SECTION 7 G.R. No. L-13281 August 31, 1960 SIARI VALLEY ESTATES, vs. FILEMON LUCASAN, ET AL., respondents.

Registration Act, the notice shall contain a reference to the number of INC., petitioner,

the certificate of title and the volume and page in the registration book where the certificate is registered" (Section 7 [a], Rule 59).

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 forcertiorari. 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

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

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.

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.,

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 RAVANERA, petitioners, vs. FELIPE I. IMPERIAL, respondent. husband OSCAR

Appeal by certiorari taken by petitioners from (a) the decision of the Court of Appeals in CA-G.R. No. SP-00080, 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, non-compliance 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

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

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

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.

George L. Howard and Ambrosio Padilla, Mempin & Reyes Law Offices for petitioner. Rafael G. Suntay for private respondent.
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. C-00565. 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

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.

v. Liberty H. Dizon, Nicolas Torio, Jr. and Joel Patrick Torio, defs. to the amount of

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 defendantappellant 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 defendant-debtor 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 SP-C00565 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 CA-GR CV No. 50884. The CA disposed as follows: Parenthetically, when the decision in Civil Case No. 90-1848 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/T3. 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 ofP95,000.00. 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 defraudingStronghold 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 DeLeon 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 beforepetitioners 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:

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.

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; Liong-Wong-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

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 beforethat 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, the CA correctly applied Capistrano, as follows: 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.

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.

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 effectedprecisely 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

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

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. WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED. Costs against petitioner. 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 CAG.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. T30586.[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 thirdparty 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. 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. 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 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. 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. 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. December 23, 1909 G.R. No. 5534 HERBERT S. WALKER and W. J. ROHDE, plaintiffs-appellees, vs. JOSE McMICKING, defendant-appellant.

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 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:

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.
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

OBrien and De Roman Lacson for appellees. JOHNSON, J.:

Witt

for

appellant.

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

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 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. 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. 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 -

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 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. 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. 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. 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. 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:

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.

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 lost either his actual or constructive control over the property. Second. The plaintiffs herein, innocently and in good faith and under a right, acquired possession of the property in question. 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. 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-inCharge 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 ofP50,000.00. 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

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. 6D57-51813 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] The Courts Ruling 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 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] 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.) 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. 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 Sheriff 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 Complaint1 dated November 12, 2002, Attys. Vilma Hilda D. Villanueva-Fabella 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. xxx xxx xxx "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 Ex-Parte 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 pre-trial 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 non-suited[,] which was set for hearing in the morning of 24 October 2002, the same day the aforementioned ex parte presentation 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 ex-parte 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 Comment3 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 Comment4alleging 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-bond5 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 ordered6 the return7 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 Procedure9 -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 findings and the recommendation of the OCA. 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 counter-bond 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 judgment17 the attaching party may recover in the action.18The 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 ordered20 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 inadvertence22 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.23The Motion for Reconsideration24 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 Order27granting this Motion was then issued on November 4, 2002, well within the three-month period. The money was returned, and no prejudice was suffered by any of the parties. Second, respondent judge owned up to his mistake28 in his Comment. This is an admirable act. Under the Code of Judicial Conduct, judges should be the embodiment of competence29 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.36Certainly, 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 granted38the 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 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. 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 hearsay46 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 verification48 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 certification against forum shopping is not needed in this case; Rule 140 makes no such requirement. 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. 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 court60 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 responsibility78 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 REMINDER90 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 herebySUSPENDED 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.chanroblesvirtualawlibrary chanrobles virtual law library Complainant alleges that: chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 8. PDCP filed a motion for reconsideration of the November 26 Order, which was denied in an Order dated December 11, 1990.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library The administrative complaint was referred to Judge Martin S. Villarama Jr. of the Regional Trial Court, Pasig, for investigation, report and recommendation.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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).chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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) chanrobles virtual law library 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).chanroblesvirtualawlibrary chanrobles virtual law library

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).chanroblesvirtualawlibrary chanrobles virtual law library 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).chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library Respondent could have avoided getting into his present predicament had he not turned over the possession of the seized goods prematurely to the PDCP.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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.chanroblesvirtualawlibrary chanrobles virtual law library 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 codebtors. 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 comaker 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 respect to each of the respondents herein: 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 co-maker; 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 "4-2594" (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 abovementioned 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). On the other hand, the testimony of the complainant cannot be entirely believed for the following reasons: (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"). (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 alias writ directed against Cangrejo was issued on March 29, 1994, which was within the five-year period. 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 redirect 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 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. While there is evidence to show that indeed complainant Marianette Villareal is the principal debtor while Felimon Cangrejo is merely a comaker, 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. 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. 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

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/Exofficio 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. MTJ93-853) 1 and the other against Clerk of Court Lilia S. Buena (A.M. No. P-94-1013). 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 plaintiff-appellee, 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. 30-34). 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 ExOfficio 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 Ex-Officio 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 CAG.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. 1 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, 28-31, 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 non-recording 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-IN-INTEREST, 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 intervenorappellee 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 CAG.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 discharged 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

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. 2891 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 THATCERTIORARI 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 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, 41FCI, 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 (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:

VS. COURT OF APPEALS, G.R. NOS. 76879 AND

CEIC's claim

obligation, pays with the express or tacit approval of the debtor;

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

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.

Supreme Court as due and owing in favor of the said bank by the Seller.

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 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 by-laws. Shares of stock so

alienation, sale or transfer of stock made, the date thereof, and by and to whom made; and such

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

issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorneyin-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.

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 on the Corporation Code expound, thus: xxx xxx xxx Shares of stock being personal property, may be the subject matter of pledge and chattel mortgage. Suchcollateral 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. 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

another acquire ownership of stock. (Wallach vs. Stein [N.J.], 136 A., 209, 210.)

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 above-quoted 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

Jaime Gonzales' /Consortium's Claim

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.) 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: 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

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

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. 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 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. It has been held that the lien obtained by attachment stands upon as high equitable grounds as a mortgage lien: 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 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 Alfredo Chicote and Jose Arnaiz for appellee. STREET, J.:

for

appellant.

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. G.R. No. L-39596 March 23, 1934 "CONSULTA" No. 1013 OF THE REGISTER OF DEEDS OF TAYABAS. GOTAUCO & CO., applicant-appellant, vs. THE REGISTER OF DEEDS OF TAYABAS, oppositor-appellee.

Godofredo Reyes for Office of the Solicitor-General Hilado for appellee.

appellant.

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.1vvphi1.ne+ SECTION 8 G.R. No. L-34589 June 29, 1988 ENGINEERING CONSTRUCTION INCORPORATED, petitioner, vs. NATIONAL POWER CORPORATION and COURT OF APPEALS, respondents. G.R. No. L-34656 June 29, 1988 MANILA ELECTRIC COMPANY, petitioner, vs. COURT OF APPEALS and NATIONAL POWER CORPORATION, respondents. FERNAN, J.: In these related petitions for review under Rule 45 of the Rules of Court, the Engineering Construction, Inc. [ECI] and the Manila Electric Company [MERALCO] question the decision of the Court of Appeals in CA-G.R. No. 47528-R which set aside the orders of the trial court directing execution pending appeal of a judgment for P1,108,985.31 in damages in favor of ECI. Petitioners also question the resolution of said court holding them liable for restitution of the garnished funds to the National Power Corporation [NPC]. On August 29, 1968, ECI filed a complaint for damages against the NPC in the then Court of First Instance of Manila, Branch 15, alleging that it suffered damages to its facilities and equipment due to the inundation of its campsite in Ipo, Norzagaray, Bulacan, as a direct result of the improper and careless opening by NPC of the spillway gates of Angat Dam at the height of typhoon "Welming" on November 4,1967. 1 On December 23, 1970, the trial court found NPC guilty of gross negligence and rendered its judgment, thus: WHEREFORE, judgment is rendered in favor of plaintiff and against defendant as follows: 1. Ordering defendant to pay plaintiff actual or compensatory damages in the amount of P675,785.31; 2. Ordering defendant to pay consequential damages in the amount of P233,200.00; *

3. Ordering defendant to pay plaintiff the amount of P50,000 as and by way of exemplary damages; and 4. Ordering defendant to pay plaintiff the amount of P50,000 as and for attorney's fees ... 2 NPC filed a notice of appeal from that decision but before it could perfect its appeal, ECI moved for and was granted execution pending appeal upon posting a covering bond of P200,000 which it later increased to P1,109,000 to fully answer for whatever damages NPC might incur by reason of the premature execution of the lower court's decision. 3 In granting said motion for the exceptional writ over the strong opposition of the NPC, the trial court adopted the grounds adduced by movant ECI. 1. x x x. 2. That the substantial portion of the award of damages refers to the actual or compensatory damages incurred by plaintiff, which are supported by voluminous documentary evidence, the genuineness and due execution of which were admitted and further, no evidence whatever was presented to contest the same; 3. That this case has been pending for years, as the plaintiff and the Honorable Court were led to believe that the matter in dispute would be settled amicably; 4. That an appeal by defendant would obviously be for purposes of delay; 5. That on appeal, the case would certainly drag on for many years, and in the meantime, the actual loss and damages sustained by plaintiff, who because of such loss have become heavily obligated and financially distressed, would remain uncompensated and unsatisfied 6. That also, plaintiff is willing and able to file a bond to answer for any damage which defendant may suffer as a result of an execution pending appeal. 4 Subsequently, Deputy Sheriff Restituto R. Quemada who was assigned to enforce the writ of execution, garnished in favor of ECI all amounts due and payable to NPC which were then in possession of MERALCO and sufficient to cover the judgment sum of P1,108,985.31. 5 Attempts to lift the order of execution having proved futile and the offer of a supersedeas bond having been rejected by the lower court, NPC filed with the Appellate Court a petition for certiorari. 6 In its challenged decision of October 20, 1971, the Court of Appeals granted NPCs petition and nullified the execution pending appeal of the judgment rendered by the trial court on December 28, 1970, as well as all issued writs and processes in connection with the execution. One justice dissented. 7 On November 11, 1971, MERALCO sought from the Appellate Court a clarification and reconsideration of the aforesaid decision on the ground, among others, that the decision was being used by NPC to compel MERALCOto return the amount of P1,114,545.23 (inclusive of sheriff's fees) in two checks which it had already entrusted to the deputy sheriff on February 23, 1971, who then indorsed and delivered the same to ECI. Whereupon, in its resolution of January 7, 1972, the Appellate Court held the sheriff, MERALCO and ECI liable to restore to NPC the amount due to NPC which MERALCO had earlier turned over to the sheriff for payment to ECI. 8 Their two motions for reconsideration having been denied, ECI and MERALCO filed separate petitions for review before this Court: Nos. L-34589 and 34656, the very petitions before us for adjudication. In this connection, it must be made clear that we are not concemed with the main appeal. For the present, we limit our discussion to the correctness of the extraordinary writ of execution pending appeal and the ordered restitution of the garnished funds--two collateral matters which have greatly exacerbated the existing dispute between the parties. We shall deal first with the propriety of the execution pending appeal. Section 2, Rule 39 of the Rules of Court provides: Execution pending appeal. On motion of the prevailing party with notice to the adverse party

the court may, in its discretion, order execution to issue even before the expiration of the time to appeal, upon good reasons to be stated in a special order. If a record on appeal is filed thereafter, the motion and the special order shall be included thereon. While the rule gives the court the discretionary power to allow immediate execution, the following requisites must be satisfied for its valid exercise: (a) There must be a motion by the prevailing party with notice to the adverse party; (b) There must be a good reasons for issuing the execution; and (c) The good reasons must be stated in a special order. In its assailed decision, the Appellate Court, through Justice Salvador V. Esguerra, observe that NPC, as defendant in the civil case for damages, was being ordered to pay the amount of P 1,108,985.31 pending appeal when practically 40% thereof was made up of awards of damages based on the court's sole and untrammeled discretion. Such amount might greatly be reduced by the superior court, especially the items for consequential and exemplary damages and attorney's fees which by themselves would amount to the "staggering" sum of P433,220.00 The Appellate Court noted the many instances when on review, the amounts for attorney's fees and exemplary and moral damages were drastically cut or eliminated altogether in the absence of proof that the losing party acted with malice, evident bad faith or in an oppressive manner. Inasmuch as the list submitted by ECI of the estimated losses and damages to its tunnel project caused by the instant flooding on November 4, 1967 was duly supported by vouchers presented in evidence, and considering that NPC, for its part, failed to submit proofs to refute or contradict such documentary evidence, we are constrained to sustain the order of execution pending appeal by the trial court but only as far as the award for actual or compensatory damages is concemed. We are not prepared to disagree with the lower court on this point since it was not sufficiently shown that it abused or exceeded its authority. With respect to the consequential and exemplary damages as well as attorney's fees, however, we concur with the Appellate Court in holding that the lower court had exceeded the limits of its discretion. Execution should have been postponed until such time as the merits of the case have been finally determined in the regular appeal. In the fairly recent case of RCPI, et al vs. Lantin Nos. L-59311 and 59320, January 31, 1985 , 134 SCRA 395, 400-401, the Court said: The execution of any award for moral and exemplary damages is dependent on the outcome of the main case. Unlike actual damages for which the petitioners may clearly be held liable if they breach a specific contract and the amounts of which are fixed and certain, liabilities with respect to moral and exemplary damages as well as the exact amounts remain uncertain and indefinite pending resolution by the Intermediate Appellate Court and eventually the Supreme Court. The existence of the factual bases of these types of damages and their casual relation to petitioners' act will have to be determined in the light of the assignments or errors on appeal. It is possible that the petitioners, after all, while liable for actual damages may not be liable for moral and exemplary damages. Or as in some cases elevated to the Supreme Court, the awards may be reduced. Indeed, as later events would show, the Appellate Court was proven right when it postulated that it is not beyond the realm of probability that NPCs appeal from the lower court's judgment could result in the substantial reduction of the consequential damages and attorney's fees and the deletion of exemplary damages. We take judicial notice of the fact that on August 24, 1987, the Court of Appeals rendered a

decision on the main appeal. 9 It affirmed the trial court's conclusion that NPC was guilty of negligence but differred in the award of damages. While it upheld the court a quo's award of P675,785.31 as actual damages, it reduced the consequential damages from P333,200.00 to P19,200.00 and the attorney's fees from P50,000 to P30,000.00 The grant of P50,000 as exemplary damages was eliminated. Altogether, the award of damages was modified from P1,108,985.31 to P724,985.31. From that decision, both the ECI and NPC filed their separate appeals to this Court. 10 Finally, on May 16, 1988, the Court promulgated its judgment affirming in all respects the Appellate Court's decision in CA-G.R. No. 49955-R, thus putting to rest the question of negligence and NPCs liability for damages. The point that the Court wishes to emphasize is this: Courts look with disfavor upon any attempt to execute a judgment which has not acquired a final character. Section 2, Rule 39, authorizing the premature execution of judgments, being an exception to the general rule, must be restrictively construed. It would not be a sound rule to allow indiscriminately the execution of a money judgment, even if there is a sufficient bond. "The reasons allowing execution must constitute superior circumstances demanding urgency which will outweigh the injury or damages should the losing party secure a reversal of the judgment."' 11 We come now to the second issue of whether petitioners, including the sheriff, are bound to restore to NPC the judgment amount which has been delivered to ECI in compliance with the writ of garnishment. In line with our pronouncement that we are sanctioning in this particular instance the execution pending appeal of actual but not consequential and exemplary damages and attorney's fees which must necessarily depend on the final resolution of the main cases, i.e., Nos. L-47379 and 47481, the direct consequence would be to authorizeNPC to proceed against the covering bond filed by ECI but only to the extent of the difference between the amount finally adjudicated by this Court in the main cases [P724,985.31] and the amount originally decreed by the trial court relating to the consequential and exemplary damages and attorney's fees [P1,108.985.31]. In other words,ECIs bond is held answerable to NPC for P384,000. But while partial restitution is warranted in favor of NPC, we find that the Appellate Court erred in not absolvingMERALCO, the garnishee, from its obligations to NPC with respect to the payment to ECI of P1,114,543.23, thus in effect subjecting MERALCO to double liability. MERALCO should not have been faulted for its prompt obedience to a writ of garnishment. Unless there are compelling reasons such as: a defect on the face of the writ or actual knowledge on the part of the garnishee of lack of entitlement on the part of the garnisher, it is not incumbent upon the garnishee to inquire or to judge for itself whether or not the order for the advance execution of a judgment is valid. Section 8, Rule 57 of the Rules of Court provides, Effect of attachment of debts and credits.-All persons having in their possession or under their control any credits or other similar personal property belonging to the party against whom attachment is issued, or owing any debts to the same, at the time of service upon them of a copy of the order of attachment and notice as provided in the last preceding section, shall be liable to the applicant for the amount of such credits, debts or other property, until the attachment be discharged, or any judgment recovered by him be satisfied, unless such property be delivered or transferred, or such debts be paid, to the clerk, sheriff or other proper officer of the court issuing the attachment. Garnishment is considered as a specie of attachment for reaching credits belonging to the judgment debtor and owing to him from a stranger to the litigation. Under the above-cited rule, the garnishee [the third person] is obliged to deliver the credits, etc. to the proper officer issuing the writ and "the law exempts from liability the person

having in his possession or under his control any credits or other personal property be, longing to the defendant, ..., if such property be delivered or transferred, ..., to the clerk, sheriff, or other officer of the court in which the action is pending." 12 Applying the foregoing to the case at bar, MERALCO, as garnishee, after having been judicially compelled to pay the amount of the judgment represented by funds in its possession belonging to the judgment debtor or NPC, should be released from all responsibilities over such amount after delivery thereof to the sheriff. The reason for the rule is self-evident. To expose garnishees to risks for obeying court orders and processes would only undermine the administration of justice. WHEREFORE, the Court in disposing of the two side issues of execution pending appeal and petitioners' liability for restitution, hereby MODIFIES the Court of Appeals' decision and resolution under review, and rules as follows: [a] NPC is authorized to proceed against the P1,109,000 bond filed by ECI to the extent of P384,000 which corresponds to the difference between the awards for consequential and exemplary damages and attorney's fees upheld by the Court in the main cases (Nos. L-47379 and 47481) and those decreed for the same items by the trial court; [b] MERALCO is declared absolved from any and all responsibilities in connection with the amount of P1,114,545.23 representing the NPC garnished funds and therefore relieved from the burden of restoring the same to NPC. SO ORDERED . G.R. No. L-34548 November 29, 1988 RIZAL COMMERCIAL BANKING CORPORATION, petitioner, vs. THE HONORABLE PACIFICO P. DE CASTRO and PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION,respondents

Meer, Meer & Meer for petitioner. The Solicitor General for respondents.

