares of stock
be recorded in the stock and transfer
book of a corporation. The statement
attributed by the Regional Trial Court to
the Supreme Court in Samahang
Magsasaka, Inc.vs. Gonzalo Chua Guan,
G.R. No. L-7252, February 25, 1955
(unreported), to the effect that "as
between two attaching creditors, the
one whose claim was registered first on
the books of the corporation enjoys
priority," is an obiter dictum that does
not modify the procedure laid down in
Section 7(d), Rule 57 of the Rules of
Court.
Therefore, ruled the Court of Appeals,
the attachment made over the
Chemphil shares in the name of Garcia
on July 19, 1985 was made in
accordance with law and the lien
created thereby remained valid and
subsisting at the time Garcia sold those
shares to FCI (predecessor-in-interest
of appellee CEIC) in 1988.
Anent the last issue, the Court of
Appeals rejected CEIC's subrogation
theory based on Art. 1302 (2) of the
New Civil Code stating that the
obligation to SBTC was paid by Garcia
himself and not by a third party (FCI).
The Court of Appeals further opined
that while the check used to pay SBTC
was a FCI corporate check, it was funds
of Garcia in FCI that was used to pay
off SBTC. That the funds used to pay off
SBTC were funds of Garcia has not
been refuted by FCI or CEIC. It is clear,
therefore, that there was an attempt on
the part of Garcia to use FCI and CEIC
as convenient vehicles to deny the
consortium its right to make itself
whole through an execution sale of the
Chemphil shares attached by the
consortium at the inception of Civil
Case No. 8527. The consortium,

therefore, is entitled to the issuance of


the Chemphil shares of stock in its
favor. The Regional Trial Court's order
of
September
4,
1989,
should,
therefore, be reinstated in toto.
Accordingly, the question of whether or
not the attachment lien in favor of
SBTC in the SBTC case is superior to
the attachment lien in favor of the
consortium in Civil Case No. 8527
becomes immaterial with respect to
the right of intervenor-appellee CEIC.
The said issue would have been
relevant had CEIC established its
subrogation to the rights of SBTC.
On 26 March 1993, the Court of Appeals (Special Ninth
Division) in CA-G.R. No. SP 20474 rendered a decision
denying due course to and dismissing PCIB's petition
for certiorari on grounds that PCIB violated the rule
against forum-shopping and that no grave abuse of
discretion was committed by respondent Regional Trial
Court in issuing its assailed orders dated 19 December
1989 and 5 March 1990. PCIB's motion for
reconsideration was denied on 11 January 1994. 37
On 7 July 1993, the consortium, with the exception of
PISO, assigned without recourse all its rights and
interests in the disputed shares to Jaime Gonzales. 38
On 3 January 1994, CEIC filed the instant petition for
review docketed as G.R. Nos. 112438-39 and assigned
the following errors:
I.
THE RESPONDENT COURT OF APPEALS
GRAVELY ERRED IN SETTING ASIDE AND
REVERSING THE ORDERS OF THE
REGIONAL
TRIAL
COURT
DATED
DECEMBER 5, 1989 AND MARCH 5,
1990 AND IN NOT CONFIRMING
PETITIONER'S OWNERSHIP OVER THE
DISPUTED CHEMPHIL SHARES AGAINST
THE FRIVOLOUS AND UNFOUNDED
CLAIMS OF THE CONSORTIUM.
II.
THE RESPONDENT COURT OF APPEALS
GRAVELY ERRED:
(1) In not holding that
the
Consortium's
attachment over the
disputed
Chemphil
shares did not vest any

priority right in its favor


and cannot bind third
parties
since
admittedly
its
attachment on 19 July
1985 was not recorded
in
the
stock
and
transfer
books
of
Chemphil,
and
subordinate
to
the
attachment of SBTC
which SBTC registered
and annotated in the
stock
and
transfer
books of Chemphil on 2
July 1985, and that the
Consortium's
attachment failed to
comply with Sec. 7(d),
Rule 57 of the Rules as
evidenced
by
the
notice of garnishment
of the deputy sheriff of
the trial court dated 19
July 1985 (annex "D")
which
the
sheriff
served on a certain
Thelly Ruiz who was
neither President nor
managing
agent
of
Chemphil;
(2) In not applying the
case law enunciated by
this
Honorable
Supreme
Court
inSamahang
Magsasaka,
Inc. vs. Gonzalo Chua
Guan, 96 Phil. 974 that
as
between
two
attaching creditors, the
one whose claim was
registered first in the
books
of
the
corporation
enjoys
priority,
and
which
respondent
Court
erroneously
characterized
as
mere obiter dictum;
(3) In not holding that
the dismissal of the
appeal
of
the
Consortium from the
order of the trial court
dismissing
its
counterclaim
against

Antonio M. Garcia and


the finality of the
compromise agreement
which
ended
the
litigation between the
Consortium
and
Antonio M. Garcia in
the Dynetics
case had ipso jure disc
harged
the
Consortium's purported
attachment over the
disputed shares.
III.
THE RESPONDENT COURT OF APPEALS
GRAVELY ERRED IN NOT HOLDING THAT
CEIC HAD BEEN SUBROGATED TO THE
RIGHTS
OF
SBTC
SINCE
CEIC'S
PREDECESSOR IN INTEREST HAD PAID
SBTC PURSUANT TO THE DEED OF
SALE AND PURCHASE OF STOCK
EXECUTED BY ANTONIO M. GARCIA ON
JULY 15, 1988, AND THAT BY REASON
OF
SUCH
PAYMENT,
WITH
THE
CONSENT
AND
KNOWLEDGE
OF
ANTONIO M. GARCIA, FCI AND CEIC, AS
PARTY IN INTEREST TO FCI, WERE
SUBROGATED BY OPERATION OF LAW
TO THE RIGHTS OF SBTC.
IV.
THE RESPONDENT COURT OF APPEALS
GRAVELY
ERRED
AND
MADE
UNWARRANTED
INFERENCES
AND
CONCLUSIONS,
WITHOUT
ANY
SUPPORTING EVIDENCE, THAT THERE
WAS AN ATTEMPT ON THE PART OF
ANTONIO M. GARCIA TO USE FCI AND
CEIC AS CONVENIENT VEHICLES TO
DENY THE CONSORTIUM ITS RIGHTS TO
MAKE ITSELF WHOLE THROUGH AN
EXECUTION OF THE CHEMPHIL SHARES
PURPORTEDLY ATTACHED BY THE
CONSORTIUM ON 19 JULY 1985. 39
On 2 March 1994, PCIB filed its own petition for review
docketed as G.R. No. 113394 wherein it raised the
following issues:
I. RESPONDENT COURT OF APPEALS
COMMITTED
SERIOUS
ERROR
IN
RENDERING
THE
DECISION
AND
RESOLUTION IN QUESTION (ANNEXES A
AND B) IN DEFIANCE OF LAW AND
JURISPRUDENCE
BY
FINDING

RESPONDENT CEIC AS HAVING BEEN


SUBROGATED TO THE RIGHTS OF SBTC
BY THE PAYMENT BY FCI OF GARCIA'S
DEBTS TO THE LATTER DESPITE THE
FACT THAT
A. FCI PAID THE SBTC
DEBT BY VIRTUE OF A
CONTRACT
BETWEEN
FCI AND GARCIA, THUS,
LEGAL SUBROGATION
DOES NOT ARISE;
B. THE SBTC DEBT WAS
PAID
BY
GARCIA
HIMSELF AND NOT BY
FCI,
HENCE,
SUBROGATION
BY
PAYMENT COULD NOT
HAVE OCCURRED;
C.
FCI
DID
NOT
ACQUIRE ANY RIGHT
OVER THE DISPUTED
SHARES AS SBTC HAD
NOT YET LEVIED UPON
NOR BOUGHT THOSE
SHARES
ON
EXECUTION.
ACCORDINGLY,
WHAT
FCI ACQUIRED FROM
SBTC WAS SIMPLY A
JUDGMENT CREDIT AND
AN ATTACHMENT LIEN
TO
SECURE
ITS
SATISFACTION.
II. RESPONDENT COURT OF APPEALS
COMMITTED
SERIOUS
ERROR
IN
SUSTAINING THE ORDERS OF THE
TRIAL COURT DATED DECEMBER 19,
1989 AND MARCH 5, 1990 WHICH
DENIED
PETITIONER'S
OWNERSHIP
OVER
THE
DISPUTED
SHARES
NOTWITHSTANDING PROVISIONS OF
LAW AND EXTANT JURISPRUDENCE ON
THE MATTER THAT PETITIONER AND
THE CONSORTIUM HAVE PREFERRED
SENIOR RIGHTS THEREOVER.
III. RESPONDENT COURT OF APPEAL
COMMITTED
SERIOUS
ERROR
IN
CONCLUDING THAT THE DISMISSAL OF
THE
COMPLAINT
AND
THE
COUNTERCLAIM IN CIVIL CASE NO.
8527
ALSO
RESULTED
IN
THE
DISCHARGE
OF
THE
WRIT
OF
ATTACHMENT DESPITE THE RULINGS OF
THIS HONORABLE COURT IN BF HOMES

VS. COURT OF APPEALS, G.R. NOS.


