G.R. No.

L-13281 August 31, 1960

SIARI VALLEY ESTATES, INC., petitioner,

vs.
FILEMON LUCASAN, ET AL., respondents.

BAUTISTA ANGELO, J.:

On January 30, 1952, the Court of First Instance of Zamboanga del Norte rendered decision
ordering Filemon Lucasan to deliver to the Siari Valley Estates, Inc. the cattle inside the former's
pasture or pay its value amounting to P40,000.00 and damages in another sum of P40,000.00, This
decision was affirmed in toto by the Supreme Court, and when the same became final and
executory, a writ of execution was issued. In carrying out this writ, the sheriff proceeded to levy on
certain parcels of lands belonging to defendant. These lands were sold by the sheriff at public
auction to the corporation as the highest bidder on January 14, 1956. The judgment debtor having
failed to redeem the land within the period of one year, on January 26, 1957, the sheriff issued in
favor of the purchaser the final certificate of sale, copy of which was registered in the Office of the
Register of Deeds of Zamboanga. On February 16, 1957, upon petition of the corporation, a writ of
possession was issued directing the sheriff to place said corporation in possession thereof.
Notwithstanding said writ, however, the corporation failed to take possession of the lands, hence it
filed a motion reiterating its petition that it be placed in their possession.

This time judgment debtor Filemon Lucasan filed an opposition alleging that he was in possession of
one of the parcels of land sold at public auction on which he has erected a house and which he has
extra judicially constituted as a family home, the rest being in possession of third parties. On April
30, 1957, the court, overruling the opposition, issued an order directing the sheriff to place the
corporation in possession of the lands sold to it. On August 7, 1957, debtor Lucasan filed a motion
for reconsideration which was denied, the court reiterating its previous order with little amendment,
but on August 23, 1957 issued another order allowing the corporation to take possession of all lands
sold, with the exception of parcel 1 on which the family home was constituted, holding that the levy
and sale made by the sheriff with regard to said parcel were not made in accordance with law and so
are null and void. Having failed to have this last order reconsidered, the corporation interposed the
present petition 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 Registration Act, the
notice shall contain a reference to the number of the certificate of title and the volume and page in
the registration book where the certificate is registered" (Section 7 [a], Rule 59).

These provisions should be strictly construed if their purpose has to be accomplished. The
requirement that the notice of levy should contain a reference to the number of the certificate of title
and the volume and page in the registration book where the certificate is registered is made in order
that the debtor as well as a third person may be properly informed of the particular land or property
that is under the custody of the court. This can only be accomplished by making a reference to the
certificate of title covering the property. The situation differs if the land is unregistered in which case
it is enough that the notice be registered under Act 3344. This conclusion finds support in the
following authorities:

An attachment levied on real estate not duly recorded in the registry of property is not an
encumbrance on the attached property, nor can such attachment, unrecorded in the registry,
serve as a ground for decreeing the annulment of the sale of the property, at the request of
another creditor. (Gonzales Diez vs. Delgado and Imperial, 37 Phil., 389)

... In conformity with the provisions of section 71 of the Land Registration Act, the sheriff of
the City of Manila filed a notice of the levy with the register of deeds, which notice was
entered in the primary entry book of the register's office, but was afterwards, on May 20,
1920, returned to the sheriff with the information that the property was registered in the name
of Buenaventura Dizon, having been conveyed to the latter by the defendant in execution,
Celerino Arellano, and that, therefore, no memorandum of the notice had been entered upon
the outstanding certificate of title. It may be noted that the notice contained no "reference to
the number of the certificate of title of the land to be effected and the volume and page in the
registry book where the certificate is registered, and that t that extent, the notice did not meet
the requirements of said section 71. (De Ocampo vs. Treasurer of the Philippine Islands, 50
Phil., 140, 141; Emphasis supplied).

Since the notice of levy made by the sheriff as regards parcel number 1 which is a registered land
contains no reference to the number of its certificate of title and the volume and page in the registry
book where the title is registered, it follows that said notice is legally ineffective and as such did not
have the effect of binding the property for purposes of execution. Consequently, the sale carried out
by virtue of said levy is also invalid and of no legal effect.

The second issue raised is: Is the family home extra judicially established by respondent on the lot
and house in question exempt from execution?

Respondent sustains the affirmative considering that the money judgment rendered against him was
appealed to the Supreme Court in which event, he contends, the same could not be considered as a
debt at the time the family home was constituted for it was still inchoate and as such cannot come
under the provisions of Article 243 (2) of the new Civil Code.

The article above referred to provides that "The family home extra judicially formed shall be exempt
from execution" except "for debts incurred before the declaration was recorded in the Registry of
Property." What if the meaning of the word debt used in this article? Does it refer to a debt that is
undisputed, or may it also refer to any pecuniary obligation even if the same has not yet been finally
determined? In other words, can a judgment for a sum of money be considered a debt within the
meaning of this provision even if said judgment is still pending appeal?