CORTES, J.: The crux of the instant controversy dwells on the liability of a bank for releasing its depositor's funds upon orders of the court, pursuant to a writ of garnishment. If in compliance with the court order, the bank delivered the garnished amount to the sheriff, who in turn delivered it to the judgment creditor, but subsequently, the order of the court directing payment was set aside by the same judge, should the bank be held solidarily liable with the judgment creditor to its depositor for reimbursement of the garnished funds? The Court does not think so. In Civil Case No. Q-12785 of the Court of First Instance of Rizal, Quezon City Branch IX entitled "Badoc Planters, Inc. versus Philippine Virginia Tobacco Administration, et al.," which was an action for recovery of unpaid tobacco deliveries, an Order (Partial Judgment) was issued on January 15, 1970 by the Hon. Lourdes P. San Diego, then Presiding Judge, ordering the defendants therein to pay jointly and severally, the plaintiff Badoc Planters, Inc. (hereinafter referred to as "BADOC") within 48 hours the aggregate amount of P206,916.76, with legal interests thereon. On January 26,1970, BADOC filed an Urgent Ex-Parte Motion for a Writ of Execution of the said Partial Judgment which was granted on the same day by the herein respondent judge who acted in place of the Hon. Judge San Diego who had just been elevated as a Justice of the Court of Appeals. Accordingly, the Branch Clerk of Court on the very same day, issued a Writ of Execution addressed to Special Sheriff Faustino Rigor, who then issued a Notice of Garnishment addressed to the General Manager and/or Cashier of Rizal Commercial Banking Corporation (hereinafter referred to as RCBC), the petitioner in this case, requesting a reply within five (5) days to said garnishment as to any property which the Philippine Virginia Tobacco Administration (hereinafter referred to as "PVTA") might have in the possession or control of petitioner or of any debts owing by the petitioner to said defendant. Upon receipt of such Notice, RCBC notified PVTA thereof to enable the PVTA to take the necessary steps for the protection of its own interest [Record on Appeal, p. 36] Upon an Urgent Ex-Parte Motion dated January 27, 1970 filed by BADOC, the respondent Judge issued an Order granting the Ex-Parte Motion and directing the herein petitioner "to deliver in check the amount garnished to Sheriff Faustino Rigor and Sheriff Rigor in turn is ordered to cash the check and deliver the amount to the plaintiff's representative and/or counsel on record." [Record on Appeal, p. 20;

Rollo, p. 5.] In compliance with said Order, petitioner delivered to Sheriff Rigor a certified check in the sum of P 206,916.76. Respondent PVTA filed a Motion for Reconsideration dated February 26,1970 which was granted in an Order dated April 6,1970, setting aside the Orders of Execution and of Payment and the Writ of Execution and ordering petitioner and BADOC "to restore, jointly and severally, the account of PVTA with the said bank in the same condition and state it was before the issuance of the aforesaid Orders by reimbursing the PVTA of the amount of P 206, 916.76 with interests at the legal rate from January 27, 1970 until fully paid to the account of the PVTA This is without prejudice to the right of plaintiff to move for the execution of the partial judgment pending appeal in case the motion for reconsideration is denied and appeal is taken from the said partial judgment." [Record on Appeal, p. 58] The Motion for Reconsideration of the said Order of April 6, 1970 filed by herein petitioner was denied in the Order of respondent judge dated June 10, 1970 and on June 19, 1970, which was within the period for perfecting an appeal, the herein petitioner filed a Notice of Appeal to the Court of Appeals from the said Orders. This case was then certified by the Court of Appeals to this Honorable Court, involving as it does purely questions of law. The petitioner raises two principal queries in the instant case: 1) Whether or not PVTA funds are public funds not subject to garnishment; and 2) Whether or not the respondent Judge correctly ordered the herein petitioner to reimburse the amount paid to the Special Sheriff by virtue of the execution issued pursuant to the Order/Partial Judgment dated January 15, 1970. The record reveals that on February 2, 1970, private respondent PVTA filed a Motion for Reconsideration of the Order/ Partial Judgment of January 15, 1970. This was granted and the aforementioned Partial Judgment was set aside. The case was set for hearings on November 4, 9 and 11, 1970 [Rollo, pp. 205-207.] However, in view of the failure of plaintiff BADOC to appear on the said dates, the lower court ordered the dismissal of the case against PVTA for failure to prosecute [Rollo, p. 208.] It must be noted that the Order of respondent Judge dated April 6, 1970 directing the plaintiff to reimburse PVTA t e amount of P206,916.76 with interests became final as to said plaintiff who failed to even file a motion for reconsideration, much less to appeal from the said Order. Consequently, the order to restore the account of PVTA with RCBC in the same condition and state it was before the issuance of the questioned orders must be upheld as to the plaintiff, BADOC. However, the questioned Order of April 6, 1970 must be set aside insofar as it ordered the petitioner RCBC, jointly and severally with BADOC, to reimburse PVTA. The petitioner merely obeyed a mandatory directive from the respondent Judge dated January 27, 1970, ordering petitioner 94 "to deliver in check the amount garnished to Sheriff Faustino Rigor and Sheriff Rigor is in turn ordered to cash the check and deliver the amount to the plaintiffs representative and/or counsel on record." [Record on Appeal, p. 20.] PVTA however claims that the manner in which the bank complied with the Sheriffs Notice of Garnishment indicated breach of trust and dereliction of duty on the part of the bank as custodian of government funds. It insistently urges that the premature delivery of the garnished amount by RCBC to the special sheriff even in the absence of a demand to deliver made by the latter, before the expiration of the fiveday period given to reply to the Notice of Garnishment, without any reply having been given thereto nor any prior authorization from its depositor, PVTA and even if the court's order of January 27, 1970 did not require the bank to immediately deliver the garnished amount constitutes such lack of prudence as to make it answerable jointly and severally with the plaintiff for the wrongful release of the money from the deposit of the PVTA. The respondent Judge in his controverted Order sustained such contention and blamed RCBC for the supposed "hasty release of the amount from the deposit of the PVTA without giving PVTA a chance to take proper steps by informing it of the action being taken against its deposit, thereby observing with prudence the five-day period given to it by the sheriff." [Rollo, p. 81.] Such allegations must be rejected for lack of merit. In the first place, it should be pointed out that RCBC did not deliver the amount on the strength solely of a Notice of Garnishment; rather, the release of the funds was made pursuant to the aforesaid Order of January 27, 1970. While the Notice of Garnishment dated January 26, 1970 contained no

demand of payment as it was a mere request for petitioner to withold any funds of the PVTA then in its possession, the Order of January 27, 1970 categorically required the delivery in check of the amount garnished to the special sheriff, Faustino Rigor. In the second place, the bank had already filed a reply to the Notice of Garnishment stating that it had in its custody funds belonging to the PVTA, which, in fact was the basis of the plaintiff in filing a motion to secure delivery of the garnished amount to the sheriff. [See Rollo, p. 93.] Lastly, the bank, upon the receipt of the Notice of Garnishment, duly informed PVTA thereof to enable the latter to take the necessary steps for the protection of its own interest [Record on Appeal, p. 36] It is important to stress, at this juncture, that there was nothing irregular in the delivery of the funds of PVTA by check to the sheriff, whose custody is equivalent to the custody of the court, he being a court officer. The order of the court dated January 27, 1970 was composed of two parts, requiring: 1) RCBC to deliver in check the amount garnished to the designated sheriff and 2) the sheriff in turn to cash the check and deliver the amount to the plaintiffs representative and/or counsel on record. It must be noted that in delivering the garnished amount in check to the sheriff, the RCBC did not thereby make any payment, for the law mandates that delivery of a check does not produce the effect of payment until it has been cashed. [Article 1249, Civil Code.] Moreover, by virtue of the order of garnishment, the same was placed in custodia legis and therefore, from that time on, RCBC was holding the funds subject to the orders of the court a quo. That the sheriff, upon delivery of the check to him by RCBC encashed it and turned over the proceeds thereof to the plaintiff was no longer the concern of RCBC as the responsibility over the garnished funds passed to the court. Thus, no breach of trust or dereliction of duty can be attributed to RCBC in delivering its depositor's funds pursuant to a court order which was merely in the exercise of its power of control over such funds. ... The garnishment of property to satisfy a writ of execution operates as an attachment and fastens upon the property a lien by which the property is brought under the jurisdiction of the court issuing the writ. It is brought into custodia legis, under the sole control of such court [De Leon v. Salvador, G.R. Nos. L-30871 and L-31603, December 28,1970, 36 SCRA 567, 574.] The respondent judge however, censured the petitioner for having released the funds "simply on the strength of the Order of the court which. far from ordering an immediate release of the amount involved, merely serves as a standing authority to make the release at the proper time as prescribed by the rules." [Rollo, p. 81.] This argument deserves no serious consideration. As stated earlier, the order directing the bank to deliver the amount to the sheriff was distinct and separate from the order directing the sheriff to encash the said check. The bank had no choice but to comply with the order demanding delivery of the garnished amount in check. The very tenor of the order called for immediate compliance therewith. On the other hand, the bank cannot be held liable for the subsequent encashment of the check as this was upon order of the court in the exercise of its power of control over the funds placed in custodia legis by virtue of the garnishment. In a recent decision [Engineering Construction Inc., v. National Power Corporation, G.R. No. L-34589, June 29, 1988] penned by the now Chief Justice Marcelo Fernan, this Court absolved a garnishee from any liability for prompt compliance with its order for the delivery of the garnished funds. The rationale behind such ruling deserves emphasis in the present case: But while partial restitution is warranted in favor of NPC, we find that the Appellate Court erred in not absolving MERALCO, the garnishee, from its obligations to NPC with respect to the payment of ECI of P 1,114,543.23, thus in effect subjecting MERALCO to double liability. MERALCO should not have been faulted for its prompt obedience to a writ of garnishment. Unless there are compelling reasons such as: a defect on the face of the writ or actual knowledge on the part of the garnishee of lack of entitlement on the part of the

garnisher, it is not incumbent upon the garnishee

Section 8, Rule 57 of the Rules of Court provides: Effect of attachment of debts and credits.All persons having in their possession or under their control any credits or other similar personal property belonging to the party against whom attachment is issued, or owing any debts to the same, all the time of service upon them of a copy of the order of attachment and notice as provided in the last preceding section, shall be liable to the applicant for the amount of such credits, debts or other property, until the attachment be discharged, or any judgment recovered by him be satisfied, unless such property be delivered or transferred, or such debts be paid, to the clerk, sheriff or other proper officer of the court issuing the attachment. Garnishment is considered as a specie of attachment for reaching credits belonging to the judgment debtor and owing to him from a stranger to the litigation. Under the above-cited rule, the garnishee [the third person] is obliged to deliver the credits, etc. to the proper officer issuing the writ and "the law exempts from liability the person having in his possession or under his control any credits or other personal property belonging to the defendant, ..., if such property be delivered or transferred, ..., to the clerk, sheriff, or other officer of the court in which the action is pending. [3 Moran, Comments on the Rules of Court 34 (1970 ed.)] Applying the foregoing to the case at bar, MERALCO, as garnishee, after having been judicially compelled to pay the amount of the judgment represented by funds in its possession belonging to the judgment debtor or NPC, should be released from all responsibilities over such amount after delivery thereof to the sheriff. The reason for

to inquire or to judge for itself whether or not the order for the advance execution of a judgment is valid.

the rule is self-evident. To expose garnishees to risks for obeying court orders and processes would only undermine the administration of justice. [Emphasis supplied.]

The aforequoted ruling thus bolsters RCBC's stand that its immediate compliance with the lower court's order should not have been met with the harsh penalty of joint and several liability. Nor can its liability to reimburse PVTA of the amount delivered in check be premised upon the subsequent declaration of nullity of the order of delivery. As correctly pointed out by the petitioner: xxx xxx xxx That the respondent Judge, after his Order was enforced, saw fit to recall said Order and decree its nullity, should not prejudice one who dutifully abided by it, the presumption being that judicial orders are valid and issued in the regular performance of the duties of the Court" [Section 5(m) Rule 131, Revised Rules of Court]. This should operate with greater force in relation to the herein petitioner which, not being a party in the case, was just called upon to perform an act in accordance with a judicial flat. A contrary view will invite disrespect for the majesty of the law and induce reluctance in complying with judicial orders out of fear that said orders might be subsequently invalidated and thereby expose one to suffer some

penalty or prejudice for obeying the same. And this is what will happen were the controversial orders to be sustained. We need not underscore the danger of this as a precedent. xxx xxx xxx [ Brief for the Petitioner, Rollo, p. 212; Emphasis supplied.] From the foregoing, it may be concluded that the charge of breach of trust and/or dereliction of duty as well as lack of prudence in effecting the immediate payment of the garnished amount is totally unfounded. Upon receipt of the Notice of Garnishment, RCBC duly informed PVTA thereof to enable the latter to take the necessary steps for its protection. However, right on the very next day after its receipt of such notice, RCBC was already served with the Order requiring delivery of the garnished amount. Confronted as it was with a mandatory directive, disobedience to which exposed it to a contempt order, it had no choice but to comply. The respondent Judge nevertheless held that the liability of RCBC for the reimbursement of the garnished amount is predicated on the ruling of the Supreme Court in the case of Commissioner of Public Highways v. Hon. San Diego [G.R. No. L-30098, February 18, 1970, 31 SCRA 616] which he found practically on all fours with the case at bar. The Court disagrees. The said case which reiterated the rule in Republic v. Palacio [G.R. No. L-20322, May 29, 1968, 23 SCRA 899] that government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgment is definitely distinguishable from the case at bar. In the Commissioner of Public Highways case [supra], the bank which precipitately allowed the garnishment and delivery of the funds failed to inform its depositor thereof, charged as it was with knowledge of the nullity of the writ of execution and notice of garnishment against government funds. In the aforementioned case, the funds involved belonged to the Bureau of Public Highways, which being an arm of the executive branch of the government, has no personality of its own separate from the National Government. The funds involved were government fundscovered by the rule on exemption from execution. This brings us to the first issue raised by the petitioner: Are the PVTA funds public funds exempt from garnishment? The Court holds that they are not. Republic Act No. 2265 created the PVTA as an ordinary corporation with all the attributes of a corporate entity subject to the provisions of the Corporation Law. Hence, it possesses the power "to sue and be sued" and "to acquire and hold such assets and incur such liabilities resulting directly from operations authorized by the provisions of this Act or as essential to the proper conduct of such operations." [Section 3, Republic Act No. 2265.] Among the specific powers vested in the PVTA are: 1) to buy Virginia tobacco grown in the Philippines for resale to local bona fide tobacco manufacturers and leaf tobacco dealers [Section 4(b), R.A. No. 2265]; 2) to contracts of any kind as may be necessary or incidental to the attainment of its purpose with any person, firm or corporation, with the Government of the Philippines or with any foreign government, subject to existing laws [Section 4(h), R.A. No. 22651; and 3) generally, to exercise all the powers of a corporation under the Corporation Law, insofar as they are not inconsistent with the provisions of this Act [Section 4(k), R.A. No. 2265.] From the foregoing, it is clear that PVTA has been endowed with a personality distinct and separate from the government which owns and controls it. Accordingly, this Court has heretofore declared that the funds of the PVTA can be garnished since "funds of public corporation which can sue and be sued were not exempt from garnishment" [Philippine National Bank v. Pabalan, G.R. No. L-33112, June 15, 1978, 83 SCRA 595, 598.] In National Shipyards and Steel Corp. v. CIR [G.R. No. L-17874, August 31, 1964, 8 SCRA 781], this Court held that the allegation to the effect that the funds of the NASSCO are public funds of the government and that as such, the same may not be garnished, attached or levied upon is untenable for, as a government-owned or controlled corporation, it has a personality of its own, distinct and separate from that of the government. This court has likewise ruled that other govemment-owned and controlled corporations like National Coal Company, the National Waterworks and Sewerage Authority