76879 AND 77143, OCTOBER 3, 1990,
190
SCRA
262,
AND
IN OLIB
VS. PASTORAL,
G.R.
NO.
81120,
AUGUST 20, 1990, 188 SCRA 692 TO
THE CONTRARY.
IV. RESPONDENT COURT OF APPEALS
EXCEEDED ITS JURISDICTION IN RULING
ON THE MERITS OF THE MAIN CASE
NOTWITHSTANDING
THAT
THOSE
MATTERS WERE NOT ON APPEAL
BEFORE IT.
V. RESPONDENT COURT OF APPEALS
COMMITTED
SERIOUS
ERROR
IN
HOLDING THAT PETITIONER IS GUILTY
OF FORUM SHOPPING DESPITE THE
FACT THAT SC CIRCULAR NO. 28-91
WAS NOT YET IN FORCE AND EFFECT AT
THE TIME THE PETITION WAS FILED
BEFORE
RESPONDENT
APPELLATE
COURT, AND THAT ITS COUNSEL AT
THAT TIME HAD ADEQUATE BASIS TO
BELIEVE THAT CERTIORARI AND NOT
AN APPEAL OF THE TRIAL COURT'S
ORDERS
WAS
THE
APPROPRIATE
RELIEF. 40
As previously stated, the issue boils down to who is
legally entitled to the disputed shares of Chemphil. We
shall resolve this controversy by examining the validity
of the claims of each party and, thus, determine whose
claim has priority.
CEIC's claim
CEIC traces its claim over the disputed shares to the
attachment lien obtained by SBTC on 2 July 1985
against Antonio Garcia in Civil Case No. 10398. It avers
that when FCI, CEIC's predecessor-in-interest, paid
SBTC the due obligations of Garcia to the said bank
pursuant to the Deed of Absolute Sale and Purchase of
Shares of Stock, 41 FCI, and later CEIC, was subrogated
to the rights of SBTC, particularly to the latter's
aforementioned attachment lien over the disputed
shares.
CEIC argues that SBTC's attachment lien is superior as
it was obtained on 2 July 1985, ahead of the
consortium's purported attachment on 19 July 1985.
More importantly, said CEIC lien was duly recorded in
the stock and transfer books of Chemphil.
CEIC's subrogation theory is unavailing.
By definition, subrogation is "the transfer of all the
rights of the creditor to a third person, who substitutes

him in all his rights. It may either be legal or


conventional. Legal subrogation is that which takes
place without agreement but by operation of law
because of certain acts; this is the subrogation referred
to in article 1302. Conventional subrogation is that
which takes place by agreement of the parties . . ." 42
CEIC's theory is premised on Art. 1302 (2) of the Civil
Code which states:
Art. 1302. It is presumed that there is
legal subrogation:
(1) When a creditor pays another
creditor who is preferred, even without
the debtor's knowledge;
(2) When a third person, not interested
in the obligation, pays with the express
or tacit approval of the debtor;
(3) When, even without the knowledge
of the debtor, a person interested in
the fulfillment of the obligation pays,
without prejudice to the effects of
confusion as to the latter's share.
(Emphasis ours.)
Despite, however, its multitudinous arguments, CEIC
presents an erroneous interpretation of the concept of
subrogation. An analysis of the situations involved
would reveal the clear inapplicability of Art. 1302 (2).
Antonio Garcia sold the disputed shares to FCI for a
consideration of P79,207,331.28. FCI, however, did not
pay the entire amount to Garcia as it was obligated to
deliver part of the purchase price directly to SBTC
pursuant to the following stipulation in the Deed of
Sale:
Manner of Payment
Payment of the Purchase Price shall be
made in accordance with the following
order of preferenceprovided that in no
instance shall the total amount paid by
the Buyer exceed the Purchase Price:
a. Buyer shall pay directly to the
Security Bank and Trust Co. the
amount determined by the Supreme
Court as due and owing in favor of the
said bank by the Seller.
The foregoing amount shall be paid
within fifteen (15) days from the date
the decision of the Supreme Court in
the case entitled "Antonio M. Garcia, et

al. vs. Court of Appeals, et al." G.R.


Nos. 82282-83 becomes final and
executory. 43 (Emphasis ours.)
Hence, when FCI issued the BA check to SBTC in the
amount
of
P35,462,869.62
to
pay
Garcia's
indebtedness to the said bank, it was in effect paying
with Garcia's money, no longer with its own, because
said amount was part of the purchase price which
FCI owed Garcia in payment for the sale of the disputed
shares by the latter to the former. The money "paid" by
FCI to SBTC, thus properly belonged to Garcia. It is as if
Garcia himself paid his own debt to SBTC but through a
third party FCI.
It is, therefore, of no consequence that what was used
to pay SBTC was a corporate check of FCI. As we have
earlier stated, said check no longer represented FCI
funds but Garcia's money, being as it was part of FCI's
payment for the acquisition of the disputed shares. The
FCI check should not be taken at face value, the
attendant circumstances must also be considered.
The aforequoted contractual stipulation in the Deed of
Sale dated 15 July 1988 between Antonio Garcia and
FCI is nothing more but an arrangement for the sake of
convenience. Payment was to be effected in the
aforesaid manner so as to prevent money from
changing hands needlessly. Besides, the very purpose
of Garcia in selling the disputed shares and his other
properties was to "settle certain civil suits filed against
him." 44
Since the money used to discharge Garcia's debt
rightfully belonged to him, FCI cannot be considered a
third party payor under Art. 1302 (2). It was but a
conduit, or as aptly categorized by respondents,
merely an agent as defined in Art. 1868 of the Civil
Code:
Art. 1868. By the contract of agency a
person binds himself to render some
service or to do something in
representation or on behalf of another,
with the consent or authority of the
latter.
FCI was merely fulfilling its obligation under the
aforementioned Deed of Sale.
Additionally, FCI is not a disinterested party as required
by Art. 1302 (2) since the benefits of the
extinguishment of the obligation would redound to
none other but itself. 45 Payment of the judgment debt
to SBTC resulted in the discharge of the attachment
lien on the disputed shares purchased by FCI. The
latter would then have a free and "clean" title to said
shares.

In sum, CEIC, for its failure to fulfill the requirements of


Art. 1302 (2), was not subrogated to the rights of SBTC
against Antonio Garcia and did not acquire SBTC's
attachment lien over the disputed shares which, in
turn, had already been lifted or discharged upon
satisfaction by Garcia, through FCI, of his debt to the
said bank. 46
The rule laid down in the case of Samahang
Magsasaka, Inc. v. Chua Guan, 47 that as between two
attaching creditors the one whose claim was registered
ahead on the books of the corporation enjoys priority,
clearly has no application in the case at bench. As we
have amply discussed, since CEIC was not subrogated
to SBTC's right as attaching creditor, which right in
turn, had already terminated after Garcia paid his debt
to SBTC, it cannot, therefore, be categorized as an
attaching creditor in the present controversy. CEIC
cannot resurrect and claim a right which no longer
exists. The issue in the instant case, then, is priority
between an attaching creditor (the consortium) and a
purchaser (FCI/CEIC) of the disputed shares of stock
and not between two attaching creditors the subject
matter of the aforestated Samahang Magsasaka case.
CEIC,
likewise,
argues
that
the
consortium's
attachment lien over the disputed Chemphil shares is
null and void and not binding on third parties due to
the latter's failure to register said lien in the stock and
transfer books of Chemphil as mandated by the rule
laid down by the Samahang Magsasaka v. Chua
Guan. 48
The attachment lien acquired by the consortium is
valid and effective. Both the Revised Rules of Court and
the Corporation Code do not require annotation in the
corporation's stock and transfer books for the
attachment of shares of stock to be valid and binding
on the corporation and third party.
Section 74 of the Corporation Code which enumerates
the instances where registration in the stock and
transfer books of a corporation provides:
Sec. 74. Books to be kept; stock
transfer agent.
xxx xxx xxx
Stock corporations must also keep a
book to be known as the stock and
transfer book, in which must be kept a
record of all stocks in the names of the
stockholders alphabetically arranged;
the installments paid and unpaid on all
stock for which subscription has been
made, and the date of payment of any
settlement; a statement of every