We are inclined to uphold the affirmative considering the real purpose of the law. The reason why a
family home constituted after a debt had been incurred is not exempt from execution is to protect the
creditor against a debtor who may act in bad faith by resorting to such declaration just to defeat the
claim against him. If the purpose is to protect the creditor from fraud it would be immaterial if the
debt incurred be undisputed or inchoate, for a debtor acting in good faith would prefer to wait until
his case is definitely decided before constituting the family home. Indeed, it may result, as in this
case, that the Supreme Court may affirm the judgment of the lower court. If the contention of
respondent be sustained a debtor may be allowed to circumvent this provision of the law to the
prejudice of the creditor. This the Court cannot countenance. Hence, we are persuaded to conclude
that the money judgment in question comes within the purview of the word debt used in Article 243
(2) of the new Civil Code.

WHEREFORE, the order appealed from is hereby affirmed, without prejudice of the part of petitioner
to file a new petition for execution following strictly the requirements of the rule on the matter. No
pronouncement as to costs.

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

ERLINDA RAVANERA and husband OSCAR RAVANERA, petitioners,

vs.
FELIPE I. IMPERIAL, respondent.

DE CASTRO, J.:

Appeal by certiorari taken by petitioners from (a) the decision of the Court of Appeals in CA-G.R. No.
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.
MAUR
O B.
FAJAR
DO

Ex
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 reference to the number of the
certificate of title of the land to be effected, and the volume and page in the registry
book where the certificate is registered, and that to that extent the notice did not
meet the requirements of said section 71. (De Ocampo v. Treasurer of the Philippine
Islands, 50 Phil. 140, 141; Emphasis supplied.)

The properties which were acquired by the petitioners as the highest bidders in the auction sale on
November 3, 1969 are as follows:

1. A parcel of land located at Naga City registered under Act 496 and covered by
Transfer Certificate of Title No. 257;

2. A two-storey residential house located at Naga City not registered under Act 496
but covered by Tax Declaration No. 14276; and

3. A parcel of residential land located at Naga City not registered under Act 496 but
covered by Tax Declaration No. 8732. (Annex J to Petition, pages 39 and 40, Rollo.)

From the records of the case, the notice of levy made by the sheriff as regards the registered land
contains reference to the number of its certificate of title but not to the volume and page in the
registry book where the title is registered. Nevertheless from what was stated in the case of Siari
Valley Estate vs. Lucasan, supra, it would seem that the purpose of the requirement of Section 7(a),
Rule 39 of the Revised Rules of Court is substantially complied with. This is more so where as in this
case, there appears in the notice of levy the following certification:

It is hereby certified that this instrument has been duly registered proper
memorandum hereof made on transfer Certificate of Title No. 257 & 258 and on its
owner's duplicate Reg. Book No. 3; File No. 1-248.

Naga City, Sept. 29, 1969.

Reference to the number of the certificate of title of every registered land in the notice of levy,
together with the technical description thereof, would certainly suffice to inform the debtor, as well as
third persons what particular land or property is brought to the custody of the court, as is the purpose
of the aforecited provision of the Rules of Court. Incidentally, no third person appears, to be
interested in the matter now before this Court. From the fact that respondent Imperial was able to
exercise his right of redemption with reference to three registered parcels of land, it can be easily
deduced that insofar as respondent Imperial is concerned, the purpose of the requirement of
reference having to be made to the number of the certificate of title, and also the volume and page in
the registration book where the certificate is registered, has been fully served or attained.

It may also be pertinent to note that in the Siari Valley case, heavily relied upon by the respondent
court in voiding the notice of levy in the instant case, the land involved which was actually registered
with OCT No. 2492 was described in the notice of levy as unregistered land, which was thus a
misleading information.

We, therefore, find no substantial defect in the notice of levy on all the properties levied upon and
sold to petitioners in the auction sale, that should be a basis, as the respondent court deemed it to
be, for annulling the sale made pursuant to the levy.

Respondent Imperial also brands the levy as irregular for failure of the occupants of the attached or
levied properties to be left with copy of the order, notice of levy and description of the properties. The
finding of facts of the respondent Court of Appeals which was quoted in full above, fails to disclose
the existence of occupants of the properties levied upon other than the owner, respondent Imperial.
It was incumbent on said respondent to prove by evidence duly submitted to the Court a fact that
would tend to support his claim that the levy is void or otherwise illegal. The levy being an official act
of a government functionary its regularity is presumed.