(NAWASA), the National Coconut Corporation (NACOCO) the National Rice and Corn Corporation (NARIC) and the Price Stabilization Council (PRISCO) which possess attributes similar to those of the PVTA are clothed with personalities of their own, separate and distinct from that of the government [National Coal Company v. Collector of Internal Revenue, 46 Phil. 583 (1924); Bacani and Matoto v. National Coconut Corporation et al., 100 Phil. 471 (1956); Reotan v. National Rice & Corn Corporation, G.R. No. L-16223, February 27, 1962, 4 SCRA 418.] The rationale in vesting it with a separate personality is not difficult to find. It is well-settled that when the government enters into commercial business, it abandons its sovereign capacity and is to be treated like any other corporation [Manila Hotel Employees' Association v. Manila Hotel Co. and CIR, 73 Phil. 734 (1941).] Accordingly, as emphatically expressed by this Court in a 1978 decision, "garnishment was the appropriate remedy for the prevailing party which could proceed against the funds of a corporate entity even if owned or controlled by the government" inasmuch as "by engaging in a particular business thru the instrumentality of a corporation, the government divests itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations" [Philippine National Bank v. CIR, G.R No. L-32667, January 31, 1978, 81 SCRA 314, 319.] Furthermore, in the case of PVTA, the law has expressly allowed it funds to answer for various obligations, including the one sought to be enforced by plaintiff BADOC in this case (i.e. for unpaid deliveries of tobacco). Republic Act No. 4155, which discounted the erstwhile support given by the Central Bank to PVTA, established in lieu thereof a "Tobacco Fund" to be collected from the proceeds of fifty per centum of the tariff or taxes of imported leaf tobacco and also fifty per centum of the specific taxes on locally manufactured Virginia type cigarettes. Section 5 of Republic Act No. 4155 provides that this fund shall be expended for the support or payment of: 1. Indebtedness of the Philippine Virginia Tobacco Administration and the former Agricultural Credit and Cooperative Financing Administration to FACOMAS and farmers and planters regarding Virginia tobacco transactions in previous years; 2. Indebtedness of the Philippine Virginia Tobacco Administration and the former Agricultural Credit and Cooperative Financing Administration to the Central Bank in gradual amounts regarding Virginia tobacco transactions in previous years; 3. Continuation of the Philippine Virginia Tobacco Administration support and subsidy operationsincluding the purchase of locally grown and produced Virginia leaf tobacco, at the present support and subsidy prices, its procurement, redrying, handling, warehousing and disposal thereof, and the redrying plants trading within the purview of their contracts; 4. Operational, office and field expenses, and the establishment of the Tobacco Research and Grading Institute. [Emphasis supplied.] Inasmuch as the Tobacco Fund, a special fund, was by law, earmarked specifically to answer obligations incurred by PVTA in connection with its proprietary and commercial operations authorized under the law, it follows that said funds may be proceeded against by ordinary judicial processes such as execution and garnishment. If such funds cannot be executed upon or garnished pursuant to a judgment sustaining the liability of the PVTA to answer for its obligations, then the purpose of the law in creating the PVTA would be defeated. For it was declared to be a national policy, with respect to the local Virginia tobacco industry, to encourage the production of local Virginia tobacco of the qualities needed and in quantities marketable in both domestic and foreign markets, to establish this industry on an efficient and economic basis, and to create a climate conducive to local cigarette manufacture of the qualities desired by the consuming public, blending imported and native Virginia leaf tobacco to improve the quality of locally manufactured cigarettes [Section 1, Republic Act No. 4155.] The Commissioner of Public Highways case is thus distinguishable from the case at bar. In said case, the Philippine National Bank (PNB) as custodian of funds belonging to the Bureau of Public Highways, an agency of the government, was chargeable with knowledge of the

exemption

of

such

government

funds

from

execution

and

garnishment pursuant to the elementary precept that public funds

cannot be disbursed without the appropriation required by law. On the other hand, the same cannot hold true for RCBC as the funds entrusted to its custody, which belong to a public corporation, are in the nature of private funds insofar as their susceptibility to garnishment is concerned. Hence, RCBC cannot be charged with lack of prudence for immediately complying with the order to deliver the garnished amount. Since the funds in its custody are precisely meant for the payment of lawfully-incurred obligations, RCBC cannot rightfully resist a court order to enforce payment of such obligations. That such court order subsequently turned out to have been erroneously issued should not operate to the detriment of one who complied with its clear order. Finally, it is contended that RCBC was bound to inquire into the legality and propriety of the Writ of Execution and Notice of Garnishment issued against the funds of the PVTA deposited with said bank. But the bank was in no position to question the legality of the garnishment since it was not even a party to the case. As correctly pointed out by the petitioner, it had neither the personality nor the interest to assail or controvert the orders of respondent Judge. It had no choice but to obey the same inasmuch as it had no standing at all to impugn the validity of the partial judgment rendered in favor of the plaintiff or of the processes issued in execution of such judgment. RCBC cannot therefore be compelled to make restitution solidarily with the plaintiff BADOC. Plaintiff BADOC alone was responsible for the issuance of the Writ of Execution and Order of Payment and so, the plaintiff alone should bear the consequences of a subsequent annulment of such court orders; hence, only the plaintiff can be ordered to restore the account of the PVTA. WHEREFORE, the petition is hereby granted and the petitioner is ABSOLVED from any liability to respondent PVTA for reimbursement of the funds garnished. The questioned Order of the respondent Judge ordering the petitioner, jointly and severally with BADOC, to restore the account of PVTA are modified accordingly. SO ORDERED. G.R. No. 107282 March 16, 1994 THE MANILA REMNANT CO., INC., petitioner, vs. HON. COURT OF APPEALS, AND SPS. OSCAR C. VENTANILLA AND CARMEN GLORIA DIAZ, respondents.

specific performance, annulment of deeds, and damages against Manila Remnant Co., Inc., A.U. Valencia and Co., Inc., and Carlos Crisostomo. It was docketed as Civil Case No. 26411 in the Court of First Instance of Quezon City, Branch 7-B. On November 17, 1980, the trial court rendered a decision declaring the contracts to sell in favor of the Ventanillas valid and subsisting, and annulling the contract to sell in favor of Crisostomo. It ordered the MRCI to execute an absolute deed of sale in favor of the Ventanillas, free from all liens and encumbrances. Damages and attorney's fees in the total amount of P210,000.00 were also awarded to the Ventanillas for which the MRCI, AUVCI, and Crisostomo were held solidarily liable. The lower court ruled further that if for any reason the transfer of the lots could not be effected, the defendants would be solidarily liable to the Ventanillas for reimbursement of the sum of P73,122.35, representing the amount paid for the two lots, and legal interest thereon from March 1970, plus the decreed damages and attorney's fees. Valencia was also held liable to MRCI for moral and exemplary damages and attorney's fees. From this decision, separate appeals were filed by Valencia and MRCI. The appellate court, however, sustained the trial court in toto. MRCI then filed before this Court a petition for certiorari to review the portion of the decision of the Court of Appeals upholding the solidary liability of MRCI, AUVCI and Carlos Crisostomo for the payment of moral and exemplary damages and attorney's fees to the Ventanillas. On November 22, 1990, this Court affirmed the decision by the Court of Appeals and declared the judgment of the trial court immediately executory.

The Present Case

Tabalingcos & Associates Law Office for petitioner. Oscar C. Ventanilla, Jr. and Augusto Garmaitan for private respondents.

CRUZ, J.: The present petition is an offshoot of our decision in Manila Remnant Co., Inc., (MRCI) v. Court of Appeals, promulgated on November 22, 1990. That case involved parcels of land in Quezon City which were owned by petitioner MRCI and became the subject of its agreement with A.U. Valencia and Co., Inc., (AUVCI) by virtue of which the latter was to act as the petitioner's agent in the development and sale of the property. For a stipulated fee, AUVCI was to convert the lands into a subdivision, manage the sale of the lots, execute contracts and issue official receipts to the lot buyers. At the time of the agreement, the president of both MRCI and AUVCI was Artemio U. Valencia. Pursuant to the above agreement, AUVCI executed two contracts to sell dated March 3, 1970, covering Lots 1 and 2, Block 17, in favor of spouses Oscar C. Ventanilla and Carmen Gloria Diaz for the combined contract price of P66,571.00, payable monthly in ten years. After ten days and without the knowledge of the Ventanilla couple, Valencia, as president of MRCI, resold the same parcels to Carlos Crisostomo, one of his sales agents, without any consideration. Upon orders of Valencia, the monthly payments of the Ventanillas were remitted to the MRCI as payments of Crisostomo, for which receipts were issued in his name. The receipts were kept by Valencia without the knowledge of the Ventanillas and Crisostomo. The Ventanillas continued paying their monthly installments. On May 30, 1973, MRCI informed AUVCI that it was terminating their agreement because of discrepancies discovered in the latter's collections and remittances. On June 6, 1973, Valencia was removed by the board of directors of MRCI as its president. On November 21, 1978, the Ventanilla spouses, having learned of the supposed sale of their lots to Crisostomo, commenced an action for

On January 25, 1991, the spouses Ventanilla filed with the trial court a motion for the issuance of a writ of execution in Civil Case No. 26411. The writ was issued on May 3, 1991, and served upon MRCI on May 9, 1991. In a manifestation and motion filed by MRCI with the trial court on May 24, 1991, the petitioner alleged that the subject properties could not be delivered to the Ventanillas because they had already been sold to Samuel Marquez on February 7, 1990, while their petition was pending in this Court. Nevertheless, MRCI offered to reimburse the amount paid by the respondents, including legal interest plus the aforestated damages. MRCI also prayed that its tender of payment be accepted and all garnishments on their accounts lifted. The Ventanillas accepted the amount of P210,000.00 as damages and attorney's fees but opposed the reimbursement offered by MRCI in lieu of the execution of the absolute deed of sale. They contended that the alleged sale to Samuel Marquez was void, fraudulent, and in contempt of court and that no claim of ownership over the properties in question had ever been made by Marquez. On July 19, 1991, Judge Elsie Ligot-Telan issued the following order: To ensure that there is enough amount to cover the value of the lots involved if transfer thereof to plaintiff may no longer be effected, pending litigation of said issue, the garnishment made by the Sheriff upon the bank account of Manila Remnant may be lifted only upon the deposit to the Court of the amount of P500,000.00 in cash. MRCI then filed a manifestation and motion for reconsideration praying that it be ordered to reimburse the Ventanillas in the amount of P263,074.10 and that the garnishment of its bank deposit be lifted. This motion was denied by the trial court in its order dated September 30, 1991. A second manifestation and motion filed by MRCI was denied on December 18, 1991. The trial court also required MRCI to show cause why it should not be cited for contempt for disobedience of its judgment. These orders were questioned by MRCI in a petition for certiorari before the respondent court on the ground that they were issued with grave abuse of discretion. The Court of Appeals ruled that the contract to sell in favor of Marquez did not constitute a legal impediment to the immediate execution of the judgment. Furthermore, the cash bond fixed by the trial court for the lifting of the garnishment was fair and reasonable because the value of the lot in question had increased considerably. The appellate court also set aside the show-cause order and held that the trial court should have proceeded under Section 10, Rule 39 of the Rules of Court and not Section 9 thereof. 1

In the petition now before us, it is submitted that the trial court and the Court of Appeals committed certain reversible errors to the prejudice of MRCI. The petitioner contends that the trial court may not enforce it garnishment order after the monetary judgment for damages had already been satisfied and the amount for reimbursement had already been deposited with the sheriff. Garnishment as a remedy is intended to secure the payment of a judgment debt when a well-founded belief exists that the erring party will abscond or deliberately render the execution of the judgment nugatory. As there is no such situation in this case, there is no need for a garnishment order. It is also averred that the trial court gravely abused its discretion when it arbitrarily fixed the amount of the cash bond for the lifting of the garnishment order at P500,000.00. MRCI further maintains that the sale to Samuel Marquez was valid and constitutes a legal impediment to the execution of the absolute deed of sale to the Ventanillas. At the time of the sale to Marquez, the issue of the validity of the sale to the Ventanillas had not yet been resolved. Furthermore, there was no specific injunction against the petitioner reselling the property. Lastly, the petitioner insists that Marquez was a buyer in good faith and had a right to rely on the recitals in the certificate of title. The subject matter of the controversy having passed to an innocent purchaser for value, the respondent court erred in ordering the execution of the absolute deed of sale in favor of the Ventanillas. For their part, the respondents argue that the validity of the sale to them had already been established even while the previous petition was still pending resolution. That petition only questioned the solidary liability of MRCI to the Ventanillas. The portion of the decision ordering the MRCI to execute an absolute deed of sale in favor of the Ventanillas became final and executory when the petitioner failed to appeal it to the Supreme Court. There was no need then for an order enjoining the petitioner from re-selling the property in litigation. They also point to the unusual lack of interest of Marquez in protecting and asserting his right to the disputed property, a clear indication that the alleged sale to him was merely a ploy of the petitioner to evade the execution of the absolute deed of sale in their favor. The petition must fail. The validity of the contract to sell in favor of the Ventanilla spouses is not disputed by the parties. Even in the previous petition, the recognition of that contract was not assigned as error of either the trial court or appellate court. The fact that the MRCI did not question the legality of the award for damages to the Ventanillas also shows that it even then already acknowledged the validity of the contract to sell in favor of the private respondents. On top of all this, there are other circumstances that cast suspicion on the validity, not to say the very existence, of the contract with Marquez. First, the contract to sell in favor of Marquez was entered into after the lapse of almost ten years from the rendition of the judgment of the trial court upholding the sale to the Ventanillas. Second, the petitioner did not invoke the contract with Marquez during the hearing on the motion for the issuance of the writ of execution filed by the private respondents. It disclosed the contract only after the writ of execution had been served upon it. Third, in its manifestation and motion dated December 21, 1990, the petitioner said it was ready to deliver the titles to the Ventanillas provided that their counterclaims against private respondents were paid or offset first. There was no mention of the contract to sell with Marquez on February 7, 1990. Fourth, Marquez has not intervened in any of these proceedings to assert and protect his rights to the subject property as an alleged purchaser in good faith. At any rate, even if it be assumed that the contract to sell in favor of Marquez is valid, it cannot prevail over the final and executory judgment ordering MRCI to execute an absolute deed of sale in favor of the Ventanillas. No less importantly, the records do not show that Marquez has already paid the supposed balance amounting to P616,000.00 of the original price of over P800,000.00. 2 The Court notes that the petitioner stands to benefit more from the supposed contract with Marquez than from the contract with the Ventanillas with the agreed price of only P66,571.00. Even if it paid the P210,000.00 damages to the private respondents as decreed by the

trial court, the petitioner would still earn more profit if the Marquez contract were to be sustained. We come now to the order of the trial court requiring the posting of the sum of P500,000.00 for the lifting of its garnishment order. While the petitioners have readily complied with the order of the trial court for the payment of damages to the Ventanillas, they have, however, refused to execute the absolute deed of sale. It was for the purpose of ensuring their compliance with this portion of the judgment that the trial court issued the garnishment order which by its term could be lifted only upon the filling of a cash bond of P500,000.00. The petitioner questions the propriety of this order on the ground that it has already partially complied with the judgment and that it has always expressed its willingness to reimburse the amount paid by the respondents. It says that there is no need for a garnishment order because it is willing to reimburse the Ventanillas in lieu of execution of the absolute deed of sale. The alternative judgment of reimbursement is applicable only if the conveyance of the lots is not possible, but it has not been shown that there is an obstacle to such conveyance. As the main obligation of the petitioner is to execute the absolute deed of sale in favor of the Ventanillas, its unjustified refusal to do so warranted the issuance of the garnishment order. Garnishment is a species of attachment for reaching credits belonging to the judgment debtor and owing to him from a stranger to the litigation. 3 It is an attachment by means of which the plaintiff seeks to subject to his claim property of the defendant in the hands of a third person or money owed by such third person or garnishee to the defendant. 4 The rules on attachment also apply to garnishment proceedings. A garnishment order shall be lifted if it established that: (a) the party whose accounts have been garnished has posted a counterbond or has made the requisite cash deposit; 5 (b) the order was improperly or irregularly issued 6 as where there is no ground for garnishment 7 or the affidavit and/or bond filed therefor are defective or insufficient; 8 (c) the property attached is exempt from execution, hence exempt from preliminary attachment 9 or (d) the judgment is rendered against the attaching or garnishing creditor. 10 Partial execution of the judgment is not included in the above enumeration of the legal grounds for the discharge of a garnishment order. Neither does the petitioner's willingness to reimburse render the garnishment order unnecessary. As for the counterbond, the lower court did not err when it fixed the same at P500,000.00. As correctly pointed out by the respondent court, that amount corresponds to the current fair market value of the property in litigation and was a reasonable basis for determining the amount of the counterbond. Regarding the refusal of the petitioner to execute the absolute deed of sale, Section 10 of Rule 39 of the Rules of Court reads as follows: Sec. 10. Judgment for specific act; vesting title If a judgment directs a party to execute a conveyance of land, or to deliver deeds or other documents, or to perform any other specific act, and the party fails to comply within the time specified, the court may direct the act to be done at the cost of the disobedient party by some other person appointed by the court and the act when so done shall have like effect as if done by the party. If real or personal property is within the Philippines, the court in lieu of directing a conveyance thereof may enter judgment divesting the title of any party and vesting it in others and such judgment shall have the force and effect of a conveyance executed in due form of law. Against the unjustified refusal of the petitioner to accept payment of the balance of the contract price, the remedy of the respondents is consignation, conformably to the following provisions of the Civil Code: Art. 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released