alienation, sale or transfer of stock


made, the date thereof, and by and to
whom made; and such other entries as
the by-laws may prescribe. The stock
and transfer book shall be kept in the
principal office of the corporation or in
the office of its stock transfer agent
and shall be open for inspection by any
director
or
stockholder
of
the
corporation at reasonable hours on
business days. (Emphasis ours.)
xxx xxx xxx
Section 63 of the same Code states:
Sec. 63. Certificate of stock and
transfer of shares. The capital stock
of stock corporations shall be divided
into shares for which certificates signed
by the president or vice-president,
countersigned by the secretary or
assistant secretary, and sealed with
the seal of the corporation shall be
issued in accordance with the bylaws. Shares of stock so issued are
personal property and may be
transferred
by
delivery
of
the
certificate or certificates indorsed by
the owner or his attorney-in-fact or
other person legally authorized to
make
the
transfer. No
transfer,
however, shall be valid, except as
between the parties, until the transfer
is recorded in the books of the
corporation so as to show the names of
the parties to the transaction, the date
of the transfer, the number of the
certificate or certificates and the
number of shares transferred.
No shares of stock against which the
corporation holds any unpaid claim
shall be transferable in the books of
the corporation. (Emphasis ours.)
Are attachments of shares of stock included in the term
"transfer" as provided in Sec. 63 of the Corporation
Code? We rule in the negative. As succinctly declared
in the case of Monserrat v. Ceron, 49 "chattel mortgage
over shares of stock need not be registered in the
corporation's stock and transfer book inasmuch as
chattel mortgage over shares of stock does not involve
a "transfer of shares," and that only absolute transfers
of shares of stock are required to be recorded in the
corporation's stock and transfer book in order to have
"force and effect as against third persons."

xxx xxx xxx


The word "transferencia" (transfer) is
defined by the "Diccionario de la
Academia de la Lengua Castellana" as
"accion y efecto de transfeir" (the act
and effect of transferring); and the
verb "transferir", as "ceder or renunciar
en otro el derecho o dominio que se
tiene sobre una cosa, haciendole dueno
de ella" (to assign or waive the right in,
or absolute ownership of, a thing in
favor of another, making him the
owner thereof).
In the Law Dictionary of "Words and
Phrases", third series, volume 7, p.
5867, the word "transfer" is defined as
follows:
"Transfer" means any
act by which property
of one person is vested
in
another,
and
"transfer of shares", as
used in Uniform Stock
Transfer Act (Comp. St.
Supp. 690), implies any
means whereby one
may be divested of and
another
acquire
ownership of stock.
(Wallach vs. Stein [N.J.],
136 A., 209, 210.)
xxx xxx xxx
In the case of Noble vs. Ft. Smith
Wholesale Grocery Co. (127 Pac., 14,
17; 34 Okl., 662; 46 L.R.A. [N.S.], 455),
cited in Words and Phrases, second
series, vol. 4, p. 978, the following
appears:
A "transfer" is the act
by which the owner of
a thing delivers it to
another with the intent
of passing the rights
which he has in it to
the latter, and a chattel
mortgage is not within
the meaning of such
term.
xxx xxx xxx. 50

Although the Monserrat case refers to a chattel


mortgage over shares of stock, the same may be
applied to the attachment of the disputed shares of
stock in the present controversy since an attachment
does not constitute an absolute conveyance of
property but is primarily used as a means "to seize the
debtor's property in order to secure the debt or claim
of the creditor in the event that a judgment is
rendered." 51
Known commentators
expound, thus:

on

the

Corporation

Code

xxx xxx xxx


Shares of stock being personal
property, may be the subject matter of
pledge
and
chattel
mortgage.
Such collateral transfers are however
not covered by the registration
requirement of Section 63, since our
Supreme Court has held that such
provision applies only to absolute
transfers thus, the registration in the
corporate books of pledges and chattel
mortgages of shares cannot have any
legal effect. 52 (Emphasis ours.)
xxx xxx xxx
The requirement that the transfer shall
be recorded in the books of the
corporation to be valid as against third
persons has reference only to absolute
transfers or absolute conveyance of the
ownership or title to a share.
Consequently, the entry or notation on
the books of the corporation of pledges
and chattel mortgages on shares is not
necessary to their validity (although it
is advisable to do so) since they do not
involve
absolute
alienation
of
ownership of stock (Monserrat vs.
Ceron, 58 Phil. 469 [1933]; Chua Guan
vs. Samahang Magsasaka, Inc., 62 Phil.
472 [1935].) To affect third persons, it
is enough that the date and description
of the shares pledged appear in a
public instrument. (Art. 2096, Civil
Code.) With respect to a chattel
mortgage constituted on shares of
stock, what is necessary is its
registration in the Chattel Mortgage
Registry. (Act No. 1508 and Art. 2140,
Civil Code.) 53

CEIC's reliance on the Samahang Magsasaka case is


misplaced. Nowhere in the said decision was it
categorically stated that annotation of the attachment
in the corporate books is mandatory for its validity and
for the purpose of giving notice to third persons.
The only basis, then, for petitioner CEIC's claim is the
Deed of Sale under which it purchased the disputed
shares. It is, however, a settled rule that a purchaser of
attached property acquires it subject to an attachment
legally and validly levied thereon. 54
Our corollary inquiry is whether or not the consortium
has indeed a prior valid and existing attachment lien
over the disputed shares.
Jaime Gonzales' /Consortium's Claim
Is the consortium's attachment lien over the disputed
shares valid?
CEIC vigorously argues that the consortium's writ of
attachment over the disputed shares of Chemphil is
null and void, insisting as it does, that the notice of
garnishment was not validly served on the designated
officers on 19 July 1985.
To support its contention, CEIC presented the sheriff's
notice of garnishment 55 dated 19 July 1985 which
showed on its face that said notice was received by
one Thelly Ruiz who was neither the president nor
managing agent of Chemphil. It makes no difference,
CEIC further avers, that Thelly Ruiz was the secretary
of the President of Chemphil, for under the abovequoted provision she is not among the officers so
authorized or designated to be served with the notice
of garnishment.
We cannot subscribe to such a narrow view of the rule
on proper service of writs of attachment.
A secretary's major function is to assist his or her
superior. He/she is in effect an extension of the latter.
Obviously, as such, one of her duties is to receive
letters and notices for and in behalf of her superior, as
in the case at bench. The notice of garnishment was
addressed to and was actually received by Chemphil's
president through his secretary who formally received
it for him. Thus, in one case, 56 we ruled that the
secretary of the president may be considered an
"agent" of the corporation and held that service of
summons on him is binding on the corporation.

Moreover, the service and receipt of the notice of


garnishment on 19 July 1985 was duly acknowledged
and confirmed by the corporate secretary of Chemphil,
Rolando Navarro and his successor Avelino Cruz
through their respective certifications dated 15 August
1989 57 and 21 August 1989. 58
We rule, therefore, that there was substantial
compliance with Sec. 7(d), Rule 57 of the Rules of
Court.
Did the compromise agreement between Antonio
Garcia and the consortium discharge the latter's
attachment lien over the disputed shares?
CEIC argues that a writ of attachment is a mere
auxiliary remedy which, upon the dismissal of the case,
dies a natural death. Thus, when the consortium
entered into a compromise agreement, 59 which
resulted in the termination of their case, the disputed
shares were released from garnishment.
We disagree. To subscribe to CEIC's contentions would
be to totally disregard the concept and purpose of a
preliminary attachment.
A writ of preliminary attachment is a
provisional remedy issued upon order
of the court where an action is pending
to be levied upon the property or
properties of the defendant therein, the
same to be held thereafter by the
Sheriff as security for the satisfaction
of whatever judgment might be
secured in said action by the attaching
creditor
against
the
defendant. 60 (Emphasis ours.)
Attachment
is
a
juridical
institution which has for its purpose to
secure the outcome of the trial, that is,
the satisfaction of the pecuniary
obligation really contracted by a person
or believed to have been contracted by
him, either by virtue of a civil
obligation emanating from contract or
from law, or by virtue of some crime or
misdemeanor that he might have
committed, and the writ issued,
granted it, is executed by attaching
and safely keeping all the movable
property of the defendant, or so much
thereof may be sufficient to satisfy the
plaintiff's demands . . . 61 (Emphasis
ours.)
The chief purpose of the remedy of
attachment is to secure a contingent

lien on defendant's property until


plaintiff
can,
by
appropriate
proceedings, obtain a judgment and
have such property applied to its
satisfaction, or to make some provision
for unsecured debts in cases where the
means of satisfaction thereof are liable
to be removed beyond the jurisdiction,
or improperly disposed of or concealed,
or otherwise placed beyond the reach
of creditors. 62 (Emphasis ours.)

debt. The law does not


provide the length of
time an attachment
lien shall continue after
the
rendition
of
judgment, and it must
therefore
necessarily
continue until the debt
is paid, or sale is had
under execution issued
on the judgment or
until
judgment
is
satisfied,
or
the
attachment discharged
or vacated in some
manner provided by
law.