The alleged inadequacy of the purchase price of the properties sold in the execution sale is no
ground to assail the validity of the sale, for the judgment debtor has the right to redeem the property,
and the smaller the price, the easier is it for him to buy back the property. 8

Respondent Imperial goes back to the issuance of the order of execution on December 30, 1968 to
show that the order is invalid because it was issued after he has perfected his appeal on December
10, 1966 (p. 22, Respondent's Brief). What the Court of Appeals, however, stated in its decision is
that "on February 17, 1966, pending approval of the Record on Appeals, plaintiff Archbishops of
Nueva Caceres filed a Motion for Execution of the decision or to order defendant to file supersedeas
bond and to deposit the amount of P500.00 every month as rentals," and that on May 6, 1966, the
respondent court (CFI of Camarines Sur) granted the motion for execution pending appeal. This
order was brought up by respondent Imperial to the Supreme Court on certiorari as a special civil
action, resulting in the stay of the enforcement of the order of the execution. The special civil action,
however, was dismissed on May 22,1968, by the Supreme Court, and the dismissal merely
reactivated the order of execution pending appeal issued on May 6,1966.

Clearly, the original order of execution pending appeal was perfectly valid, and the issuance of alias
writ when the original writ was not acted upon at the instance of the plaintiff for the reason that
amicable settlement between the parties was proposed but failed to materialize, did not affect the
validity of either the original or alias writ of execution. Accordingly, We rule that contrary to the
contention of respondent Imperial (see pages 22-23, Brief for the Respondent), the writ of execution
that gave rise to the levy of the properties in question and their sale in a public auction is valid and
regular in all respects. 'That the alias writ of execution was issued by the Clerk of Court and not by
the judge is no ground for holding invalid said alias writ, considering that the Clerk of Court is not
without authority to issue ordinary writs and processes, under the seal of the Court (Session 4, Rule
136, Revised Rules of Court).
In any event, respondent Imperial as judgment debtor is in estoppel by his failure to seasonably
make an objection to the allegedly defective notice of levy and notice of sale before the actual sale,
or before redeeming some of his properties despite the supposed defect of the notice of levy. He
should have interposed objection to the levy and the sale from the very beginning, from October 15,
1969 when he received notice of levy and notice of sale. A waiver on his part to question the validity
of the auction sale may also be said to arise from his failure to pay the arrears in real estate taxes, or
to redeem the mortgage of one of the properties sold at public auction, during the period of
redemption. These are omissions which are clearly an indication of acquiescence in the sale, or his
awareness that the execution sale was valid and legally unassailable. To allow him to turn back on
his manifest conformity to the levy and sale on execution of his properties, after petitioners have
bought the property as the highest bidder during the auction sale, would be patently unjust to the
said petitioners, who had every reason to rely on the presumed regularity of the proceedings as
official acts of both the judge and his own court officer, the sheriff.

WHEREFORE the decision appealed from is hereby reversed. The notice of levy and the sale of the
properties in question, both registered and unregistered in favor of the petitioners are hereby
declared valid. No pronouncement as to cost.

SO ORDERED.

G.R. No. 78635 April 27, 1989

LEONORA OBAA, petitioner,

vs.
COURT OF APPEALS, RAFAEL G. SUNTAY, REGISTER OF DEEDS OF QUEZON CITY, and the
EX-OFICIO SHERIFF OF QUEZON CITY, respondents.

GUTIERREZ, JR., J.:

This is a petition to review on certiorari the decision of the Court of Appeals which set aside the trial
court's decision, dismissed herein petitioner Leonora Obaa's complaint and ordered her to pay
Rafael G. Suntay the amount of P5,000.00 as attorney's fees with costs against her.

The facts of the case as stated in the Court of Appeals' decision are as follows:

Records show that defendant-appellant (Rafael G. Suntay) was the former counsel of
Liberty H. Dizon and her minor children, Nicolas and Noel Patrick, both surnamed
Torio, in an intestate proceeding docketed as No. 142 and in the petition for
guardianship over said minors in Sp. Proc. No. 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 v. Liberty H. Dizon, Nicolas Torio, Jr.
and Joel Patrick Torio, defs. to the amount of P10,000.00.

Date of Instrument Nov. 29, 1972

Date of Inscription Dec. 1, 1972.

(Exh. 1-A)'

Due to the failure of the sheriff to serve the summonses issued in Civil Case 4238 for
the reason that Mrs. Dizon and her wards no longer resided at the last known
address at 34-H Road, Cypress Village, Quezon City, and that their present address
cannot be ascertained appellant as plaintiff in said civil case filed a Motion for
Service of Summons by Publication (Exh. H) which was granted by the court in its
Order dated February 12, 1973 (Exh. 1). Accordingly, summons were served upon
Mrs. Dizon and her wards through publication.