from responsibility by the consignation of the thing or sum due. . . Art. 1258. Consignation shall be made by depositing the things due at the disposal of the judicial authority, before whom the tender of payment shall be proved, in a proper case, and the announcement of the consignation in other cases. The consignation having been made, the interested parties shall also be notified thereof. Art. 1260. Once the consignation has been duly made, the debtor may ask the judge to order the cancellation of the obligation. Accordingly, upon consignation by the Ventanillas of the sum due, the trial court may enter judgment canceling the title of the petitioner over the property and transferring the same to the respondents. This judgment shall have the same force and effect as conveyance duly executed in accordance with the requirements of the law. In sum, we find that: 1. No legal impediment exists to the execution, either by the petitioner or the trial court, of an absolute deed of sale of the subject property in favor of the respondent Ventanillas; and 2. The lower court did not abuse its discretion when it required the posting of a P500,000.00 cash bond for the lifting of the garnishment order. WHEREFORE, the petition is DENIED and the challenged decision of the Court of Appeals is AFFIRMED in toto, with costs against the petitioner. It is so ordered. G.R. No. 104133, April 18, 1995 SPOUSES EMILIO ABINUJAR AND MILAGROS M. LANA, PETITIONERS, VS. THE COURT OF APPEALS AND SPOUSES SANTIAGO RAMIRO AND FLORENTINA RAMIRO, RESPONDENTS. DECISION QUIASON, J.: This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the Decision dated December 27, 1991 and the Resolution dated February 11, 1992 of the Court of Appeals in CAG.R. SP No. 24683. I On October 10, 1987, petitioners executed a Deed of Sale with Right to Repurchase in favor of private respondents, involving a residential house located at No. 346 Algeciras St., Sampaloc, Manila. Due to serious financial and business reverses, petitioners were not able to redeem the property within four months as agreed upon. On October 24, 1989, private respondents filed a complaint for ejectment in the Metropolitan Trial Court of the City of Manila, docketed as Civil Case No. 130352-CV against petitioners. On December 27, 1989, the parties, assisted by their counsels, executed a compromise agreement. In an order dated March 15, 1990, the Metropolitan Trial Court approved the compromise agreement. The order reproduced the agreement as follows: 1. That defendants [petitioners herein] agree to pay plaintiffs [private respondents herein] in the amounts and on the dates specifically indicated herein below: P50,000.00 on Jan. 31, 1990; 10,000.00 on Feb. 28, 1990; 10,000.00 on March 31, 1990; 10,000.00 on April 30, 1990; 10,000.00 on May 31, 1990; 10,000.00 on June 30, 1990; 10,000.00 on July 31, 1990; 10,000.00 on August 31, 1990; 10,000.00 on September 30, 1990; 2. That failure on the part of the defendants to pay three (3) consecutive payments, plaintiffs will be entitled to a writ of execution, unless the parties agree to extend the period of entitlement to a writ of execution in writing to be submitted and/or approved by this Honorable Court; xxx (Rollo, p. 53). On April 15, 1990, private respondents filed a motion for execution on the ground that petitioners failed to pay the first three installments stipulated in the compromise agreement, to wit: P50,000.00 on January 31, 1990; P10,000.00 on February 28, 1990; and P10,000.00 on March 31, 1990.

On April 6, 1990, petitioners filed an Urgent Ex-Parte Motion for Reconsideration and/or Correct Order of this Court calling attention to a typographical error in the Order dated March 15, 1990, and asking that the amount of P10,000.00 payable on September 30, 1990 be corrected and changed to the agreed amount of P5,000.00. On April 25, 1990, the Metropolitan Trial Court issued an order granting the motion for correction of the typographical error in the decision. On August 17, 1990, petitioners filed an ex-parte motion asking that the check payments previously deposited by them with the court, be accepted and be given to respondents in compliance with their compromise agreement. On August 23, 1990, respondents opposed petitioners exparte motion and stated that they would not renew the compromise agreement with petitioners. The Metropolitan Trial Court denied private respondents motion for execution dated April 15, 1990 and another similar motion dated June 26, 1990. On October 12, 1990, respondents filed a petition for mandamus with us (G.R. No. 95470). In a resolution dated November 5, 1990, we referred the case to the Executive Judge of the Regional Trial Court, Manila. Petitioners moved to dismiss the petition for mandamus. On March 14, 1991, the Regional Trial Court denied the motion to dismiss and issued the assailed resolution commanding the Metropolitan Trial Court to issue a writ of execution of the decision approving the compromise agreement in Civil Case No. 130352-CV. In compliance with the said resolution, the Metropolitan Trial Court issued an order dated March 27, 1991 directing the issuance of a writ of execution to enforce the compromise agreement entered into by the parties. On April 11, 1991, a Sheriffs Notice to Voluntarily Vacate the Premises was served on petitioner. Petitioners then filed a petition for certiorari with a prayer for the issuance of a temporary restraining order and a writ of injunction with the Court of Appeals (CA-G.R. SP No. 24683). On December 27, 1991, the Court of Appeals dismissed the petition. Likewise, the said court denied the motion for reconsideration filed by petitioner. II Petitioners contend that both the Regional Trial Court and Metropolitan Trial Court acted with grave abuse of discretion, the former in issuing a resolution directing the Metropolitan Trial Court to issue a writ of execution against petitioners herein, and the latter, in issuing said writ of execution. III A compromise agreement is a contract between the parties, which if not contrary to law, morals or public policy, is valid and enforceable between them (Municipal Board of Cabanatuan City v. Samahang Magsasaka, Inc., 62 SCRA 435 [1975]). There are two kinds of compromise agreements, the judicial, which puts an end to a pending litigation, and the extrajudicial, which is to avoid a litigation (Civil Code of the Philippines, Art. 2028; Caguioa, VI Commentaries and Cases on Civil Law 292 [1970]). As a contract, a compromise agreement is perfected by mutual consent (Rovero v. Amparo, 91 Phil. 228 [1952]). A judicial compromise, however, while binding between the parties upon its execution, is not executory until it is approved by the court and reduced to a judgment. Article 2037 of the Civil Code of the Philippines provides: A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise. 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 courts ministerial duty enforceable by mandamus (Maceda, Jr. v. Moreman Builders Co., Inc., 203 SCRA 293 [1991]). In the compromise agreement, petitioners obligated themselves to pay private respondents the amount of P50,000.00 on January 31, 1990, P10,000.00 on February 28, 1990, and P10,000.00 on March 31, 1990. Petitioners received a copy of the decision of the Metropolitan Trial Court approving the compromise agreement on March 26, 1990.

Clearly, there was a breach, for it was only on August 17, 1990 that petitioners attempted to pay by means of nine postdated checks the amounts agreed upon. In effect, the first installment payment of P50,000.00 due on January 31, 1990 was moved to August 31, 1990, the second installment of P10,000.00 due on February 28, 1990 was moved to September 30, 1990 and so forth, thereby making the last installment of P5,000.00 due on September 30, 1990 moved to April 30, 1991. This is tantamount to novating the original agreement entered into by the parties without the consent of private respondents. Inasmuch as a judicial compromise becomes binding between the parties upon its execution, petitioners should have paid the installments falling due even before the approval thereof by the trial court. But assuming that a judicial compromise is not perfected until it is approved by the court, still petitioner should have paid the installments due on March 31, 1990, together with the installments due on January 31 and February 28, 1990 on or before March 31, 1990. Petitioners also assail the validity of the issuance by the Deputy Sheriff of the notice to voluntarily vacate the premises by way of enforcing the decision approving the compromise agreement. They maintain that their obligation is monetary in nature and the applicable rule should have been Section 15, Rule 39 and not Section 13, Rule 39 of the Revised Rules of Court. Petitioners contention has merit. When the parties entered into a compromise agreement, the original action for ejectment was set aside and the action was changed to a monetary obligation. A perusal of the compromise agreement signed by the parties and approved by the inferior court merely provided that in case the defendants (petitioners herein) failed to pay three monthly installments, the plaintiffs (private respondents herein) would be entitled to a writ of execution, without specifying what the subject of execution would be. Said agreement did not state that petitioners would be evicted from the premises subject of the suit in case of any default in complying with their obligation thereunder. This was the result of the careless drafting thereof for which only private respondents were to be blamed. A judgment is the foundation of a writ of execution which draws its vitality therefrom (Monaghon v. Monaghon, 25 Ohio St. 325). An officer issuing a writ of execution is required to look to the judgment for his immediate authority (Sydnor v. Roberts, 12 Tex. 598). An execution must conform to and be warranted by the judgment on which it was issued (Francisco, The Revised Rules of Court 641 [1966]; Kramer v. Montgomery, 206 Okla. 190, 242 P. 2d 414 [1952]). There should not be a substantial variance between the judgment and the writ of execution (Avery v. Lewis, 10 Vt. 332). Thus, an execution is fatally defective if the judgment was for a sum of money and the writ of execution was for the sale of mortgaged property (Bank of Philippine Islands v. Green, 48 Phil. 284 [1925]). As petitioners obligation under the compromise agreement as approved by the court was monetary in nature, private respondents can avail only of the writ of execution provided in Section 15, Rule 39 of the Revised Rules of Court, and not that provided in Section 13. Section 15, Rule 39 provides: Execution of money judgments. The officer must enforce an execution of a money judgment by levying on all the property, real and personal of every name and nature whatsoever, and which may be disposed of for value, of the judgment debtor not exempt from execution, or on a sufficient amount of such property, if there be sufficient, and selling the same, and paying to the judgment creditor, or his attorney, so much of the proceeds as will satisfy the judgment. Any excess in the proceeds over the judgment and accruing costs must be delivered to the judgment debtor, unless otherwise directed by the judgment or order of the court. When there is more property of the judgment debtor than is sufficient to satisfy the judgment and accruing costs, within the view of the officer, he must levy only on such part of the property as is amply sufficient to satisfy the judgment and costs. 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. On the other hand, Section 13, Rule 39 provides:

How execution for the delivery or restitution of property enforced.- The officer must enforce an execution for the delivery or restitution of property by ousting therefrom the person against whom the judgment is rendered and placing the judgment creditor in possession of such property, and by levying as hereinafter provided upon so much of the property of the judgment debtor as will satisfy the amount of the judgment and costs included in the writ of execution. WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the MODIFICATION that the Sheriff is directed to enforce the execution only of the money judgment in accordance with Section 15, Rule 39 of the Revised Rules of Court. SO ORDERED. G.R. No. L-30982 January 31, 1930 THE PHILIPPINE NATIONAL BANK, plaintiff-appellant, vs. OLUTANGA LUMBER COMPANY, defendant-appellee.

Camus and Delgado for appellant. Jose Erquiaga for defendant-appellee. Araneta and Zaragoza for appellee Bank of the Philippine Islands. VILLA-REAL, J.:

This appeal is taken by the Philippine National Bank from an order of the Court of First Instance of Manila, the dispositive part of which is as follows: The Philippine National Bank having appeared as an ordinary creditor in the involuntary insolvency of the Olutanga Lumber Company, civil case No. 33048 of this court, claiming the sum attached by the sheriff, it thereby renounced its preferred right acquired through garnishment issued in the present case; and for that reason, the motion of the Bank of the Philippine Islands is hereby granted, and the sheriff of the City of Manila is hereby ordered to return to it the sum deposited by virtue of the garnishment, after deducting therefrom his legal fees to which he has a perfect right notwithstanding the result arrived at. In support of its appeal, the appellant assigns the following alleged errors committed by the trial court in its judgment, to wit: 1. The lower court erred in holding, in its said order of March 31, 1928, that appellant the Philippine National Bank had waived its lien acquired by garnishment in the present case by joining as an unsecured creditor the petition for the involuntary insolvency of the Olutanga Lumber Company. 2. The lower court erred in holding, in its said order of March 31, 1928, that the garnishment issued in the present case referred only to P16,656.30, and in ordering the difference between said sum and the amount of P30,092.11 deposited with the sheriff of Manila to be returned to the Bank of the Philippine Islands after deducting the sheriff's fees therefrom. 3. The lower court erred in denying the motion of the appellant of November 14, 1928. The following facts are necessary and pertinent to resolve the questions raised in the present appeal: In civil case entitled the Bank of the Philippine Islands, plaintiff and appellee, vs. Olutanga Lumber Company, defendant and appellant, G. R. No. 27045,1 said plaintiff and appellee was ordered by this court to pay to the aforesaid defendant and appellant a certain sum amounting to P31,242.11, Philippine currency. Upon the return of the case to the Court of First Instance of Zamboanga, the corresponding writ of execution was issued, which was complied with by the sheriff of said province by presenting it to the manager of the branch of the Bank of the Philippine Islands in the City of Zamboanga, on January 10, 1928, but without levying execution on any property belonging to the execution debtor. On the same date, the aforesaid sheriff addressed to the central office of said bank at Manila the following telegram: Execution Bank Philippine Islands versus Olutanga Lumber Company served today manager Zamboanga branch. Please authorize him pay amount due defendant Olutanga Lumber plus sheriff fees otherwise levy will be made on your Zamboaga office. LUIS PANAGUITON, Provincial Sheriff. On the same date, January 10, 1928, before receiving the foregoing telegram, the central office of the Bank of the Philippine Islands in Manila was notified by the sheriff of the City of Manila that all the credits and debts contracted by it with the Olutanga Lumber Company,

amounting to P16,656.30, plus the interest at the rate of 12 per cent per annum from April 19, 1922 until fully paid, were levied upon in the name of the Philippine National Rank by virtue of a writ of attachment issued in civil case No. 32936 of the Court of First Instance of Manila. On the following day, January 11, 1928, the Bank of the Philippine Islands, in reply to said notice, addressed a letter to the sheriff of the City of Manila, notifying the latter that, pursuant to his notice of attachment, it retained at the disposal of said sheriff the aforesaid sum of P16,656.30, plus interest at the rate of 12 per cent per annum from April 19, 1922 until such date as may be designated. On the same date, January 11, 1928, the sheriff of the City of Manila sent a letter to the Bank of the Philippine Islands at Manila, requiring the latter to deliver to him the sum of P32,109,45, theretofore attached, belonging to the Olutanga Lumber Company. After the delivery to the sheriff of the City of Manila of the amount of the judgment in favor of the Olutanga Lumber Company, rendered in civil case No. 1176 of the Court of First Instance of Zamboanga, G. R. No. 27045 of this court, the Bank of the Philippine Islands notified the provincial sheriff of Zamboanga by telegram, on January 12, 1928, that the amount of the judgment in favor of the Olutanga Lumber Company against said bank had been delivered to the sheriff of the City of Manila, and that any question on that subject should be taken up with him. On January 14, 1928, the provincial sheriff of Zamboanga sent a communication to the manager of the Bank of the Philippine Islands in said city, notifying him that all the money he had in his possession or control, belonging to the Bank of the Philippine Islands, was levied upon by virtue of an order of execution issued by the Court of First Instance of Zamboanga in civil case No. 1176, entitled Bank of the Philippine Islands vs. Olutanga Lumber Company, G. R. No. 27045 of this court, copy of which order of execution was served upon him on January 10, 1928. On January 14, 1928, the sheriff of the City of Manila sent a telegram to the sheriff of the Province of Zamboanga, telling him that the amount of the judgment against the Bank of the Philippine Islands and in favor of the Olutanga Lumber Company, which had been attached by virtue of two writs of attachment issued by the Philippine National Bank and the Standard Oil company of New York against the Olutanga Lumber Company, had been deposited with him by said Bank of the Philippine Islands. Notwithstanding the fact that the provincial sheriff of Zamboanga had been duly informed of the levy made by the sheriff of the City of Manila upon the funds of the Olutanga Lumber Company in possession of the herein appellee, the Bank of the Philippine Islands, and of the delivery of said funds to said judicial officer of the City of Manila, he attempted to collect from the branch of said Bank of the Philippine Islands at Zamboanga the amount of the judgment in favor of the Olutanga Lumber Company, threatening to levy, and in fact did levy, an attachment against said branch. In view of this act of the provincial sheriff of Zamboanga, the herein appellee, the Bank of the Philippine Islands, had to file a petition for prohibition with this court against the Judge of the Court of First Instance of Zamboanga, the provincial sheriff of said province and the Olutanga Lumber Company, docketed as G. R. No. 29043 of this court. Upon hearing said petition, this court entered the following resolution on February 9, 1928: Upon consideration of the petition filed in case G. R. No. 29043, Banco de las Islas Filipinas vs. J. Horilleno et al., and of the answer interposed by the respondents in connection with the arguments adduced by both parties in their memoranda and during the hearing of said case, and it appearing that the writ of execution complained of was issued and served upon the petitioner before the latter received notice by the garnishment, and two days before he was required by the sheriff of Manila to deliver the amount mentioned in the said garnishment proceedings, wherefore, the respondent judge did not exceed its jurisdiction in issuing the aforesaid writ of execution, it is ordered that the petition for a writ of prohibition be and is hereby denied, with costs against the petitioner. Mr. Justice Street took no part. On February 10, 1928, the clerk of this court sent the following telegram to the provincial sheriff of Zamboanga:

Supreme Court denied writ of prohibition requested by Bank Philippine Islands to stop execution judgment in favor Olutanga Lumber Company you may proceed with execution forthwith. Upon receipt of the foregoing telegram, the provincial sheriff of Zamboanga sent the following letter to the manager of the Bank of the Philippine Islands at Zamboanga: SIR: With reference to the levy made by the undersigned on your office on January 14, 1928, in the sum of thirty-two thousand pesos (P32,000), Philippine currency, to cover the amount claimed in the order of execution issued by the Court of First Instance of Zamboanga in civil case No. 1176, "The Bank of the Philippine Islands vs. Olutanga Lumber Company," and R. G. No. 27045, which levy has been suspended by order of the Honorable Supreme Court by virtue of the writ of prohibition filed by the Bank of the Philippine Islands against the undersigned and others, I have the honor to inform you that said writ of prohibition has been denied by the Supreme Court as per telegram received by the undersigned, a copy of which is herewith inclosed. In view thereof, and in pursuance of the order of execution above referred to, you are hereby ordered to deliver to the undersigned, immediately upon your receipt hereof, the sum of thirty-one thousand five hundred ninety-six pesos and eighty-three centavos (P31,596.83), Philippine currency, which is the amount recovered by the Olutanga Lumber company in the Supreme Court including interests, costs and sheriff's fees. Zamboanga, Zamboanga, February 11, 1928. (Sgd.) LUIS PANAGUITON In view of this urgent and peremptory demand of the provincial sheriff of Zamboanga, the manager of the Bank of the Philippine Islands at Zamboanga had no other remedy than to deliver to the sheriff of Zamboanga the sum of P31,596.83. The only question necessary to be decided in this appeal is whether the funds placed by the Bank of the Philippine Islands in possession of the sheriff of the City of Manila, which had been attached in the name of the Philippine National Bank and against the Olutanga Lumber Company, had been released from said attachment when the aforesaid Bank of the Philippine Islands, by judicial order, paid the judgment rendered by this court against the said Bank of the Philippine Islands and in favor of the Olutanga Lumber Company. We have seen that after the central office of the Bank of the Philippine Islands in the City of Manila had deposited with the sheriff of the City of Manila the sum of P32,109.45, by virtue of a demand made upon it by the latter in compliance with an order of attachment issued by the Court of First Instance of Manila in civil case No. 32936, wherein the Philippine National Bank was and still is the plaintiff and the Olutanga Lumber Company was and still is the defendant, which sum of P32,109.45 was the amount of the judgment rendered in civil case No. 1176 of the Court of First Instance of Zamboanga, G. R. No. 27045 of this court, in favor of the Olutanga Lumber Company and against the Bank of the Philippine Islands, said central office of the Bank of the Philippine Islands notified the provincial sheriff of Zamboanga of said consignation; but the latter, notwithstanding the attachment of said amount by the sheriff of the City of Manila, tried to collect from the branch office in Zamboanga of the Bank of the Philippine Islands the amount of said judgment. Under the circumstances the Zamboanga branch had to resort to this court for a remedy to prevent execution of said judgment. This court denied the remedy prayed for, and upon receipt of notice of said denial the provincial sheriff of Zamboanga insisted in collecting from the Zamboanga branch of the Bank of the Philippine Islands the amount of said judgment, which said bank had to pay. The general rule is that, where attached properties belonging to the principal debtor are taken out of the hands of a person by legal process, after he had been notified of the order of attachment, said person cannot be made to answer for the properties in a proceeding to carry out said attachment (28 Corpus Juris, paragraph 362, page 264). In the present case, the fact that the funds attached in the possession of the Bank of the Philippine Islands, belonging to the Olutanga Lumber Company, had been deposited with the sheriff of the City of Manila by order of said officer, does not change the juridical situation

Provincial Sheriff

of said funds as attached in the possession of the Bank of the Philipine Islands, and, according to the above-quoted rule, the aforesaid Bank of the Philippine Islands, having been judicially compelled to pay the amount of the judgment represented by said funds to the Olutanga Lumber Company, after having employed all the legal means to avoid it, is released from all responsibility to the Philippine National Bank in whose favor the writ of attachment was issued. For the foregoing considerations, we are of the opinion, and so hold, that when a person has funds in his possession belonging to a debtor, and said funds are attached by a creditor of the latter, said person is relieved from all responsibility to said creditor if he is judicially compelled to deliver said funds to the aforesaid debtor. Wherefore, the dispositive part of the order appealed from is affirmed in so far as it grants the motion of the Bank of the Philippine Islands, and the sheriff of the City of Manila is hereby ordered to return to said bank the amount deposited by virtue of the writ of attachment, after deducting his legal fees, with costs against the appellant. So ordered. G.R. No. L-60887 November 13, 1991 PERLA COMPANIA DE SEGUROS, INC., petitioner, vs. HON. JOSE R. RAMOLETE, PRIMITIVA Y. PALMES, HONORATO BORBON, SR., OFFICE OF THE PROVINCIAL SHERIFF, PROVINCE OF CEBU, respondents. Hector L. Fernandez for petitioner. Domingo Quibranza and Vicente A. Quibranza for private respondents. FELICIANO, J.:p The present Petition for Certiorari seeks to annul: (a) the Order dated 6 August 1979 1 which ordered the Provincial Sheriff to garnish the third-party liability insurance policy issued by petitioner Perla Compania de Seguros, Inc. ("Perla") in favor of Nelia Enriquez, judgment debtor in Civil Case No. R-15391; (b) the Order dated 24 October 1979 2 which denied the motion for reconsideration of the 6 August 1979 Order; and (c) the Order dated 8 April 1980 3 which ordered the issuance of an alias writ of garnishment against petitioner. In the afternoon of 1 June 1976, a Cimarron PUJ owned and registered in the name of Nelia Enriquez, and driven by Cosme Casas, was travelling from Cebu City to Danao City. While passing through Liloan, Cebu, the Cimarron PUJ collided with a private jeep owned by the late Calixto Palmes (husband of private respondent Primitiva Palmes) who was then driving the private jeep. The impact of the collision was such that the private jeep was flung away to a distance of about thirty (30) feet and then fell on its right side pinning down Calixto Palmes. He died as a result of cardio-respiratory arrest due to a crushed chest. 4 The accident also caused physical injuries on the part of Adeudatus Borbon who was then only two (2) years old. On 25 June 1976, private respondents Primitiva Palmes (widow of Calixto Palmes) and Honorato Borbon, Sr. (father of minor Adeudatus Borbon) filed a complaint 5 against Cosme Casas and Nelia Enriquez (assisted by her husband Leonardo Enriquez) before the then Court of First Instance of Cebu, Branch 3, claiming actual, moral, nominal and exemplary damages as a result of the accident. The claim of private respondent Honorato Borbon, Sr., being distinct and separate from that of co-plaintiff Primitiva Palmes, and the amount thereof falling properly within the jurisdiction of the inferior court, respondent Judge Jose R. Ramolete ordered the Borbon claim excluded from the complaint, without prejudice to its being filed with the proper inferior court. On 4 April 1977, the Court of First Instance rendered a Decision 6 in favor of private respondent Primitiva Palmes, ordering common carrier Nelia Enriquez to pay her P10,000.00 as moral damages, P12,000.00 as compensatory damages for the death of Calixto Palmes, P3,000.00 as exemplary damages, P5,000.00 as actual damages, and P1,000.00 as attorney's fees. The judgment of the trial court became final and executory and a writ of execution was thereafter issued. The writ of execution was, however, returned unsatisfied. Consequently, the judgment debtor Nelia Enriquez was summoned before the trial court for examination on 23 July 1979. She declared under oath that the Cimarron PUJ registered in her name was covered by a third-party liability insurance policy issued by petitioner Perla. Thus, on 31 July 1979, private respondent Palmes filed a motion for garnishment 7 praying that an order of garnishment be issued against the insurance policy issued by petitioner in favor of the judgment

debtor. On 6 August 1979, respondent Judge issued an Order 8 directing the Provincial Sheriff or his deputy to garnish the third-party liability insurance policy. Petitioner then appeared before the trial court and moved for reconsideration of the 6 August 1979 Order and for quashal of the writ of garnishment, 9 alleging that the writ was void on the ground that it (Perla) was not a party to the case and that jurisdiction over its person had never been acquired by the trial court by service of summons or by any process. The trial court denied petitioner's motion.10 An Order for issuance of an alias writ of garnishment was subsequently issued on 8 April 1980. 11 More than two (2) years later, the present Petition for Certiorari and Prohibition was filed with this Court on 25 June 1982 alleging grave abuse of discretion on the part of respondent Judge Ramolete in ordering garnishment of the third-party liability insurance contract issued by petitioner Perla in favor of the judgment debtor, Nelia Enriquez. The Petition should have been dismissed forthwith for having been filed way out of time but, for reasons which do not appear on the record, was nonetheless entertained. In this Petition, petitioner Perla reiterates its contention that its insurance contract cannot be subjected to garnishment or execution to satisfy the judgment in Civil Case No. R-15391 because petitioner was not a party to the case and the trial court did not acquire jurisdiction over petitioner's person. Perla further argues that the writ of garnishment had been issued solely on the basis of the testimony of the judgment debtor during the examination on 23 July 1979 to the effect that the Cimarron PUJ was covered by a third-party liability insurance issued by Perla, without granting it the opportunity to set up any defenses which it may have under the insurance contract; and that the proceedings taken against petitioner are contrary to the procedure laid down in Economic Insurance Company, Inc. v. Torres, et al., 12 which held that under Rule 39, Section 45, the Court "may only authorize" the judgment creditor to institute an action against a third person who holds property belonging to the judgment debtor. We find no grave abuse of discretion or act in excess of or without jurisdiction on the part of respondent Judge Ramolete in ordering the garnishment of the judgment debtor's third-party liability insurance. Garnishment has been defined as a species of attachment for reaching any property or credits pertaining or payable to a judgment debtor. 13 In legal contemplation, it is a forced novation by the substitution of creditors: 14the judgment debtor, who is the original creditor of the garnishee is, through service of the writ of garnishment, substituted by the judgment creditor who thereby becomes creditor of the garnishee. Garnishment has also been described as a warning to a person having in his possession property or credits of the judgment debtor, not to pay the money or deliver the property to the latter, but rather to appear and answer the plaintiff's suit. 15 In order that the trial court may validly acquire jurisdiction to bind the person of the garnishee, it is not necessary that summons be served upon him. The garnishee need not be impleaded as a party to the case. All that is necessary for the trial court lawfully to bind the person of the garnishee or any person who has in his possession credits belonging to the judgment debtor is service upon him of the writ of garnishment. The Rules of Court themselves do not require that the garnishee be served with summons or impleaded in the case in order to make him liable. Rule 39, Section 15 provides: Sec. 15. Execution of money judgments. The officer must enforce an execution of a money judgment by levying on all the property, real or personal of every name and nature whatsoever, and which may be disposed of for value, of the judgment debtor not exempt from execution . . . 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 Rule 57, Section 7(e) in turn reads: Sec. 7. Attachment of real and personal property; recording thereof. Properties shall be attached by the officer executing the order in the following manner:

manner and with like effect as under a writ of attachment. (Emphasis supplied).

xxx xxx xxx (e) Debts and credits, and other personal property not capable of manual delivery, by leaving with

him to the party against whom attachment is issued, and the credits and other personal property in his possession, or under his control, belonging to said party, are attached in pursuance of such order; xxx xxx xxx (Emphasis supplied) Through service of the writ of garnishment, the garnishee becomes a "virtual party" to, or a "forced intervenor" in, the case and the trial court thereby acquires jurisdiction to bind him to compliance with all orders and processes of the trial court with a view to the complete satisfaction of the judgment of the court. In Bautista v. Barredo, 16 the Court, through Mr. Justice Bautista Angelo, held: While it is true that defendant Jose M. Barredo was not a party in Civil Case No. 1636 when it was instituted by appellant against the Philippine Ready Mix Concrete Company, Inc., however, jurisdiction was acquired over him by

the person owing such debts, or having his possession or under his control such credits or other personal property, or with his agent, a copy of the order, and notice that the debts owing by

It is clear from Section 45, Rule 39 that if a persons alleged to have property of the judgment debtor or to be indebted to him claims an interest in the property adverse to him or denies the debt, the court may only authorize the judgment creditor to institute an action against such person for the recovery of such interest or debt. Said

section does not authorize the court to make a finding that the third person has in his possession property belonging to the judgment debtor or is indebted to him and to order said third person to pay the amount to the judgment creditor. It has been held that the only power of the court

the court and he became a virtual party to the case when, after final judgment was rendered in said case against the company, the sheriff served upon him a writ of garnishment in behalf of appellant. Thus, as held by this Court in the case
of Tayabas Land Company vs. Sharruf, 41 Phil. 382, the proceeding by garnishment is a species of attachment for reaching credits belonging to the judgment debtor and owing to him from a stranger to the litigation. By means of the citation,

jurisdiction to try summarily the question whether the third party served with notice of execution and levy is indebted to defendant when such indebtedness is denied. To make an order in relation to property which the garnishee claimed to own in his own right, requiring its application in satisfaction of judgment of another, would be to deprive the garnishee of property upon summary proceeding and without due process of law. (Emphasis supplied) But reliance by petitioner on the case of Economic Insurance Company, Inc. v. Torres (supra) is misplaced. The Court there held that a separate action needs to be commenced when the garnishee

in proceedings supplemental to execution is to niake an order authorizing the creditor to sue in the proper court to recover an indebtedness due to the judgment debtor. The court has no

"claims an interest in the property adverse to him (judgment debtor) or denies the debt." In the instant case, petitioner Perla did not deny

the stranger becomes a forced intervenor; and the court, having acquired jurisdiction over him 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. (Emphasis supplied). In Rizal Commercial Banking Corporation v. De Castro, 17 the Court
stressed that the asset or credit garnished is thereupon subjected to a specific lien:

the sole control of such court. 18 (Emphasis supplied) In the present case, there can be no doubt, therefore, that the trial court actually acquired jurisdiction over petitioner Perla when it was served with the writ of garnishment of the third-party liability insurance policy it had issued in favor of judgment debtor Nelia Enriquez. Perla cannot successfully evade liability thereon by such a contention. Every interest which the judgment debtor may have in property may be subjected to execution.19 In the instant case, the judgment debtor Nelia Enriquez clearly had an interest in the proceeds of the third-party liability insurance contract. In a third-party liability insurance contract, the insurer assumes the obligation of paying the injured third party to whom the insured is liable. 20 The insurer becomes liable as soon as the liability of the insured to the injured third person attaches. Prior payment by the insured to the injured third person is not necessary in order that the obligation of the insurer may arise. From the moment that the insured became liable to the third person, the insured acquired an interest in the insurance contract, which interest may be garnished like any other credit. 21 Petitioner also contends that in order that it may be held liable under the third-party liability insurance, a separate action should have been commenced by private respondents to establish petitioner's liability. Petitioner invokesEconomic Insurance Company, Inc. vs. Torres, 22 which stated:

The garnishment of property to satisfy a writ of execution operates as an attachment and fastens upon the property a lien by which the property is brought under the jurisdiction of the court issuing the writ. It is brought into custodia legis, under

before the trial court that it had indeed issued a third-party liability insurance policy in favor of the judgment debtor. Petitioner moreover refrained from setting up any substantive defense which it might have against the insured-judgment debtor. The only ground asserted by petitioner in its "Motion for Reconsideration of the Order dated August 6, 1979 and to Quash Notice of Garnishment" was lack of jurisdiction of the trial court for failure to implead it in the case by serving it with summons. Accordingly, Rule 39, Section 45 of the Rules of Court is not applicable in the instant case, and we see no need to require a separate action against Perla: a writ of garnishment suffices to hold petitioner answerable to the judgment creditor. If Perla had any substantive defenses against the judgment debtor, it is properly deemed to have waived them by laches. WHEREFORE, the Petition for Certiorari and Prohibition is hereby DISMISSED for having been filed out of time and for lack of merit. The assailed Orders of the trial court are hereby AFFIRMED. Costs against petitioner. This Decision is immediately executory. SO ORDERED. G.R. No. L-9802 March 31, 1917 TEC BI & CO., plaintiff-appellee, vs. THE CHARTERED BANK OF INDIA, AUSTRALIA AND CHINA, defendant-appellant.

Gibbs, McDonough & Herrero & Masigan for appellee. CARSON, J.:

Blanco

for

appellant.