We reiterate the rule laid down in BF Homes,


Inc. v. CA 63 that an attachment lien continues until
the debt is paid, or sale is had under execution issued
on the judgment or until judgment is satisfied, or the
attachment discharged or vacated in the same manner
provided by law. We expounded in said case that:

It has been held that


the lien obtained by
attachment
stands
upon as high equitable
grounds as a mortgage
lien:

The appointment of a rehabilitation


receiver who took control and custody
of BF has not necessarily secured the
claims of Roa and Mendoza. In the
event
that
the
receivership
is
terminated with such claims not having
been satisfied, the creditors may also
find
themselves
without
security
therefor in the civil action because of
the dissolution of the attachment. This
should not be permitted. Having
previously obtained the issuance of the
writ in good faith, they should not be
deprived of its protection if the
rehabilitation plan does not succeed
and the civil action is resumed.

The lien or security


obtained
by
an
attachment
even
before judgment, is a
fixed
and
positive
security, a specific lien,
and, although whether
it will ever be made
available to the creditor
depends
on
contingencies,
its
existence is in no way
contingent, conditioned
or inchoate. It is a
vested
interest,
an
actual and substantial
security,
affording
specific security for
satisfaction of the debt
put in suit, which
constitutes a cloud on
the legal title, and is as
specific as if created by
virtue of a voluntary
act of the debtor and
stands upon as high
equitable grounds as a
mortgage. (Corpus Juris
Secundum, 433, and
authorities
therein
cited.)

xxx xxx xxx


As we ruled in Government of the
Philippine Islands v. Mercado:
Attachment is in the
nature
of
a
proceeding in rem. It is
against the particular
property. The attaching
creditor
thereby
acquires specific lien
upon
the
attached
property which ripens
into a judgment against
the res when the order
of sale is made. Such a
proceeding is in effect
a finding that the
property attached is an
indebted thing and a
virtual condemnation of
it to pay the owner's

xxx xxx xxx

The case at bench admits of a peculiar character in the


sense that it involves a compromise agreement.
Nonetheless, the rule established in the aforequoted
cases still applies, even more so since the terms of the
agreement have to be complied with in full by the
parties thereto. The parties to the compromise
agreement should not be deprived of the protection
provided by an attachment lien especially in an
instance where one reneges on his obligations under
the agreement, as in the case at bench, where Antonio
Garcia failed to hold up his own end of the deal, so to
speak.
Moreover, a violation of the terms and conditions of a
compromise agreement entitles the aggrieved party to
a writ of execution.
In Abenojar & Tana v. CA, et al.,

64

we held:

The non-fulfillment of the terms and


conditions of a compromise agreement
approved by the Court justifies
execution thereof and the issuance of
the writ for said purpose is the Court's
ministerial
duty
enforceable
by mandamus.
Likewise we ruled in Canonizado v. Benitez: 65
A judicial compromise may be enforced
by a writ of execution. If a party fails or
refuses to abide by the compromise,
the other party may enforce the
compromise or regard it as rescinded
and insist upon his original demand.
If we were to rule otherwise, we would in effect create
a back door by which a debtor can easily escape his
creditors. Consequently, we would be faced with an
anomalous situation where a debtor, in order to buy
time to dispose of his properties, would enter into a
compromise agreement he has no intention of
honoring in the first place. The purpose of the
provisional remedy of attachment would thus be lost. It
would become, in analogy, a declawed and toothless
tiger.
From the foregoing, it is clear that the consortium
and/or its assignee Jaime Gonzales have the better
right over the disputed shares. When CEIC purchased
the disputed shares from Antonio Garcia on 15 July
1988, it took the shares subject to the prior, valid and
existing attachment lien in favor of and obtained by
the consortium.
Forum Shopping in G.R. No. 113394

We uphold the decision of the Court of Appeals finding


PCIB guilty of forum-shopping. 66
The Court of Appeals opined:
True it is, that petitioner PCIB was not a
party to the appeal made by the four
other
banks
belonging
to
the
consortium, but equally true is the rule
that where the rights and liabilities of
the parties appealing are so interwoven
and dependent on each other as to be
inseparable, a reversal of the appealed
decision as to those who appealed,
operates as a reversal to all and will
inure to the benefit of those who did
not join the appeal (Tropical Homes vs.
Fortun,
169
SCRA
80,
p.
90, citing Alling vs. Wenzel, 133 111.
264-278; 4 C.J. 1206). Such principal,
premised upon communality of interest
of the parties, is recognized in this
jurisdiction (Director of Lands vs.
Reyes, 69 SCRA 415). The four other
banks which were part of the
consortium, filed their notice of appeal
under date of March 16, 1990,
furnishing a copy thereof upon the
lawyers of petitioner. The petition
for certiorari in the present case was
filed on April 10, 1990, long after the
other members of the consortium had
appealed from the assailed order of
December 19, 1989.
We view with skepticism PCIB's contention that it did
not join the consortium because it "honestly believed
thatcertiorari was the more efficacious and speedy
relief available under the circumstances." 67 Rule 65 of
the Revised Rules of Court is not difficult to
understand. Certiorari is available only if there is no
appeal or other plain, speedy and adequate remedy in
the ordinary course of law. Hence, in instituting a
separate petition for certiorari, PCIB has deliberately
resorted to forum-shopping.
PCIB cannot hide behind the subterfuge that Supreme
Court Circular 28-91 was not yet in force when it filed
thecertiorari proceedings in the Court of Appeals. The
rule
against
forum-shopping
has
long
been
established. 68Supreme Court Circular 28-91 merely
formalized the prohibition and provided the appropriate
penalties against transgressors.
It alarms us to realize that we have to constantly
repeat our warning against forum-shopping. We cannot
over-emphasize its ill-effects, one of which is aptly
demonstrated in the case at bench where we are
confronted with two divisions of the Court of Appeals

issuing contradictory decisions 69 one in favor of CEIC


and the other in favor of the consortium/Jaime
Gonzales.
Forum-shopping or the act of a party against whom an
adverse judgment has been rendered in one forum, of
seeking another (and possibly favorable) opinion in
another forum (other than by appeal or the special civil
action of certiorari), or the institution of two (2) or
more actions or proceedings grounded on the same
cause on the supposition that one or the other court
would make a favorable disposition, 70 has been
characterized as an act of malpractice that is
prohibited and condemned as trifling with the Courts
and abusing their processes. It constitutes improper
conduct which tends to degrade the administration of
justice. It has also been aptly described as deplorable
because it adds to the congestion of the already
heavily
burdened
dockets
of
the
courts. 71
WHEREFORE, premises considered the appealed
decision in G.R. Nos. 112438-39 is hereby AFFIRMED
and the appealed decision in G.R. No. 113394, insofar
as it adjudged the CEIC the rightful owner of the
disputed shares, is hereby REVERSED. Moreover, for
wantonly resorting to forum-shopping, PCIB is hereby
REPRIMANDED and WARNED that a repetition of the
same or similar acts in the future shall be dealt with
more severely.
SO ORDERED.

G.R. No. L-15499

February 9, 1921

THE TAYABAS LAND COMPANY, plaintiff-appellee,


vs.
SALOMON SHARRUF, CANUTO BARTOLOME,
sheriff of Tayabas,
SALVADOR FARRE and FRANCISCO
ALVAREZ, defendants.
SALOMON SHARRUF, appellant.
Crossfield and O'Brien for appellant.
Alfredo Chicote and Jose Arnaiz for appellee.
STREET, J.:
On December 10, 1914, one Salvador Farre recovered a
joint and several judgment against Salomon M. Sharruf
and Farham M. Sharruf in the Court of First Instance of
the city of Manila for the sum of P1,300, with legal
interest from September 5, 1914, and with costs. This
judgment having remained unsatisfied, and execution
was upon April 3, 1916, issued thereon at the instance
of the plaintiff.
Meanwhile on March 27, 1915, Salomon M. Sharruf had
himself recovered a judgment, also in the Court of First
Instance of the city of Manila, against the Tayabas Land
Company and A.M. Ginainati, for the sum of P6,841.36,
with interest and costs; and as there seems to have
been no visible property belonging to Salomon M.
Sharruf and Farham M. Sharruf subject to seizure by
the sheriff to satisfy the execution in favor of Salvador
Farre, it became important for Farre to subject the
judgment in favor of Salomon M. Sharruf against the
Tayabas Land Company and A.M. Ginainati to the
payment of his own claim.
To this end process of garnishment (notification de
embargo) was, on April 6, 1916, issued at the instance
of Salvador Farre in aid of his execution against the
Sharrufs and was on the same or succeeding day duly
served upon the Tayabas Land Company. By this
process the Tayabas Land Company was informed that
levy had, by virtue of the execution aforesaid, been
made upon all the property of S. M. Sharruf in the
possession of said Tayabas Land Company and upon all
debts owing by the latter to said Sharruf, and in
particular upon all participation and interest of S. M.
Sharruf in the judgment rendered in his favor in the
action prosecuted by him against the Tayabas Land
Company and others.
In pursuance of the levy thus effected upon the
judgment in favor of Salomon M. Sharruf against the
Tayabas Land Company, the sheriff of the city of
Manila, as in ordinary cases of levy upon chattels of
real property, proceeded upon April 15, 1916, to
expose to sale all right, title, and interest of said

Sharruf in the judgment aforesaid. At this sale Salvador


Farre, the execution creditor himself, became the
purchaser of the judgment in question for the sum of
P200; but the Tayabas Land Company, with a
legitimate view to its own protection, afterwards
stepped in, and acting through Mr. Francisco Alvarez,
as attorney and intermediary, purchased from Farre, on
October 6, 1917, the judgment of Salomon M. Sharruf
against itself, paying to Farre the full amount due him,
to wit, the sum of P1,588.24.
At this point it should be stated that when levy of
execution was made in the manner above stated, upon
the judgment in favor of Sharruf against the Tayabas
Land Company and others, the time allowed by law for
an appeal in that case of the Supreme Court had not
passed; and said cause was in fact subsequently
appealed to the Supreme Court, where final judgment
was rendered, affirming the decision of the lower court,
on February 15, 1918.1
It may also be stated that on April 4, 1916, Salomon M.
Sharruf, by a public document, which was duly
incorporated in the record in his case against the
Tayabas Land Company, et al., sold and transferred
unto O'Brien & Company, a corporation, his right, title,
and interest in the judgment aforesaid to the extent
necessary to satisfy a debt for P988.14, owing to
O'Brien & Company, for merchandise purchased from
said entity by Sharruf; and upon the same date Messrs.
Crossfield & O'Brien, as attorneys, filed a memorandum
of an attorney's lien in their favor to the extent of 25
per cent of the amount of the judgment. These
transactions, as will be seen, had the result of reducing
in a considerable degree the apparent beneficial
interest of Salomon M. Sharruf in the result of the
litigation, but they do not affect the fundamentals of
the case.
As a consequence of the facts above narrated the
Tayabas Land Company supposes that the judgment
obtained by Salomon M. Sharruf against it and A.M.
Ginainati has been wholly satisfied, while Salomon M.
Sharruf and those interested under him claim that the
execution sale of the judgment in question was void
and that as a consequence said judgment remains
wholly unsatisfied. Proceeding upon this conception of
the case, Messrs. Crossfield and O'Brien, as attorneys
for the plaintiff in that action, procured an execution to
be issued on August 30, 1918, upon said judgment for
the entire amount of the recovery, including accrued
interest and costs, less the sum of P13.21, which had
been secured in a garnishment proceeding against one
of the local banks.
Being thus menaced with the levy of an execution upon
its property, the Tayabas Land Company instituted the
present action in the Court of First Instance of the city
of Manila, Against Salomon M. Sharruf and others,

including the sheriff of the Province of Tayabas, to


obtain an order restraining the threatened levy of
execution and perpetually enjoining all proceedings for
the enforcement of the judgment against it. Upon
hearing the cause the trial court, while recognizing the
validity of the claims of O'Brien & Company and of
Crossfield and O'Brien, held that all other interest in
said judgment pertaining to Salomon M. Sharruf had
passed by virtue of the execution sale to Salvador Farre
and thence by transfer through Francisco Alvarez to the
Tayabas Land Company. As a consequence the court
declared the preliminary injunction perpetual. From
said judgment Salomon M. Sharruf appealed to this
court.
The principal question in the case relates to the validity
of the proceedings whereby the judgment against the
Tayabas Land Company and A.M. Ginainati in favor of
Salomon M. Sharruf was, on April 15, 1916, exposed to
sale by the sheriff under the execution issued in the
action of Salvador Farre against the two Sharrufs; and
we believe it will be conducive to clarity in the
discussion for us to proceed at once to consider the
manner in which, under the provisions of our Code of
Civil Procedure, a judgment for a sum of money
entered in favor of the plaintiff in one case can be
reached and applied to the payment of a judgment in
another case against the party who occupies the
position of creditor in the former.
In the first place, we have no hesitancy in saying that a
judgment for a sum of money, that is, the interest of
the plaintiff in such a judgment, is liable to execution. A
judgment for a sum of money is, as to the party
entitled to payment, a credit; and as to the party who
ought to pay the money, a debt. Furthermore, the
interest of the creditor in such a judgment is clearly
property, though not capable of manual delivery. All of
these elements of value "debts." "credits," and "all
other property not capable of manual delivery" are
expressly declared, in section 450 of the Code of Civil
Procedure, to be liable to execution. It will be noted,
however, that under the section just cited, debts,
credits, and other property not capable of manual
delivery are to be dealt with in a different manner from
that prescribed in case of the execution of tangible
property; for while tangible property is proceeded with
by seizure and sale under execution, debts and credits
are to be attached by the citation of the debtor. The
provisions governing the execution of tangible property
are found in sections 453 to 457, inclusive, of the Code
of Civil Procedure; while the provisions prescribing the
method of reaching debts and credits are found chiefly
in the chapter relating to attachment, consisting
principally of sections 431 to 436, inclusive, of the
Code of Civil Procedure.
The proceeding thus indicated as proper, in order to
subject a debt or credit is known in American civil

procedure as the process of garnishment; and it may


be truly said that garnishment is one of the simplest
processes, and the least involved in technicalities, of
any proceeding known to the law. It consists in the
citation of some stranger to the litigation, who is
debtor to one of the parties to the action. By this
means such debtor stranger becomes a forced
intervenor; and the court, having acquired jurisdiction
over his person by means of the citation, requires him
to pay his debt, not to his former creditor, but to the
new creditor, who is creditor in the main litigation. It is
merely a case of involuntary novation by the
substitution of one creditor for another. Upon principle
the remedy is a species of attachment or execution for
reaching any property pertaining to a judgment debtor
which may be found owing to such debtor by a third
person.
The situation involved supposes the existence of at
least three persons, to wit, a judgment creditor, a
judgment debtor, and the garnishee, or person cited,
who in turn is supposed to be indebted to the first
debtor (i.e., judgment debtor).
To proceed a little further with the barest details of the
process of garnishment, we note that a citation issues
from the court having jurisdiction of the principal
litigations, notifying the garnishee that the property
and credits of the judgment debtor have been levied
upon or attached in the hands of such garnishee, and
enjoining him not to deliver, transfer, or otherwise
dispose of any effects or credits belonging to that
person, and requiring him furthermore to make a
statement to the court of the property of the judgment
debtor in his hands and of the debts owing by the
garnishee to such debtor.
In cases where indebtedness is admitted, as not
infrequently occurs, the payment of the money by the
garnishee to the judgment creditor or into court, brings
the proceeding to a close, so far as the garnishee is
concerned; but if the garnishee fails to answer, or does
not admit the indebtedness, he may be required to
attend before the court in which the action is pending
to be examined on oath respecting the same. Finally, if
the liability of the garnishee is made manifest, the
officer of the court may, under paragraph No. 3 of
section 436 of the Code of Civil Procedure, collect the
money and pay it to the person entitled.
The circumstances that garnishment has not been
made the subject of independent treatment in our
Code of Civil Procedure and that the rules relating
thereto are only brought out inferentially in connection
with the subject of attachment has undoubtedly
contributed to obscure a matter which upon principle is
simple enough. Additional light on the subject may,
however, be acquired by referring to sections 476, 481,
and 486 of the Code of Civil Procedures, which treat of