The motion for a rehearing in this case must be denied. In so far as the brief of counsel in support of this motion consists of a renewal of contentions advanced with much vehemence at the original hearing on appeal, we need only say that we adhere to the views already expressed in the opinion; and that we see no reason to change or modify out former rulings, which were adopted after due deliberation, and mature consideration of the arguments and citation of authority by counsel, and of the law applicable to the facts disclosed by the record. As to the contentions of counsel based, in the language of his brief, on 'certain obvious and insuperable objections to plaintiff's recovery which have been heretofore overlooked, due to what has developed to have been overconfidence in the points raised" in his printed brief, it might be sufficient to say that he is not entitled to demand a rehearing as of right, in order that he may be given an opportunity to present new argument and to raise new contentions, which he failed or neglected

to advance at the original hearing, notwithstanding the fact that he was given every opportunity for that purpose either in the course of his oral argument in open court, or in his printed brief filed with the record on appeal. We have, nevertheless, given each of these contentions careful consideration, and it may be well to set forth very summarily the grounds upon which we rest our opinion that none of them furnishes a sufficient reason for setting aside the decision entered of record after the original hearing. 1. The contention that plaintiff should not have been permitted to maintain an original and independent action against the garnishee, may be disposed of very summarily by a reference to the case of Roberts & Co. vs. Landecker (9 Cal., 262), followed in Carter vs. Los Angeles National Bank (116 Cal., 370), which are based on statutory provisions substantially identical with those of our own Code. The doctrine is thus announced in the syllabus of Roberts & Co. vs. Landecker (9 Cal., 262). 1. ATTACHMENT PROCEEDINGS; STATUTORY AND SPECIAL. It is well settled that the proceedings by attachment are statutory and special, and must be strictly pursued, and when a party relies upon his attachment-lien as a remedy, he must strictly follow the provisions of the Attachment Law. 2. ID; LIABILITY OF GARNISHEE. The provisions of the one hundred and twenty-eighth section were intended for the security of the plaintiff, and not to confer a privilege upon the garnishee, and the plaintiff may or may not, at his election, require the garnishee to appear and answer on oath, and his liability will not be affected by the failure of the plaintiff to take such a step. 3. ID.; PROCEEDINGS AGAINST GARNISHEE. A plaintiff who has sued out an attachment and given the necessary notice to a garnishee that the property in his hands is attached, and subsequently the garnishee fraudulently disposes of the property, has a right to waive his lien on the property, and bring suit for the value of the property, against the garnishee. 4. STATUTORY RIGHTS AND REMEDIES. If a statute gives a particular remedy in conferring a new right, then the particular remedy must be pursued; but under the Attachment Law a new right is created, but no practical remedy is prescribed." The syllabus in the case of Carter vs. Los Angeles National Bank (116 Cal., 370-1) is as follows: ATTACHMENT; GARNISHMENT; ACTION BY JUDGMENT CREDITOR AGAINST GARNISHER. After execution unsatisfied against the judgment debtor, the judgment creditor may bring an action at law against a garnishee upon whom notice was served under an attachment issued in the action before judgment; and it is not necessary before bringing such action that the garnishee should be required to appear and answer, or that an order should be obtained authorizing the action against the garnishee; and no equitable circumstance need be shown to justify the suit, which is upon direct liability of the garnishee to the plaintiff in that suit provided for in section 544 of the Code of Civil Procedure." Section 544 of the California Code of Civil Procedure is identical with section 432 of the Philippine Code of Civil Procedure, which, like most of the provisions of our Code touching attachment proceedings, was borrowed literally from the California Code; and we cannot agree with counsel that the provisions of section 436 of our Code furnish a "practical remedy" to enforce the right conferred in section 432 which differentiates the doctrine which should be applied in this jurisdiction from that set forth in the above cited opinions of the Supreme Court of California. 2. As to the contention of counsel based on the theory that, at all events, plaintiff's right of recovery in this action should be limited to the worthless equity of redemption of his judgment debtor in the tobacco in the hands of the defendant, it is sufficient to call attention to our former ruling that article 1865 of the Civil Code providing that a "pledge shall not be effective against a third person, when evidence of its date does not appear in a public instrument" is a "rule of

substantive law, prescribing a condition without which the execution of a pledge contract cannot affect third persons adversely." 3. As to the contention that plaintiff should have been required to have execution issued and returned unsatisfied, in whole or in part, before the court below could entertain this action, it is to be observed, not only that this contention wholly fails to take into account the ruling in our former opinion, just referred to, holding that the pledge of the tobacco to the defendant bank was wholly ineffective in so far as the rights of third persons were concerned; and that such an objection, even if well founded, should have been advanced in the trial court, and cannot be raised for the first time on appeal, and still less upon a motion for a rehearing after decision has been rendered in the appellate court. 4. We come now to consider the contentions of counsel based on the alleged "repeal of articles 1922 and 1924 of the Civil Code upon which the judgment is based," by the enactment of the Bankruptcy Act (No. 1956). With reference to this contention counsel says: We apologize to the court for not having raised this point in our original brief because it seems to us conclusive against the judgment. Our only excuse for not having done so before is that this Honorable Court has continued to apply these articles of the Civil code since their repeal and we presume has been fully justified in so doing because no member of the bar, as far as we know, interested in defeating these provisions of the old bankruptcy law, has ever awakened at the right moment to the fact that we have a new bankruptcy act in full force and effect. It is true, as said by counsel, that in a long line of decisions filed before and since the enactment of the Bankruptcy Act on May 20, 1909, this court has steadfastly and uniformly construed, applied, and recognized as in full force and effect, in this jurisdiction, the various provisions of articles 1922 and 1924 of the Spanish Civil Code touching statutory preferences where such preferences have been asserted, as in the case at bar, in judicial proceedings other than formal bankruptcy proceedings, and we have said, furthermore, on more than one occasion, that the doctrine announced in these decisions constitutes a rule of property not subject to change except by legislative enactment. (Cf. Discussion and citation of cases in Alzua and Arnalot vs. Johnson, 21 Phil., 308.) But counsel contends that all these statutory preferences were swept away by necessary implication as a result of the enactment of the Insolvency Law (Act No. 1956). We cannot give our assent to this contention. It seems to be based on the general provisions of Chapter VI of the Bankruptcy Act, which do not provide for the recognition of any of these "statutory preferences," other than those included in the list of preferred claims set forth in sections 49 and 50, although the order in which "preferred claims" shall be paid from the proceeds of the sale of the property of the insolvent which comes into the hands of the assignee, is expressly set forth in these sections, which provide furthermore that "all other creditors shall be paid pro rata." But this argument for repeal, by implication, of the provisions of the Spanish code touching "statutory preferences," not mentioned in Chapter VI of the Act, takes no account of the provisions of section 59 of the Bankruptcy Act, by virtue of which a right to any of these statutory preferences may be set up and maintained, if duly asserted in the manner and form therein prescribed. This section is as follows: When a creditor has a mortgage, or pledge of real or personal property of the debtor, or a lien thereon, for securing the payment of a debt owing to him from the debtor, or an attachment or execution on property of the debtor duly recorded and not dissolved under this Act, he shall be admitted as a creditor for the balance of the debt, only, after deducting the value of such property, such value to be ascertained by agreement between him and the receiver, if any, and if no receiver, them upon such sum as the court or a judge thereof may decide to be fair and reasonable, before the election of an assignee, or by a sale thereof, to be made in such manner as the court or judge thereof shall direct; or the creditor may release or convey his claim to the receiver, if any, or if no receiver then to the sheriff, before the election of an assignee, or to the assignee if an assignee has been elected, upon such property, and be admitted to prove his whole debt. If the value of the property exceeds the sum for which it is so held as security,

the assignee may release to the creditor the debtor's right of redemption thereon on receiving such excess; or he may sell the property, subject to the claim of the creditor thereon, and in either case the assignee and creditor, respectively, shall execute all deeds and writings necessary or proper to consummate the transaction. If the property is not sold or released, and delivered up, or its value fixed, the creditor shall not be allowed to prove any part of his debt, but the assignee shall deliver to the creditor all such property upon which the creditor holds a mortgage, pledge, or lien, or upon which he has an attachment or execution. It has been suggested that under our former rulings, these "statutory preferences" cannot be treated as liens affecting the property of the debtor, as that word is used in the above cited section of the Bankruptcy Act. But while it is true that we have held in a number of decisions, that these "statutory preferences" of the Civil Code are not liens in the strict and limited sense of that word as used in AngloAmerican jurisprudence, and while we have taken considerable pains to distinguish the nature and effect of these "statutory preferences" (sometimes called "civil law liens" by American law writers), from that of "liens," as that word is used in the strict technical parlance of the American and English authorities; nevertheless, there can be no question that when a right to one of these "statutory preferences" has actually been asserted, in the course of judicial proceedings which have for their object the distribution of funds derived from the sale of all or any part of the asserts of the debtor, by a proper party to such proceedings, as intervenor or otherwise; these consequences flowing therefrom are closely assimilated to, and substantially identical with those arising as a result of the assertion in the course of such proceedings, of a recorded "lien" upon the asserts of the debtor with a view to its enforcement therein. We are of opinion, therefore, that the word "liens" as used in section 59 of the Insolvency Law should be held to include "statutory preferences" such as those now under consideration if and when they are duly asserted in the course of bankruptcy proceedings. We are not unaware of the fact that this construction of the language of the statute may give rise to some practical difficulties in the administration of insolvency proceedings; but we do not apprehend that these difficulties will prove to be any less surmountable than similar practical difficulties with which our courts have been confronted, in applying and construing the terms of many other statutes enacted in recent years, wherein the general provisions and the terminology in which they are expressed have been borrowed directly from American or English precedents, in the enactment of which the legislator had in mind provisions of substantive law radically different from those of the Spanish substantive law still in force in force in these Islands. The right to a preference in the case at bar being founded upon the failure of a debtor to pay the purchase price of goods sold to him by the plaintiff; it may be well to add that the right of the vendor of merchandise, bought on credit by an insolvent, "so long as the actual delivery thereof has not been made" to have such goods placed at his disposal, in the manner and form prescribed in subsection 8, section 48 of the Insolvency Law, is manifestly an additional and cumulative remedy allowed a vendor of merchandise, the purchase price of which has not been paid, and is in no wise in conflict with the right of such a vendor to assert the preference secured to him in article 1922 of the Code of Civil Procedure [Civil Code], in any case wherein delivery has actually been made. As we said in the case of Smith, Bell & Co. vs. Estate of Maronilla (R.G. No. 8769), decided February 5, 19161(wherein we ruled adversely upon a similar contention as to the repeal by implication of the provisions of articles 1922 and 1924 of the Civil Code as a result of the enactment of the provisions of the new Code of Civil Procedure touching the distribution of the estates of deceased persons), we would be loathe to believe that it was the intention of the legislator to destroy all these valuable privileges, without substituting anything in their stead; and we decline to sustain such a contention in the absence of clear and explicit language in the statute which, either in express terms or by necessary implication, leads to such conclusion. Strong and compelling reasons of public policy, in this jurisdiction as elsewhere, have resulted in the enactment of legislation providing special security in one form or another, for credits for construction, repair and preservation of personal property; transportation charges;

seeds and other agricultural advances; rents; credits evidenced in solemn judgments; and the like. The security in such cases, furnished under statutory authority in the United States, in the form of liens on the property of the debtor, was not affected, nor intended to be affected by the enactment of the American prototypes of the provisions of our Insolvency Law and our Code of Civil Procedure; and we are satisfied that it was not the intention of the legislature to destroy, without providing a substitute therefor, the security in the form of "statutory preferences" furnished in our Civil Code in like cases, and that the language of these statutes does not sustain such a contention. G.R. No. 73976 May 29, 1987 THE CONSOLIDATED BANK and TRUST CORPORATION (SOLIDBANK), petitioner, vs. HON. INTERMEDIATE APPELLATE COURT, GOLDEN STAR INDUSTRIAL CORPORATION, NICOS INDUSTRIAL CORPORATION and THE PROVINCIAL SHERIFF OF BULACAN, respondents.

C.M. Delos Reyes and Associates for petitioner. Magtanggol C. Gunigundo and Fajardo Law office for respondents.

GUTIERREZ, JR., J.: The basic issue for resolution in this petition for review of the December 13, 1985 decision of the Intermediate Appellate Court, now the Court of Appeals, as well as the resolution of March 13, 1986 denying the motion for reconsideration, is whether or not an attaching creditor acquires the right of redemption of a debtor over the attached properties of the latter which are subsequently extrajudicially foreclosed by third parties. Briefly, the facts are as follows: Originally, petitioner Consolidated Bank and Trust Corporation (SOLIDBANK) loaned private respondent NICOS Industrial Corporation (NICOS) sums of money in the total amount of FOUR MILLION SEVENTY SIX THOUSAND FIVE HUNDRED EIGHTEEN AND 64/100 PESOS (P4,076,518.64). Subsequently, NICOS failed to pay back the loan prompting SOLIDBANK to file a collection case before the Court of First Instance of Manila, Branch XXIX. The case was docketed as Civil Case No. 8211611. On August 30, 1982, the court in the aforecited case issued an order of attachment " ... upon the rights, interests and participation of which defendants NICOS Industrial Corporation ... may have in Transfer Certificate of Title No. T-210581 (T-32.505 M) and Transfer Certificate of Title No. T-10580 (T-32.504 M) (Annexes "B", "B-1", "B-2" and "B3" of petition). On September 1, 1982, pursuant to the writ of attachment issued by the Court and upon petitioner's posting of sufficient bond, the Sheriff of Manila levied and attached the two real properties described by the foregoing order of attachment, including the buildings and other improvements thereon. Afterwards, the Sheriff sent separate Notices of Levy Upon Realty to the Registrar of Deeds of Malolos, Bulacan, dated September 1, 1982 requesting him "to make the proper annotation in the books of your office" by virtue of the order of attachment dated August 30,1982 issued by the Manila Court in Civil Case No. 82-11611. Accordingly, on September 7, 1982, the Registrar of Deeds of Malolos, Bulacan, pursuant to the request of the Manila Sheriff, inscribed and annotated the Notices of Levy Upon Real Property at the back of Transfer Certificates of Title Nos. T-210581 (T-32.505 M) and T210580 (T-32.504 M). Pursuant to the foregoing ng inscription and annotations, guards were deputized by the Manila Sheriff to secure the premises of the two attached realties. A year later, however, on July 11, 1983, the attached properties which had been mortgaged by NICOS to the United Coconut Planters Bank (UCPB) on March 11, 1982, were extrajudicially foreclosed by the latter. As the highest bidder therein, a certificate of sale was issued to it by the Sheriff of Bulacan over the subject realties including the buildings and improvements thereon. Surprisingly, two transactions occurred soon thereafter, both on August 29, 1983. First, UCPB sold all of its rights, interests, and participation over the properties in question to a certain Manuel Go; Second, Manuel Go sold all the rights he acquired from UCPB over the

same lots on that very same day to private respondent Golden Star Industrial Corporation (GOLDEN STAR). Barely a month later, on October 5, 1983, respondent NICOS, though fully aware that it still had the right to redeem the auctioned properties within the one year period of redemption from July 11, 1983, suddenly executed a document entitled "Waiver of Right of Redemption" in favor of respondent GOLDEN STAR. On September 15, 1983, GOLDEN STAR filed a petition for the issuance of a writ of possession over the subject realties before the Regional Trial Court, Branch VI of Malolos, Bulacan. On November 4, 1983, the Malolos Court granted GOLDEN STAR's petition for a writ of possession and issued the writ. In accordance with these orders, armed men of GOLDEN STAR forcibly took over the possession of the properties in dispute from the guards deputized by the Sheriff of Manila to secure the premises. Thus on November 21, 1983, petitioner SOLIDBANK, on the strength of its prior attachment over the lands in question filed with the Malolos court an omnibus motion to annul the writ of possession issued to GOLDEN STAR and to punish for contempt of court the persons who implemented the writ of possession with the use of force and intimidation. The respondents NICOS and GOLDEN STAR, filed oppositions to the foregoing omnibus motion, the former on the basis of the waiver of its right of redemption to GOLDEN STAR, and the latter on its alleged ignorance that the lands in question were under custodia legis, having been attached by the Sheriff of Manila. On June 9, 1984, the Malolos Court issued an order denying the omnibus motion, the decretal portion of which is as follows: WHEREFORE, the Omnibus Motion of movant Consolidated Bank and Trust Corporation to annul the writ of possession issued by this Court in favor of Golden Star Industrial Corporation and to cite for contempt those who fraudulently secured and unlawfully implemented the writ of possession is hereby DENIED for lack of merit. (p. 8 of the Brief for the Complainant-Oppositor-Appellant in ACG.R. CV No. 04398 [p.118, Rollo]) The petitioner SOLIDBANK forthwith interposed an appeal before the Intermediate Appellate Court arguing inter alia that the properties were under custodia legis, hence the extrajudicial foreclosure and the writ of possession were null and void, and that the right of NICOS to redeem the auctioned properties had been acquired by SOLIDBANK. On December 13, 1985, the Intermediate Appellate Court rendered its assailed decision "finding no merit in this appeal and affirming in toto the appealed order of June 9, 1984, ruling that "the properties in issue ... were not incustodia legis at the time of the extrajudicial foreclosure." The petitioner moved for reconsideration, arguing that its writ of attachment over the properties in question was duly registered in the Register of Deeds of Malolos, Bulacan, and that the right to redeem said properties should be retained or given back to SOLIDBANK as attaching creditor. On March 13, 1986, the Intermediate Appellate Court promulgated its resolution denying the motion for reconsideration for lack of merit. Hence this petition for review, on the grounds that respondent appellate court decided the case contrary to law and applicable decisions of the Supreme Court, and has departed from the accepted and usual course of judicial proceedings as to call for an exercise of the power of supervision of this Court. The fundamental question herein, which is determinative of the other issues, is whether or not the subject properties were under custodia legis by virtue of the prior annotation of a writ of attachment in petitioner's favor at the time the properties were extrajudicially foreclosed. We rule in the affirmative on the following grounds: First of all, the records show (specifically Annexes "B," "B-1" to "B-3" of the petition) that on September 1, 1982, the Sheriff of Branch XXIX of the Court of First Instance of Manila, sent separate Notices of Levy Upon Realty to the Registrar of Deeds of Malolos Bulacan, requesting him "to make the proper annotation in the books of your office," "by virtue of an order of attachment issued in Civil Case No. 82-11611 dated August 30, 1982, ... upon the rights, interests, and participation of which defendant NICOS Industrial Corporation in this case may have

in ... ."Transfer Certificate of Title No. T-210581 (T-32.505 M) and Transfer Certificate of Title No. T-210580 (T-32,505 M). Secondly, and more significant, the records clearly show (page 4, Annex "D" of petition) that the Registrar of Deeds of Malolos, Bulacan, on September 7, 1982, inscribed and annotated the foregoing Notices of Levy at the back of Transfer Certificate of Title Nos. 210580 and 210581, to wit: TRANSFER CERTIFICATE OF TITLE No. T-210580 (T-32.504 M) Entry No. 79524 (M): Kind; NOTICE OF LEVY UPON REALTY, Executed in favor of the CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK);-Plaintiff; Conditions: Notice is hereby given that by virtue of an Order of Attachment issued by the C.F.I. of Manila, Branch XXIX, in Civil Case No. 82-11611, all the rights, interest and participation of NICOS INDUSTRIAL CORPORATION-Defendant over the herein described lot is hereby levied upon attached.; Date of Instrument: September 1, 1982; Date of Inscription: September 7, 1982 at 2:35. Meycauayan, Bulacan.

D e e d s TRANSFER CERTIFICATE OF TITLE No. T-210581 (T-32.505 M) Entry No. 79524 (M); Kind: NOTICE OF LEVY UPON REALTY, Executed in favor of THE CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK) Plaintiff; Conditions: Notice is hereby given that by virtue of an Order of Attachment issued by the C.F.I. of Manila, Branch XXIX, in Civil Case No. 82-11611, all the rights, interest and participation of NICOS INDUSTRIAL CORPORATION Defendants over the herein described lot is hereby levied upon attached.; Date of Instrument; September 1, 1982; Date of Inscription: September 7, 1982 at 2:35. Meycauayan, Bulacan.

( Based on the foregoing evidence on record, the conclusion is clear that S the disputed real properties were undercustodia legis by virtue of a G valid attachment at D time the same were extrajudicially foreclosed the by a third party mortgagee. . The rule is well settled that when a writ of attachment has been levied ) on real property or any interest therein belonging to the judgment debtor, the levy thus effected creates a lien which nothing can destroy V but its dissolution I (Chua Pua Hermanos v. Register of Deeds of Batangas, 50 Phil. 670; Government, et. al. v. Mercado, 67 Phil. 409). O The foregoing conclusion has two necessary consequences. L Firstly, it follows that the writ of possession issued by the Malolos court E in favor of respondent GOLDEN STAR is nun and void ab initio because T it interfered with the jurisdiction of a co-ordinate and co-equal court A (See De Leon v. Salvador, 36 SCRA 567): While property or money is in custodia legis, the R officer holding it is the mere hand of the court, his . possession is the possession of the court, and to interfere with it is to invade the jurisdiction of the L court itself (Gende v. Fleming, 371 N.E. 2d. 191; I Bishop v. Atlantic Smokeless Coal Co., 88F. Supp. N 27, C 7 CJS 320). Of equal importance is the fact that the transactions on which A respondent GOLDENLSTAR's right to a writ of possession are based are highly irregular andL questionable, to say the least, considering the following circumstances: O On July 11, 1983, the Sheriff of Bulacan executed a certificate of sale over the two lots in question in favor of UCPB. G On August 29, 1983, or about a month and a half later, UCPB sold its A rights, interests and R participation over the lands to Manuel Go. On that very same C day, August 29, 1983, Manuel Go sold the same properties to respondent GOLDEN STAR. I On October 5, 1983,Arespondent NICOS which had a one year right of redemption over the lands in question executed a "Waiver of Right of B Redemption in favor of respondent GOLDEN STAR." The attempts to r bring the disputed properties out of the petitioner's reach, inspite of a the attachment, are plain and apparent. n Based on the foregoing facts, we find c that respondents NICOS and GOLDEN STAR conspired to defeat petitioner's lien on the attached h properties and to deny the latter its right of redemption. It appears that in issuing the writ of possession, the Malolos court R relied on copies of documents (which did not show the memorandum e of encumbrance) submitted to it by GOLDEN STAR. It was thus led g into the error of ruling that the petitioner's attachment was not i properly annotated. s Secondly, it likewise follows that thet petitioner has acquired by operation of law the right of redemption e over the foreclosed properties pursuant to Sec. 6 of Act No. 3135, to wit: r In all such cases in which an extrajudicial sale is made ... any personohaving a lien on the property subsequent to the mortgage ... may redeem the f

same at any time within the term of one year from and after the date of sale. It has been held that "an attaching creditor may succeed to the incidental rights to which the debtor was entitled by reason of his ownership of the property, as for example, a right to redeem from a prior mortgage" (Lyon v. Stanford, 5 Conn. 541, 7 SJS 505). The fact that respondent NICOS executed a waiver of right of redemption in favor of respondent GOLDEN STAR on October 5, 1983 is of no moment as by that time it had no more right which it may waive in favor of another, Finally, GOLDEN STAR argues that even if the attachment in issue was duly registered and the petitioner has a right of redemption, the certificate of sale of the lands in question was registered on September 6, 1983. It claims that the period to redeem therefore lapsed on September 6, 1984 without the petitioner bank ever exercising any right of redemption. This argument is untenable. Well settled is the rule that the pendency of an action tolls the term of the right of redemption. Specifically, tills Court in Ong Chua v. Carr, (53 Phil. 975, 983) categorically ruled that: xxx xxx xxx ... Neither was it error on the part of the court to hold that the pendency of the action tolled the term for the right of redemption; that is an old and well established rule. This was reiterated in Fernandez v. Suplido (96 Phil. 541, 543), as follows: xxx xxx xxx ... As pointed out in Ong Chua v. Carr, 53 Phil. 975, the pendency of an action brought in good faith and relating to the validity of a sale with pacto de retro tolls the term for the right of redemption. ... Not only that. It has been held that "under a statute limiting the time for redemption ... the right of redemption continues after perfection of an appeal ... until the decision of the appeal (Philadelphia Mortgage Co. v. Gustus, 75 N.W. 1107). In the case at bar, the petitioner commenced the instant action by way of an omnibus motion before the Bulacan Court on November 21, 1983 or barely two months after the certificate of sale was registered on September 6, 1983, well within the one year period of redemption. WHEREFORE, IN VIEW OF THE FOREGOING, the petition is granted and judgment is hereby rendered: 1) declaring as valid and binding the levy and attachment by the Manila Sheriff on the two realties in question including the buildings and improvements thereon; 2) declaring that petitioner has acquired the right of redemption over the aforesaid properties which it may exercise within one year from notice of entry of judgment in this case; and 3) declaring as null and void (a) the order of the Bulacan Court dated November 4, 1983 granting the writ of possession to respondent GOLDEN STAR, (b) its order of June 9, 1984 denying the petitioner's omnibus motion, and (c) the Waiver of Right of Redemption executed by respondent NICOS in favor of respondent GOLDEN STAR. SO ORDERED. G.R. No. 76879 October 3, 1990 BF HOMES, INCORPORATED, petitioner, vs. COURT OF APPEALS, ROSALINDA R. ROA and VICENTE MENDOZA, respondents. G.R.No. 77143 October 3, 1990 ROSALINDA ROA and VICENTE MENDOZA, petitioners, vs. COURT OF APPEALS and BF HOMES, INCORPORATED, respondents.

Espinosa, Cabrera & Associates for Rosalinda Roa, et al. Balgos & Perez for BF Homes, Inc.

CRUZ, J.: Involved here are two petitions for review assailing the decision of the Court of Appeals in CA-G.R. No. Sp 05411, entitled BF Homes, Inc. v. Judge Tutaan, et al., dated June 6, 1986, as amended on October 22, 1986.

BF Homes, Inc. is a domestic corporation previously engaged in the business of developing and selling residential lots and houses and other related realty matters. On July 19, 1984, BF contracted a loan from Rosalinda R. Roa and Vicente Mendoza in the amount of P250,000.00 with interest at the rate of 33% per annum payable after 32 days. The obligation was embodied in a promissory note and secured by two post-dated checks issued by BF in favor of the lenders. On September 25, 1984, BF filed a Petition for Rehabilitation and for a Declaration in a State of Suspension of Payments under Sec. 5(d) of P.D. No. 902-A with a prayer that upon the filing of the petition and in the meantime, all claims against it for any and all accounts or indebtedness be suspended, but allowing petitioner to continue with its normal operations. It also asked for the approval of the proposed rehabilitation plan. On October 17, 1984, Roa and Mendoza filed a complaint against BF with the Regional Trial Court of Quezon City, docketed as Civil Case No. Q-43104, for the recovery of the loan of P250,000.00, with interest and attorney's fees. The complaint also prayed for the issuance of a writ of preliminary attachment against the properties of BF. October 22, 1984, the trial court issued the writ against properties of BF sufficient to satisfy the principal claim in the amount of P257,333.33. In a motion dated October 25, 1984, BF moved for the dismissal of the case for lack of jurisdiction, or at least for its suspension in view of the pendency of SEC Case No. 002693. it also asked for the lifting of the writ of preliminary attachment. The trial court denied the motion to dismiss on November 20, 1984, and the motion for reconsideration on January 11, 1985. Citing the case of DMRC Enterprises v. Este del Sol Mountain Reserves, Inc., 1 the trial court held it had jurisdiction because what was involved was not an intra-corporate or partnership dispute but merely a determination of the rights of the parties arising out of the contract of loan. On February 13, 1985, BF filed with the Intermediate Appellate Court (now Court of Appeals) an original action forcertiorari with prayer for a writ of preliminary injunction against the regional trial court, Roa and Mendoza. On February 14, 1985, the Court of Appeals issued an order temporarily restraining proceedings in Civil Case No. Q-43104. On March 18, 1985, the SEC, finding an urgent need to rehabilitate BF issued an order creating a management committee and suspending all actions for claims against BF pending before any court, tribunal or board. On June 6, 1986, the Court of Appeals rendered a decision dismissing the complaint in Civil Case No. Q-43104 and declaring the writ of preliminary attachment null and void. But upon a motion for reconsideration filed by Roa and Mendoza, the decision was set aside and a new one was entered upholding the jurisdiction of the regional trial court over the case. At the same time, however, it suspended the proceedings therein until after the management committee shall have been impleaded as party defendant. The dissolution of the writ of preliminary attachment was maintained. Both parties filed separate motions for reconsideration, BF took exception to the amended decision insofar as it directed the continuation of proceedings in Civil Case No. Q-43104 until after the management committee shall have been impleaded. Roa and Mendoza faulted the Court of Appeals for ordering BF to be substituted by the management committee and for dissolving the writ of preliminary attachment without the filing of the necessary counter-bond by the defendant. In a resolution dated December 22, 1986, the Court of Appeals denied both motions for reconsideration, noting that the proceedings in the civil case could not remain suspended forever. The purpose of the suspension, it said, was to enable the management committee to substitute BF as party defendant and prosecute the defense to conclusion. Substitution was necessary to prevent collusion between the previous management and creditors it might seek to favor, to the prejudice of its other creditors. In sustaining the dissolution of the writ of preliminary attachment, the respondent court said that Roa and Mendoza were secured in the satisfaction of any judgment they might obtain against BF since all the properties of the latter were already in the custody of the management committee.

Their motions for reconsideration having been denied, both parties filed their respective petitions for review before this Court. In G.R. No. 76879, entitled "BF Homes, Inc. v. Court of Appeals, Rosalinda R. Roa and Vicente Mendoza," the petitioner contends that the respondent court committed an error and violated Sec. 5(d) of P.D. No. 902-A when it authorized continuation of proceedings in Civil Case No. Q-43104 after the management committee created by the SEC shall have been impleaded. In G.R. No. 77143, entitled "Rosalinda R. Roa and Vicente Mendoza v. Court of Appeals and BF Homes, Inc.," the petitioners seek a review on the grounds that the management committee was not a proper party and should not have been ordered substituted as party defendant in the regional trial court and that the writ of preliminary attachment should not have been dissolved. These two petitions were ordered consolidated in the resolution of this Court dated August 17, 1987. On February 2, 1988, the SEC issued an order approving the proposed revised rehabilitation plan and dissolving the management committee earlier created. Atty. Florencio Orendain was appointed rehabilitation receiver. Now to the merits. The parties in both cases are agreed that the proceedings in the civil case for the recovery of a sum of money should be suspended. BF originally maintained that the action should be resumed only until after SEC Case No. 002693 shall have been adjudicated on the merits but now agrees with Roa and Mendoza, in line with the "assessment" of the Solicitor General, that the action should be suspended pending the outcome of the rehabilitation proceedings. The pertinent provision of law dealing with the suspension of actions for claims against the corporation is Sec. 6(c) of P.D. 902-A, as amended, which reads: Sec. 6. n order to effectively exercise such jurisdiction, the Commission shall possess the following powers: xxx xxx xxx (c) To appoint one or more receivers of the property, real and personal, which is the subject of the action pending before the Commission in accordance with the pertinent provisions of the Rules of Court, and in such other cases whenever necessary in order to preserve the rights of parties-litigants and/or protect the interest of the investing public and creditors: Provided, however, That the Commission may, in appropriate cases, appoint a rehabilitation receiver of corporations, partnerships or other associations not supervised or regulated by other government agencies who shall have, in addition to the powers of a regular receiver under the provisions of the Rules of Court, such functions and powers as are provided for in the succeeding paragraph (d) hereof: Provided, further, That the Commission may appoint a rehabilitation receiver of corporations, partnership or other associations supervised or regulated by other government agencies, such as banks and insurance companies, upon request of the government agency concerned: Provided, finally, That upon

management committee to substitute BF as party defendant is not acceptable. The view of the respondent court is that the continuation of the action is necessary for the purpose of determining the extent of the liability of BF to Roa and Mendoza. The flaw in this theory is that even if such liability is determined, it still cannot be enforced by the trial court as long as BF is under receivership. 2 Moreover, it disregards the possibility that such determination would not be necessary at all should the rehabilitation receiver favorably consider and fully acknowledge the claims made by Roa and Mendoza. Under Sec. 6(d) of P.D. No. 902-A, the management committee or rehabilitation receiver is empowered to take custody and control of all existing assets and properties of such corporations under management; to evaluate the existing assets and liabilities, earnings and operations of such corporations; to determine the best way to salvage and protect the interest of investors and creditors; to study, review and evaluate the feasibility of continuing operations and restructure and rehabilitate such entities if determined to be feasible by the SEC. In light of these powers, the reason for suspending actions for claims against the corporation should not be difficult to discover. It is not really to enable the management committee or the rehabilitation receiver to substitute the defendant in any pending action against it before any court, tribunal, board or body. Obviously, the real justification is to enable the management committee or rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra-judicial interference that might unduly hinder or prevent the "rescue" of the debtor company. To allow such other action to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its restructuring and rehabilitation. In BF Homes, Inc. v. Hon. Fernando P. Agdamag et al., 3 the Court of Appeals held: It must be emphasized that the suspension is only for a temporary period to prevent the irreversible collapse of the corporation and give the management committee or receiver the absolute tranquility to study the viability of the corporation. During this period, the law creates a wall around the corporation against all claims. In Alemar's Sibal & Sons, Inc. v. Hon. Jesus M. Elbinias, et al., 4 this Court, explaining the legal consequences of a receivership, said: . . . When a corporation threatened by bankruptcy is taken over by a receiver, all the creditors should stand on an equal footing. Not anyone of them should be given any preference by paying one or some of them ahead of the others. This is precisely the reason for the suspension of all pending claims against the corporation under receivership. Instead of creditors vexing the courts

and 1799; Emphasis supplied.) As will be noted, the duration of the suspension is not indicated in the law itself. And neither is it specified in the SEC order creating the management committee. The Court feels that the respondent court erred in ordering the resumption of the civil proceeding after the management committee shall have been impleaded as party defendant. The explanation that the only purpose of suspending the civil action was to enable the

appointment of a management committee, rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnership, or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. (As amended by P.D. Nos. 1653, 1758

supplied) Consequently, we feel that the trial court cannot at this point determine the extent of BF's liability, if any, to Roa and Mendoza. This is true whether it is retained as party defendant or substituted by the management committee (or the rehabilitation receiver) as directed by the respondent court. What Roa and Mendoza should do now is file their claims with the rehabilitation receiver and submit to him such evidence as they would otherwise have to adduce before the trial court to prove such claims. As the revised rehabilitation plan approved by the SEC is expected to be implemented within ten years, the proceedings in the Regional Trial Court of Quezon City should be suspended during that period, to begin from February 2, 1988, the date of its approval. This is without prejudice to the authority of the SEC to extend the period when warranted and even to order the liquidation of BF if the plan is found to be no longer feasible. On the other hand, on a more positive note, the SEC can also find within that period that BF has been sufficiently revived and able to resume its normal business operations without further need of rehabilitation.

with suits against the distressed firm, they are directed to file their claims with the receiver who is a duly appointed officer of the SEC. (Emphasis

Coming now to the writ of preliminary attachment, we find that it must stand despite the suspension of the proceedings in the Regional Trial Court of Quezon City. The writ was issued prior to the creation of the management committee and so should not be regarded as an undue advantage of Mendoza and Roa over the other creditors of BF. In its amended decision and the resolution ordering the discharge of the writ of preliminary attachment, the respondent court did not rule on whether the issuance of the writ was improper or irregular. It simply said that the writ was no longer proper or necessary at that time because the properties of BF were in the hands of the receiver. We do not think so. 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. It is settled that: If there is an attachment or sequestration of the goods or estate of the defendant in an action which is removed to a bankruptcy court, such an attachment or sequestration will continue in existence and hold the goods or estate to answer the final judgment or decree in the same manner as they would have been held to answer the final judgment or decree rendered by the Court from which the action was removed, unless the attachment or sequestration is invalidated under applicable law. (28 USCS No. 1479 [a].) 5 As we ruled in Government of the Philippine Islands v. Mercado: 6 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 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. It has been held that the hen obtained by attachment stands upon as high equitable grounds as a mortgage lien: 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. (7 Corpus Juris