supplementary proceedings. It will be found that those


proceedings are identical in principle with the
proceeding for the citation of debtors explained in the
chapter on attachment.
Enough has now been said to show clearly that the
action of the sheriff in exposing to public sale the
judgment which had been procured by Salomon M.
Sharruf in the action against the Tayabas Land
Company, et al., was wholly unauthorized, and said
sale must be considered void. The proper step would
have been for the court to require the Tayabas Land
Company, after the judgment against it had become
final, to pay into court, in the cause wherein Salvador
Farre was plaintiff, a sufficient amount of money to
satisfy Farre's claim against Sharruf; and if the
judgment against the Tayabas Land Company had been
permitted to go to the stage of execution, the proceeds
in the hands of the sheriff would have been applied,
under the direction of the court, to the payment of
Farre's claim before any part would have been payable
to Sharruf.
In dealing with the problems which have from time to
time
arisen
in
connection
with
garnishment
proceedings, courts have sometimes been perplexed
over the matter of protecting the garnishee from the
danger of having to pay his debt twice; and it goes
without saying that the procedure must be so adjusted
as not to subject the garnishee to this risk. Otherwise it
is a fatal obstacle to the garnishment. No such
difficulty would arise in a case like this, where the two
judgments are both of record in the same court, and
where consequently that court has control over the
process in both cases.
Our conclusion that the sale of the judgment in
question under process of execution was void is
supported by the decisions of the Supreme Court of
California, construing the very section of the California
Code of Civil Procedure from which section 450 of the
Code of Civil Procedure of the Philippine Islands was
taken. Thus, in McBride vs. Fallon (65 Cal., 301, 303),
the Supreme Court of that State said:
After enumerating the kinds of property of a
judgment debtor liable to execution, the Code
provides that "shares and interests in any
corporation or company" and debts and credits
. . . and all other property not capable of
manual delivery, may be attached on execution
in like manner as upon writs of attachments.
"Debts and credits and property not capable of
manual delivery must be attached in the mode
pointed out by subdivision 5, sec. 542."
(Corresponding to section 431 of the Philippine
Code of Civil Procedure.) "That is "by leaving
with the person owing the debt or having in

possession or under his control such credits


and other personal property" or with his agent,
a copy of the writ, and a notice that the debts
owing by him to the defendant, or the credits
and other personal property' in his possession
or under his control, belonging to the
defendant are attached in pursuance of such
writ.
"The fact that a debt is evidenced by a
judgment does not, in our opinion, make it
anything more or less than a debt, or more
capable of manual delivery than it would be if
not so evidenced. No provision is made for
attaching or levying on evidences of debt. It is
the debt itself which may be attached by writ
of attachment, or on execution in like manner
as upon writs of attachment." This we think to
be the meaning of the Code, and the mode
prescribed by it is exclusively . . .
In order to avoid misunderstanding, we wish to say that
we make no question as to the propriety of the
proceedings up to the time when the judgment in
question was advertised and exposed to sale by the
sheriff. The issuance of the execution and the service
of the garnishment were appropriate; and the
garnishment was effective for the purpose of
preventing the garnishee, the Tayabas Land Company,
from paying the judgment to Salomon M. Sharruf.
Moreover, the garnishment was effective for the
purpose of conferring upon the Tayabas Land Company
the right to pay off the judgment which Farre had
obtained against Sharruf. This right is not only
recognized in section 481 of the Code of Civil
Procedure but also in subsection 3 of article 1210 of
the Civil Code; and by satisfying Farre's claim,
regardless of the manner in which it was accomplished,
the Tayabas Land Company absolved itself pro tanto
from its indebtedness to Sharruf. It results that,
although the judgment against the Tayabas Land
Company has not yet been satisfied in full, said
company is entitled to be credited with the sum of
P1,588.24, said by it, through Francisco Alvarez, to
Farre on October 6, 1917, with interest.
In the view we take of the case it becomes
unnecessary to consider at length the fact that
Sharruf's judgment against the Tayabas Land Company
was appealed to the Supreme Court after the process
of garnishment had been served on the company.
Suffice is to say that this circumstance would at most
merely postpone the realization of the results without
defeating the garnishment.
Reflection upon this feature of the case, however,
confirms the opinion that our lawmakers acted wisely
in requiring that debts and credits should be executed

by means of the process of garnishment rather than by


exposing them to public sale. In the case before us a
judgment for a large amount was sold for a merely
nominal sum, and such would generally be the case at
a sale under similar conditions. This cannot fail to be
highly prejudicial to the debtor who is under immediate
execution. The proceeding by garnishment, on the
contrary, enables all parties to realize their rights
without unduly disturbing the position of any.
The judgment must be reserved, and the defendants
will be absolved from the complaint. It is so ordered,
without express pronouncement as to costs of either
instance.

RURAL
BANK
OF
[PANGASINAN], INC.,
Petitioner,

STA.

BARBARA

- versus THE MANILA MISSION OF


THECHURCH OF JESUS CHRIST OF
DAY SAINTS, INC.,
Respondent.

LATTER

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under
Rule 45 of the Rules of Court seeking to set aside the
Decision[1] dated 29 July 1997 of the Court of Appeals in
CA-G.R. SP No. 41042 affirming the Orders dated 9
October 1995 and 27 February 1996 of the Regional
Trial Court (RTC), Branch 43, of Dagupan City, in Civil
Case No. D-10583.
Spouses Tomas and Maria Soliven (spouses
Soliven) were the registered owners, under Transfer
Certificate of Title (TCT) No. T-125213, of a parcel of
land located in Barangay Maninding, Sta. Barbara,
Pangasinan (subject property). On 18 May 1992, the
spouses Soliven sold the subject property to
respondent Manila Mission of the Church of Jesus Christ
of Latter Day Saints, Inc. (Manila Mission). However, it
was only on 28 April 1994 when TCT No. T-125213 in
the name of the spouses Soliven was cancelled, and
TCT No. 195616 was issued in the name of respondent.
In the meantime, on 15 April 1993, petitioner
Rural Bank of Sta. Barbara (Pangasinan), Inc. filed with
the RTC a Complaint against the spouses Soliven for a
sum of money, docketed as Civil Case No. D10583. The Complaint of petitioner included a prayer
for the issuance of a Writ of Preliminary Attachment.
In an Order dated 7 May 1993, the RTC ordered
the issuance of the Writ of Attachment petitioner
prayed for, to wit:
WHEREFORE, let a Writ of
Attachment be issued against all the
properties of [Spouses Soliven] not
exempt from execution or so much
thereof as may be sufficient to satisfy
the [herein petitioners] principal claim
of P338,000.00
upon
filing
of

[petitioners] bond
of P100,000.00.[2]

in

the

amount

Upon the filing by petitioner of the required


bond, the RTC issued the Writ of Attachment on 21 May
1993. Acting on the authority of said Writ, Sheriff
Reynaldo C. Daray attached the subject property,
which was then still covered by TCT No. T-125213 in
the name of the spouses Soliven. The Writ of
Attachment was annotated on TCT No. T-125213 on 24
May 1993. Thus, when TCT No. T-125213 of the
spouses Soliven was cancelled and TCT No. 195616 of
petitioner was issued on 28 April 1994, the annotation
on the Writ of Attachment was carried from the former
to the latter.
While Civil Case No. D-10583 was still pending
before the RTC, respondent executed an Affidavit
claiming title and ownership over the subject property,
and requested the Ex-Officio Provincial and City Sheriff
to release the said property from attachment. The
Sheriff, however, advised respondent to file a motion
directly with the RTC.
On 16 March 1995, respondent filed with the
RTC, in Civil Case No. D-10583, a Motion to Release
Property from Attachment, to which petitioner, in turn,
filed an Opposition. After hearing, the RTC issued an
Order on 9 October 1995 discharging the subject
property from attachment. The RTC decreed in said
Order:
WHEREFORE, the Court hereby
directs the Ex-Officio Provincial Sheriff
of Pangasinan and City Sheriff of
Dagupan to discharge and release the
subject land from attachment and
orders the notice of attachment on
T.C.T. No. 195616 of the Register of
Deeds of Pangasinan be cancelled.[3]
Petitioner filed a Motion for Reconsideration of
the 9 October 1995 Order of the RTC, arguing that it
had a better right over the subject property and that
the filing by respondent with the RTC, in Civil Case No.
D-10583, of a Motion to Release Property from
Attachment, was the improper remedy. In an Order
dated 27 February 1996, the RTC denied the Motion for
Reconsideration of petitioner for lack of merit.
On 12 April 1997, petitioner filed a Petition
for Certiorari with this Court, alleging that the RTC
committed grave abuse of discretion, amounting to
lack or excess of jurisdiction, in canceling the Writ of
Attachment and ordering the release of the subject
property. The Petition was docketed as G.R. No.
124343. In a Resolution dated 27 May 1997, this Court
referred the case to the Court of Appeals for
appropriate action.
The Court of Appeals docketed the Petition
for Certiorari as CA-G.R. SP No. 41042. On 29 July 1997,
the Court of Appeals issued the assailed Decision
dismissing the Petition.

Hence, petitioner again comes before this


Court via the present Petition for Review, contending
that the Court of Appeals erred in not finding grave
abuse of discretion on the part of the RTC when the
latter directed the release of the subject property from
attachment. Petitioner insists that it has a better right
to the subject property considering that: (1) the
attachment of the subject property in favor of
petitioner was made prior to the registration of the sale
of the same property to respondent; and (2)
respondent availed itself of the wrong remedy in filing
with the RTC, in Civil Case No. D-10583, a Motion to
Release Property from Attachment. We shall discuss
ahead the second ground for the instant Petition, a
matter of procedure, since its outcome will determine
whether we still need to address the first ground, on
the substantive rights of the parties to the subject
property.

Propriety of the Motion to Release Property


from Attachment
According to petitioner, the Motion to Release
Property from Attachment filed by respondent before
the RTC, in Civil Case No. D-10583, is not the proper
remedy under Section 14, Rule 57 of the Rules of
Court,[4] which provides:
SEC.
14. Proceedings where property
claimed by third person.If the property
attached is claimed by any person
other than the party against whom
attachment had been issued or his
agent, and such person makes an
affidavit of his title thereto, or right to
the possession thereof, stating the
grounds of such right or title, and
serves such affidavit upon the sheriff
while the latter has possession of the
attached property, and a copy thereof
upon the attaching party, the sheriff
shall not be bound to keep the property
under attachment, unless the attaching
party or his agent, on demand of the
sheriff, shall file a bond approved by
the court to indemnify the third-party
claimant in a sum not less than the
value of the property levied upon. In
case of disagreement as to such value,
the same shall be decided by the court
issuing the writ of attachment. No
claim for damages for the taking or
keeping of the property may be
enforced against the bond unless the
action therefor is filed within one
hundred twenty (120) days from the
date of the filing of the bond.
The sheriff shall not be liable
for damages for the taking or keeping
of such property, to any such thirdparty claimant, if such bond shall be
filed. Nothing herein contained shall
prevent such claimant or any third
person from vindicating his claim to the
property, or prevent the attaching

party from claiming damages against a


third-party claimant who filed a
frivolous or plainly spurious claim, in
the same or a separate action.
When the writ of attachment is
issued in favor of the Republic of the
Philippines,
or
any
officer
duly
representing it, the filing of such bond
shall not be required, and in case the
sheriff is sued for damages as a result
of the attachment, he shall be
represented by the Solicitor General,
and if held liable therefor, the actual
damages adjudged by the court shall
be paid by the National Treasurer out of
the funds to be appropriated for the
purpose.
Petitioner argues that, pursuant to the
aforequoted section, the remedy of a third person
claiming to be the owner of an attached property are
limited to the following: (1) filing with the Sheriff a thirdparty claim, in the form of an affidavit, per the first
paragraph of Section 14; (2) intervening in the main
action, with prior leave of court, per the second
paragraph of Section 14, which allows a third person to
vindicate his/her claim to the attached property in
the same x x x action; and (3) filing a separate and
independent action, per the second paragraph of
Section 14, which allows a third person to vindicate
his/her claim to the attached property in a separate
action.
Respondent explains that it tried to pursue the
first remedy, i.e., filing a third-party claim with the
Sheriff. Respondent did file an Affidavit of Title and
Ownership with the Sheriff, but said officer advised
respondent to file a motion directly with the RTC in the
main case. Respondent heeded the Sheriffs advice by
filing with the RTC, in Civil Case No. D-10583, a Motion
to Release Property from Attachment. The Court of
Appeals recognized and allowed said Motion,
construing the same as an invocation by respondent of
the power of control and supervision of the RTC over its
officers, which includes the Sheriff.
We agree with the Court of Appeals on this
score. The filing by respondent of the Motion to Release
Property from Attachment was made on the advice of
the Sheriff upon whom respondent served its Affidavit
of Title and Ownership. Respondent should not be
faulted for merely heeding the Sheriffs advice.
Apparently, the Sheriff, instead of acting upon the
third-party claim of respondent on his own, would
rather have some direction from the RTC. Indeed, the
Sheriff is an officer of the RTC and may be directed by
the said court to allow the third-party claim of
respondent. Therefore, the filing of the Motion in
question can be deemed as a mere continuation of the
third-party claim of respondent, in the form of its
Affidavit of Title and Ownership, served upon the
Sheriff, in accord with the first paragraph of Section 14,
Rule 57 of the Rules of Court.
to

Alternatively, we may also consider the Motion


Release Property from Attachment, filed by

respondent before the RTC, as a Motion for Intervention


in Civil Case No. D-10583, pursuant to the second
paragraph of Section 14, Rule 56, in relation to Rule 19
of the Rules of Court. Respondent, to vindicate its claim
to the subject property, may intervene in the same
case, i.e., Civil Case No. D-10583, instituted by
petitioner against the spouses Soliven, in which the
said property was attached. Respondent has the
personality to intervene, as it is so situated as to be
adversely affected by a distribution or other disposition
of property in the custody of the court or of an officer
thereof.[5] The RTC, in acting upon and granting the
Motion to Release Property from Attachment in its
Order dated 9 October 1995, is deemed to have
allowed respondent to intervene in Civil Case No. D10583.
Moreover, it may do petitioner well to
remember that rules of procedure are merely tools
designed to facilitate the attainment of justice. They
were conceived and promulgated to effectively aid the
court in the dispensation of justice. Courts are not
slaves to or robots of technical rules, shorn of judicial
discretion. In rendering justice, courts have always
been, as they ought to be, conscientiously guided by
the norm that on the balance, technicalities take a
backseat to substantive rights, and not the other way
around.Thus, if the application of the Rules would tend
to frustrate rather than promote justice, it is always
within the power of the Court to suspend the rules, or
except a particular case from its operation. [6] Hence,
even if the Motion to Release Property from Attachment
does not strictly comply with Section 14, Rule 56 of the
Rules of Court, the RTC may still allow and act upon
said Motion to render substantive justice.
This leads us to the substantive issue in this
case, on which between the two transactions should be
given priority: the previous yet unregistered sale of the
subject property by the spouses Soliven to respondent,
or the subsequent but duly annotated attachment of
the same property by petitioner.

Previous yet unregistered sale versus


subsequent but duly annotated attachment
Petitioner does not dispute the allegation of
respondent that the subject property was sold by the
spouses Soliven to respondent on 18 May 1992,
before petitioner instituted Civil Case No. D-10583
against the spouses Soliven on 15 April 1993; the RTC
ordered the issuance of the Writ of Attachment on 7
May 1993; and the attachment of the subject property
pursuant to the Writ on 27 May 1993.
Neither did petitioner offer evidence to counter
the following documents presented by respondent
establishing the fact of the sale of the subject property
to the latter by the spouses Soliven: (1) the notarized
Deed of Sale dated 18 May 1992; (2) BPI Managers
Check No. 010685 dated 8 May 1992 in the sum
of P42,500.00 to represent the tender of payment of
capital gains tax; (3) BIR Official Receipt No. 0431320
dated 18 May 1992 of BPI Check No. 010625 for the
payment of the sum of P8,5000.00; and (4) a letter
dated 11 August 1992 of Manila Missions former
counsel, Lim Duran & Associates, to the Revenue

District Officer, District 7, Bureau of Internal Revenue,


relative
to
its
request
for
the
reconsideration/condonation of the assessment of the
capital gains tax on its purchase of the subject
property.
Petitioner, however, invokes jurisprudence
wherein this Court in a number of instances allegedly
upheld a subsequent but duly annotated attachment,
as opposed to a previous yet unregistered sale of the
same
property. Petitioner
particularly
calls
our
attention to the following paragraph in Ruiz, Sr. v.
Court of Appeals[7]:
[I]n case of a conflict between a
vendee and an attaching creditor, an
attaching creditor who registers the
order of attachment and the sale of the
property to him as the highest bidder
acquires a valid title to the property, as
against a vendee who had previously
bought the same property from the
registered owner but who failed to
register his deed of sale. This is
because registration is the operative
act that binds or affects the land
insofar as third persons are concerned.
It is upon registration that there is
notice to the whole world.
In the more recent case Valdevieso v.
Damalerio,[8] we have expounded on our foregoing
pronouncement in Ruiz.
On 5 December 1995, therein petitioner
Bernardo Valdevieso (Valdevieso) bought a parcel of
land from spouses Lorenzo and Elenita Uy (spouses
Uy), the registered owners thereof. On 19 April 1996,
therein respondents, spouses Candelario and Aurea
Damalerio (spouses Damalario), filed a Complaint
against the spouses Uy for a sum of money before the
RTC of General Santos City. On 23 April 1996, the RTC
issued a Writ of Preliminary Attachment by virtue of
which the subject parcel of land was levied. The levy
was duly recorded in the Register of Deeds, and
annotated on the TCT of the spouses Uy over the
subject parcel of land. It was only on 6 June 1996 that
the TCT in the name of the spouses Uy was cancelled,
and a new one issued in the name of Valdevieso. As in
the case at bar, the annotation on the attachment was
carried over to Valdeviesos TCT.Valdevieso filed a thirdparty claim before the RTC seeking to annul the
attachment. In a resolution, the RTC ruled in
Valdeviesos favor, but the Court of Appeals reversed
said RTC resolution. On appeal, we adjudged:
The sole issue in this case is
whether or not a registered writ of
attachment on the land is a superior
lien over that of an earlier unregistered
deed of sale.
xxxx
The settled rule is that levy on
attachment, duly registered, takes
preference over a prior unregistered