Secundum, 433, and authorities therein cited.) Under the Rules of Court, a writ of attachment may be dissolved only upon the filing of a counter-bond or upon proof of its improper or irregular issuance. Neither ground has been established in the case at bar to warrant the discharge of the writ. No counter-bond has been given. As for the contention that the writ was improperly issued for lack of notice to BF on the application for the writ, it suffices to cite Mindanao Savings & Loan Association, Inc.v. Court of Appeals, where we held: 7 The only requisites for the issuance of a writ of preliminary attachment under Section 3, Rule 57 of the Rules of Court are the affidavit and bond of the applicant. SEC. 3. Affidavit and bond required. An order of attachment shall be granted only when it is made to appear by the affidavit of the applicant, or of some other person who personally knows the facts, that a sufficient cause of action exists, that the case is one of those mentioned in section 1 hereof, that there is no other sufficient security for the claim sought to be enforced by the action and that the amount due to the applicant, or the value of the property the possession of which he is entitled to recover, is as much as the sum for which the order is granted above all legal counterclaims. The affidavit, and the bond required by the next succeeding section must be duly filed with the clerk or judge of the court before the order issues. No notice to the adverse party or hearing of the application is required. As a matter of fact a hearing would defeat the purpose of this provisional remedy. The time which such a hearing would take, could be enough to enable the defendant to abscond or dispose of his property before a writ of attachment issues. Nevertheless, while no hearing is required by the Rules of Court for the issuance of an attachment (Belisle Investment & Finance Co., Inc. v. State Investment House, Inc., 72927, June 30, 1987; Filinvest Credit Corp. v. Relova, 117 SCRA 420), a motion to quash the writ may not be granted without "reasonable notice to the applicant" and only "after hearing" (Secs. 12 and 13, Rule 57, Rules of Court). In sum, the Court holds that the substitution of the management committee/rehabilitation receiver in Civil Case No. Q-43104 in the Regional Trial Court of Quezon City is not necessary because the proceedings therein shall be suspended anyway pending implementation of the revised rehabilitation plan, during which the writ of preliminary attachment shall remain in force. WHEREFORE, the decision of the respondent court is SET ASIDE and judgment is rendered as follows: (1) In G.R. No. 76879, the petition is GRANTED. The proceedings in Civil Case No. Q-43104 shall remain suspended for a period of ten (10) years from February 2, 1988, unless extended or shortened by the SEC as circumstances may warrant; and (2) In G.R.No.77143, the petition is GRANTED insofar as it seeks restoration of the writ of preliminary attachment, issued on October 22, 1984, which is hereby reinstated. SO ORDERED.

[G.R. No. 111174. March 9, 2000] REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. BERNARDO V. SALUDARES, Presiding Judge, RTC, Br. 28, Lianga, Surigao del Sur, and HUNG MING KUK, respondents. Misj uris DECISION QUISUMBING, J.: This special civil action for certiorari assails the decision[1] of the Regional Trial Court of Lianga, Surigao del Sur, Branch 28, dated March 19, 1993. At issue is the jurisdiction of the trial court over properties owned by Lianga Bay Logging Company, Inc. (LBLC), but allegedly sequestered by the Presidential Commission on Good Government (PCGG). The facts on record show that on April 2, 1986, the PCGG issued a writ of sequestration,[2] which reads: "IN THE MATTER OF THE SEQUESTRATION OF LIANGA BAY LOGGING x -------------------------------------------------------------------x TO: MR. ARISTIDES M. ESCOSORA Baganga, Davao Oriental WRIT OF SEQUESTRATION By virtue of the power vested unto this Commission and by authority of the President of the Philippines, LIANGA BAY LOGGING, with offices at 2nd Floor, Emerald Building, Emerald Ave., Ortigas Office Bldg. Complex, Pasig, Metro Manila is hereby sequestered. Mr. Aristides Escosora is hereby appointed Fiscal Agent of this Commission and as such, he is hereby ordered to: 1. To implement this sequestration order with a minimum disruption of business activities. 2. To preserve and safeguard, as well as prevent the removal. concealment of records and the disposition and dissipation of asset, funds and resources. 3. To prevent undue removal or withdrawal of funds, until further orders to the Commission. 4. To report to the Commission on Good Government within five (5) days. Further, you are authorized to request the Commission for security support from the Military/Police authorities only if necessary. Jj lex xxx FOR THE COMMISSION: Originally Signed MARY CONCEPCION BAUTISTA Commissioner" The writ of sequestration was based on the ground that the shares of stocks in LBLC owned by Peter A. Sabido formed part of "illegally acquired wealth." On July 27, 1987, the Republic of the Philippines through the PCGG and the Office of the Solicitor General filed before the Sandiganbayan a complaint[3] for reconveyance, reversion, accounting, restitution and damages against, among others, Peter A. Sabido. On August 12, 1991, Sabido filed a Motion to Lift the Writs of Sequestration before the Sandiganbayan. On November 29, 1991, the Sandiganbayan granted the motion, disposing as follows: "WHEREFORE, the Motion (to Lift Writs of Sequestration) dated August 12, 1991, is granted. Accordingly, the Writs of Sequestration issued against the Philippine Integrated Meat Corporation on March 17, 1986, and Lianga Bay Logging Company, Inc. on April 2, 1986, are declared to have been deemed automatically lifted upon the lapse of six months from the ratification of the 1987 Constitution on February 2, 1987, without

prejudice to the continuation of the proceedings against PIMECO and Lianga....(emphasis supplied)
x x xNew miso SO ORDERED."[4]

On December 11, 1991, PCGG filed a motion for reconsideration of the decision of Sandiganbayan praying for the nullification of the order which lifted the writ of sequestration of LBLC. In the meantime, on February 11, 1993, private respondent Hung Ming Kuk filed a complaint[5] for sum of money against LBLC, with a prayer for a writ of preliminary attachment, with the Regional Trial Court, Branch 28, of Lianga, Surigao del Sur. The PCGG was not impleaded by Hung Ming Kuk as party-defendant nor was the sequestration case referred to the RTC's proceedings. Thus, the Republic of the Philippines filed a special civil action[6] for certiorari under Rule 65, dated March 29, 1993, with the Supreme Court. This petition, docketed as G.R. No. 109314, was later on consolidated with other similar cases. Meantime, on February 15, 1993, the Sandiganbayan denied the motion for reconsideration of PCGG, dated December 11, 1991. On February 17, 1993, the trial court granted the writ of preliminary attachment in favor of Hung Ming Kuk. Thereafter, Hung Ming Kuk filed a motion to declare LBLC in default for failure to file responsive pleadings pursuant to Sec. 1, Rule 18 of the Rules of Court. The RTC of Lianga, acting on the motion of Hung Ming Kuk, issued an order dated March 4, 1993, declaring LBLC as in default. Consequently, on March 19, 1993, the RTC rendered judgment by default, and decreed thus: "WHEREFORE, premised on the foregoing evidences and findings, this court hereby renders judgment in favor of the plaintiff, and ordering the defendant-Corporation to pay, as follows: 1. To pay plaintiff the principal amount of the accrued unpaid obligation in the total amount of P18,031,563.78, with interests at 14% per annum reckoned from July 1992 to February 1993 in the computed total of P1,250,666.66, the same to continue until said obligation is fully paid; Acct mis 2. To pay plaintiff moral and exemplary damages in the total amount of P150,000.00, plus Appearance Fee for the counsel in the sum of P5,000.00; 3. To pay plaintiff the total amount of P4,857,195.45 for Sheriffs Expenses, Attached Properties Guards Fees, Filing Fees, Litigation Expenses, and Attorneys Fees computed at 25% of the principal obligation, or P4,507,890.95, or a total amount ofP4,857,195.45; 4. To pay the costs of the suit. IT IS SO ORDERED."[7] On August 11, 1993, petitioner filed this special civil action under Rule 65 of the Rules of Court, raising the sole issue as follows: WHETHER, THE TRIAL COURT FAULTED IN DECIDING THE CLAIM OF PRIVATE RESPONDENT WHICH INVOLVED THE PROPERTIES OF LIANGA BAY LOGGING CO. INC. In the meantime, on January 23, 1995, the Supreme Court en banc issued its decision in the consolidated cases of Republic vs. Sandiganbayan(First Division), 240 SCRA 376 (1995). The decision included the nullification of the resolution of the Sandiganbayan that lifted the writ of sequestration of LBLC properties in G.R. No. 109314. Hence, the Court effectively confirmed the validity of the writ of sequestration over said properties. Peter A. Sabido's motion for reconsideration was denied. Finally, an entry of judgment was issued on April 22, 1997, in G.R. No. 109314. Petitioner contends that the RTC of Lianga has no jurisdiction over the subject matter of the case inasmuch as the same are under sequestration by the PCGG. Citing Baseco vs. PCGG, 150 SCRA 181 (1987), petitioner asserts that the sequestered assets have been placed undercustodia legis of the PCGG pending the final determination by the Sandiganbayan that said assets are in fact illgotten. Hence, the RTC has no jurisdiction to order the attachment of said sequestered properties. Private respondent, however avers that his original complaint was for a sum of money. It was a demand for payment of a valid obligation owed to him by LBLC. He adds that it would be unfair and unjust to declare the entire RTC proceedings regarding his claim for sum of money null and void. Mis act

Private respondent further claims that the attachment order of the trial court was issued after the Sandiganbayan had lifted the writ of sequestration against LBLC. But petitioner asserts that this order of the Sandiganbayan was reversed by the Supreme Court in a bancdecision[8] dated January 23, 1995, resolving several consolidated cases for which G.R. No. 109314 was included. Petitioner stresses that said reversal had become final and executory on April 22, 1997. In PAGCOR vs. CA, 275 SCRA 433-434 (1997), involving ownership by Philippine Casino Operators Corporation (PCOC) over several gaming and office equipment during the time that PCOC was under a sequestration by PCGG, the Court ruled: "We disagree with the RTC and the CA on the issue of jurisdiction. While there can be no dispute that PCOC was sequestered, the fact of sequestration alone did not automatically oust the RTC of jurisdiction to decide upon the question of ownership of the subject gaming and office equipment. The PCGG must be a party to the suit in order that the Sandiganbayan's exclusive jurisdiction may be correctly invoked. This is deducible from no less than E.O. No. 14, the 'Pea' and 'Nepomuceno' cases relied upon by both subordinate courts. Note that in Section 2 of E.O. No. 14 which provides: Sec. 2. The Presidential Commission on Good Government shall file all such cases, whether civil or criminal, with the Sandiganbayan, which shall have exclusive and original jurisdiction thereof. it speaks of the PCGG as party-plaintiff. On the other hand, the PCGG was impleaded as codefendant in both the 'Pea' and'Nepomuceno' cases. But here, the PCGG does not appear in either capacity, as the complaint is solely between PAGCOR and respondents PCOC and Marcelo. The 'Pea' and 'Nepomuceno cases which recognize the independence of the PCGG and the Sandiganbayan in sequestration cases, therefore, cannot be invoked in the instant case so as to divest the RTC of its jurisdiction, under Section 19 of B.P. Blg. 129, over PAGCOR's action for recovery of personal property." In the case at bar, the claim of private respondent Hung Ming Kuk is for a sum of money arising from a debt incurred by LBLC. Under a contract, private respondent had extended cash advances and supplied LBLC hardware materials, auto spare parts, and rendered services, for cutting and hauling logs. The total claim amounts to P18,031,563.78. Following Section 19 of B.P. Blg. 129, as amended by R.A. No. 7691 on March 25, 1994, the complaint falls within the jurisdiction of the Regional Trial Court, viz: S djad "Sec. 19. Jurisdiction in civil cases. -- Regional Trial Courts shall exercise exclusive original jurisdiction: xxx (8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs or the value of the property in controversy exceeds One hundred thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the above-mentioned items exceeds Two hundred thousand pesos (P200,000)." Petitioner relies, however, on the case of PCGG vs. Pea, 159 SCRA 556 (1988) and asserts that the controversy of LBLC or a sequestered company falls within the exclusive jurisdiction of the Sandiganbayan and not of the trial court. In the Pea case, the trial court issued a temporary restraining order which prevented PCGG from enforcing the memorandum of then PCGG

Commissioner Mary Concepcion Bautista. Her memorandum denied complainant's authority to sign and manage the funds of the sequestered company. The Supreme Court ruled that the trial court had no jurisdiction over PCGG being a co-equal body, and therefore, the regional trial courts may not interfere with and restrain the PCGG or set aside the order and actions of its Commissioner. In contrast, the case now before us concerns receivables of the private respondent arising out of a legitimate business contract to supply goods and services in favor of LBLC. When a collection suit was filed against LBLC by its supplier, Hung Ming Kuk, evidently PCGG could not be the proper party to defend against such claim. More so, because when PCGG had not taken over the LBLC's business operations. Sppedsc We note that PCGG is not an owner but a conservator. It can exercise only powers of administration over property sequestered, frozen or provisionally taken over. Even resort to the provisional remedies should entail the least possible interference with business operations or activities so that, in the event that the accusation that the business enterprise is "ill-gotten" be not proven, it may be returned to its rightful owner as far as possible in the same condition as it was at the time of sequestration.[9] The holding in Pea which confers exclusive jurisdiction on the Sandiganbayan in sequestration cases cannot also be relied upon by petitioner in this case. We hold that the Regional Trial Court has jurisdiction over the complaint for payment of money allegedly averred by LBLC to private respondent. We now move to the ancillary issue of whether or not the provisional remedy of attachment issued by the trial court in favor of the private respondent is valid. It bears recalling that when the Sandiganbayan ordered that the writ of sequestration be lifted, PCGG filed a special civil action for certiorari to contest that order. The Supreme Court ruled in favor of PCGG when it granted the latter's petition to declare the lifting of the writ of sequestration by the Sandiganbayan null and void. The Court's en banc resolution pertinently reads: "WHEREFORE, judgment is hereby rendered: A. NULLIFYING AND SETTING ASIDE: xxx 17) in G.R. No. 109314, its impugned Resolutions[10] dated November 29, 1991 and February 16, 1993." In the same en banc Resolution, the Court observed: "II. Provisional Remedies in Pursuance of PolicyC alrsc Special adjective tools or devices were provided by the Revolutionary Government for the recovery of that "ill-gotten wealth." These took the form of provisional remedies akin to preliminary attachment (Rule 57), writ of seizure of personalty (Rule 60) and receivership (Rule 59). They were (a) sequestration and (b) freeze orders, as regards "unearthed instance of "ill-gotten wealth; and (c) provisional takeover, as regards business enterprises and properties taken over by the government of the Marcos Administration or by entities or persons close to former President Marcos." A. Executive Orders Re Sequestration, Freezing and Takeover These special remedies were prescribed and defined in Executive Orders Numbered 1 and 2, promulgated by President Corazon C. Aquino in March, 1986. Their validity and propriety were sustained by this Court on May 27, 1987, against claims that they were unconstitutional as being bills of attainder, or as violative of the right against self-incrimination and the guaranty against unreasonable searches and seizures. In the same case, the Court also set the parameters for and restrictions on the proper exercise of the remedies." In BASECO vs. PCGG, 150 SCRA 181, 182 (1987), sequestration is defined as the process, which may be employed as a conservatory writ whenever the right of the property is involved, to preserve, pending

litigation, specific property subject to conflicting claims of ownership or liens and privileges.[11] The Court also noted the relationship between attachment and receivership, on one hand, and sequestration, freeze order and provisional takeover on the other. The latter there are ancillary remedies in prosecuting the ill-gotten wealth of the previous Marcos regime. The Court observed that sequestration, freezing and provisional takeover are akin to the provisional remedy of preliminary attachment or receivership. By an order of attachment, a sheriff seizes property of a defendant in a civil suit so that it may stand as security for the satisfaction of any judgment that may be obtained, and not disposed of, or dissipated, or lost intentionally, or otherwise, pending the action.[12] When a writ of attachment has been levied on real property or any interest therein belonging to the judgment debtor, the levy creates a lien which nothing can destroy but its dissolution.[13] This well-settled rule is likewise applicable to a writ of sequestration. Sccal r Attachment is in the nature of a proceeding in rem. It is against a particular property of a debtor. The attaching creditor thereby acquires a 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 results in its virtual condemnation to pay for the owner's debt. The law does not provide the length of time during which an attachment lien shall continue after the rendition of the judgment, and it must therefore continue until the debt is paid, or sale is had under execution issued in the judgment, or until the judgment is satisfied, or the statement discharged or vacated in some manner provided by law.[14] In our view, the disputed properties of LBLC were already under custodia legis by virtue of a valid writ of sequestration[15] issued by the PCGG on April 2, 1986, when respondent Judge Saludares issued the assailed writ of attachment in favor of private respondent Hung Ming Kuk. At that time the writ of sequestration issued by PCGG against LBLC was subsisting. Said writ of the PCGG could not be interfered with by the RTC of Lianga, because the PCGG is a coordinate and co-equal body. The PCGG had acquired by operation of law the right of redemption over the property until after the final determination of the case or until its dissolution. WHEREFORE, the instant petition is partially GRANTED. The default Order issued by the public respondent dated March 19, 1993, is AFFIRMED, but should be held in abeyance until the sequestration case involving LBLC before the Sandiganbayan is determined. The Order of Attachment issued by the public respondent is declared NULL and VOID. No pronouncement as to costs. SO ORDERED.