sale.
This result is a necessary
consequence of the fact that the
property involved was duly covered by
the Torrens system which works under
the
fundamental
principle
that
registration is the operative act which
gives validity to the transfer or creates
a lien upon the land.
The preference created by the
levy on attachment is not diminished
even by the subsequent registration of
the prior sale. This is so because an
attachment is a proceeding in rem. It is
against
the
particular
property,
enforceable against the whole world.
The attaching creditor acquires a
specific lien on the attached property
which
nothing
can
subsequently
destroy except the very dissolution of
the attachment or levy itself. Such a
proceeding, in effect, means that the
property attached is an indebted thing
and a virtual condemnation of it to pay
the owners debt. The lien continues
until the debt is paid, or sale is had
under
execution
issued
on
the
judgment, or until the judgment is
satisfied, or the attachment discharged
or vacated in some manner provided
by law.
Thus, in the registry, the
attachment in favor of respondents
appeared in the nature of a real lien
when petitioner had his purchase
recorded. The effect of the notation of
said
lien
was
to
subject
and
subordinate the right of petitioner, as
purchaser, to the lien.
Petitioner
acquired ownership of the land only
from the date of the recording of his
title in the register, and the right of
ownership which he inscribed was not
absolute but a limited right, subject to
a prior registered lien of respondents, a
right which is preferred and superior to
that of petitioner.[9]
It is settled, therefore, that a duly registered
levy on attachment takes preference over a prior
unregistered sale.
Nonetheless, respondent argues that there is a
special circumstance in the case at bar, which should
be deemed a constructive registration of the sale of the
subject property in its favor, preceding the attachment
of the same property by petitioner.

Knowledge of previous yet unregistered sale


In Ruiz, the very case cited by petitioner, we
made a qualification of the general rule that a duly
annotated attachment is superior to an unregistered
prior sale. In fact, we resolved Ruiz in favor of the
vendee in the unregistered prior sale, because
knowledge of the unregistered sale by the attaching

creditor is deemed equivalent


explained in Ruiz:

to registration. We

But
where
a
party
has
knowledge of a prior existing interest
which is unregistered at that time he
acquired a right to the same land, his
knowledge
of
that
prior
unregistered interest has the
effect
of
registration
as
to
him. Knowledge of an unregistered
sale is equivalent to registration. As
held
in Fernandez
v.
Court
of
Appeals [189 SCRA 780 (1990)],
Section 50 of
Act No. 496 (now Sec.
51
of
P.D.
1529),
provides
that
the
registration of the deed
is the operative act to
bind or affect the land
insofar as third persons
are
concerned. But
where the party has
knowledge of a prior
existing interest which
is unregistered at the
time he acquired a
right to the same land,
his knowledge of that
prior
unregistered
interest has the effect
of registration as to
him. The
torrens
system cannot be used
as a shield for the
commission of fraud
(Gustillo v. Maravilla, 48
Phil. 442). As far as
private
respondent
Zenaida Angeles and
her husband Justiniano
are concerned, the nonregistration
of
the
affidavit admitting their
sale of a portion of 110
square meters of the
subject
land
to
petitioners cannot be
invoked as a defense
because (K)nowledge of
an unregistered sale is
equivalent
to
registration (Winkleman
v. Veluz, 43 Phil. 604).
This
knowledge
of
the
conveyance to Honorato Hong can not
be denied. The records disclose that
after the sale, private respondent was
able to introduce improvements on the
land such as a concrete two-door
commercial building, a concrete fence
around the property, concrete floor of
the whole area and G.I. roofing. Acts of
ownership
and
possession
were
exercised by the private respondent

over the land. By these overt acts, it


can not therefore be gainsaid that
petitioner was not aware that private
respondent had a prior existing interest
over the land.[10]

the time of the attachment. Respondent Manila Mission


merely argues that there was a tacit recognition on the
part of petitioner Rural Bank of the construction of the
chapel when the latter did not deny this allegation in
its Opposition to the Motion to Discharge Property from
Attachment.

In the case at bar, respondent averred in its


Motion to Release Property from Attachment that the
construction of a church edifice on the subject property
was about to be finished at the time the Writ of
Preliminary Attachment was implemented on 24 May
1993, and that the construction of the church was
actually completed by mid-1993.Respondent asserts
that since petitioner did not deny these allegations,
much less adduce evidence to the contrary, then the
latter tacitly recognized the construction of the church.

The Motion, however, merely mentions the


construction of the chapel and does not charge
petitioner Rural Bank with knowledge of the
construction. There was, therefore, nothing to deny on
the part of petitioner Rural Bank, as the mere existence
of such construction at that time would not affect the
right of petitioner Rural Bank to its lien over the subject
property. Also, the mention in the Motion of the
construction of the chapel would have the effect of
being a notice of an adverse third-party claim only at
the time of such Motion. Since such notice, which was
deemed in Ruiz as constructive registration of the sale,
was effected only after the attachment of the subject
property, it could not affect the validity of the
attachment lien.

Petitioner contends, on the other hand, that


respondent failed to present evidence to prove the fact
that a church had already been constructed on the
subject property by the time the said property was
attached, thus, constituting notice to petitioner of the
claim or right of respondent to the same.
Was there, at the time of the attachment,
knowledge on the part of petitioner Rural Bank of the
interest of respondent Manila Mission on the subject
property?
If the allegation of respondent Manila Mission
anent the building of the chapel even before the
issuance of the writ of attachment is true, this case
would be similar to Ruizwhere the vendee of the
subject
property
was
able
to
introduce
improvements. However, respondent Manila Mission
presented no evidence of the building of the chapel
other
than
its
bare
allegation
thereof. More
importantly, even assuming for the sake of argument
that the chapel was indeed being built at the time of
the attachment of the property, we cannot simply
apply Ruiz and conclude that this confirms knowledge
of a previous conveyance of the property at that
time. In Ruiz, the attaching party was the wife of the
vendor of the subject property, whom she sued for
support. It was thus very probable that she knew of the
sale of the property to the vendee therein, considering
that the vendee had already introduced improvements
thereon. In the case at bar, there is no special
relationship between petitioner Rural Bank and the
spouses Soliven sufficient to charge the former with an
implied knowledge of the state of the latters
properties. Unlike in the sale of real property, an
attaching creditor is not expected to inspect the
property being attached, as it is the sheriff who does
the actual act of attaching the property.
Neither did respondent Manila Mission present
any evidence of knowledge on the part of petitioner
Rural Bank of the prior existing interest of the former at

In sum, our decisions in Ruiz v. Court of


Appeals and Valdevieso v. Damalerio oblige us to rule
that the duly registered levy on attachment by
petitioner Rural Bank takes preference over the prior
but then unregistered sale of respondent Manila
Mission. There was likewise no evidence of knowledge
on the part of petitioner Rural Bank of any third-party
interest in the subject property at the time of the
attachment. We are, therefore, constrained to grant the
instant Petition for Review and nullify the Orders of the
RTC discharging the subject property from attachment.
Nevertheless, respondent Manila Mission would
not be left without remedy. It could file a counter-bond
pursuant to Section 12, Rule 57[11] of the Rules of Court
in order to discharge the attachment. If respondent
Manila Mission fails to do the same and the property
ends up being subjected to execution, respondent can
redeem the property and seek reimbursement from the
spouses Soliven.
WHEREFORE, the instant Petition for Review
on Certiorari is
hereby GRANTED. The
Decision
dated 29 July 1997 of the Court of Appeals in CA-G.R.
SP
No.
41042
affirming
the
Orders
of
the Regional Trial Court of Dagupan City dated 9
October 1995 and 27 February 1996 issued in Civil
Case No. D-10583 is hereby REVERSED and SET
ASIDE. No pronouncement as to costs.
SO ORDERED.