Meanwhile, pursuant to a Deed of Absolute Sale dated May 16, 1973 executed by
and between Liberty H. Dizon, et al., and appellee Leonora Obaa involving the
attached property (Exh. S) the register of deeds of Quezon City cancelled TCT No.
173792 in the name of Liberty H. Dizon and her wards, and, in lieu thereof, executed
in favor of Leonora Obaa a new TCT No. 191069 necessarily transferring in the
process the encumbrance consisting of notice of levy in favor of appellant.
 On August 10, 1973, after summons by publication had been effected in Civil Case
No. 4238-M, upon motion of appellant Atty. Suntay, the court declared the
defendants therein, Liberty H. Dizon and her wards, in default and allowed plaintiffs
evidence to be presented ex-parte. Consequently, a decision was rendered on
September 28, 1973 awarding to appellant Atty. Suntay the amount of P10,000.00
representing his claim for attorney's fees relative to the prosecution of said case
(Exhibit K). Pursuant to said decision, a writ of execution was issued per order of the
court, and then followed by a Notice of Levy on Execution dated August 7, 1974,
issued by the sheriff of Quezon City. Thereafter, a certificate of sale (Exh. M) over
the subject property (now covered by TCT 191059 in the name of Leonora Obaa)
was issued in favor of the appellant, being the highest bidder. For failure of Mrs.
Dizon and her wards or by appellee Leonora Obaa to redeem the property on or
before October 15, 1975, a 'Sheriffs Final Deed of Sale' (Exh. N) was issued in favor
of appellant. Both certificates of sale were registered in the Register of Deeds of
Quezon City and was annotated at the back of TCT No. 191059 (Exh. A).

Appellant then filed a petition in the then CFI of Rizal, Quezon City, for the
cancellation; of TCT No. 191059 which was opposed by appellee Leonora Obaa.
On April 28, 1977, said CFI of Quezon City in LRC-750 issued an order cancelling
TCT No. 191059 and directing the Register of Deeds of Quezon to issue a new title
covering the subject land in the name of Rafael G. Suntay married to Victoria J.
Suntay.

To stop the registration of the subject land in the name of appellant, appellee filed an
action on August 28, 1978 before the court a quo for annulment of judgment
rendered in Civil Case No. 4238-M. In her complaint, appellee as plaintiff, contended
that the decision rendered in Civil Case No. 4238-M by the then CFI of Bulacan is
null and void for the reason that said court did not acquire jurisdiction over Liberty H.
Dizon and her wards, since they were not properly served with summons. Appellee
also claimed that the proceedings before the sheriff were defective in that the sheriff
failed to comply with the jurisdictional requirements on the manner of service of
notice in the New Rules of Court thus rendering the proceedings void ab initio.

The defendant-appellant, on the other hand, countered in his answer that LRC-750
granting the petition for the cancellation of TCT No. 191059 in favor of said appellant
is res judicata to the instant case; that plaintiffs recourse under Rule 38 has long
prescribed; that insofar as the plaintiff is concerned, when she bought the property in
question and title was transferred to her on July 2, 1973, she is charged with
knowledge of the pendency of Civil Case No. 4238-M thru the annotation at the back
of TCT No. 173792 of the Registry of Deeds of Quezon City; and that there was no-
extrinsic fraud committed by defendant-appellant that may constitute a ground to
nullify the judgment in Civil Case No. 4238-M.

The court a quo in nullifying the judgment in Civil Case No. 4238 held that no
jurisdiction was acquired over the persons of defendants therein, the action being
strictly in personam and summons by publication is insufficient; and that no valid
attachment and levy were made by the sheriff as no personal service of the copy of
the notice to the occupant of the property was made. (Rollo, pp. 37-40).

There are, therefore, three cases which eventually led to this petition. First was SP-C-00565, the
guardianship case before the Juvenile and Domestic Relations Court of Quezon City where the
attorney's fees for Suntay were initially awarded. Second was CC 4238-M before Branch VII of the
Bulacan Court of First Instance where Atty. Suntay filed his action for sum of money to collect his
fees and where a default judgment against Liberty Dizon and the Torio children was rendered. The
third is the case now before us from the Court of Appeals Civil Case No. 5418-M, the annulment
of judgment case filed in Branch VIII of the Regional Trial Court of Bulacan to set aside as null and
void the CFI decision in Civil Case No. 4238-M.

There is actually a fourth case, No. LRC 750, a petition for cancellation of the petitioner's TCT No.
191059 filed by respondent Suntay with the Court of First Instance of Quezon City.

On appeal in Civil Case No. 5418-M, the Court of Appeals dismissed petitioner Obaa's complaint
on the grounds of lack of cause of action and res judicata.

Hence, this present petition.

Petitioner raises the following assignment of errors, namely:

(T)hat the public respondent Court of Appeals committed a grave abuse of discretion
amounting to a lack of or in excess of jurisdiction, in REVERSING and SETTING
ASIDE, the appealed decision of the Trial Court a quo, despite the clear merits
thereof, and these errors of public respondent are manifest in the following:

1. THAT PETITIONER HAS NO CAUSE OF ACTION, SINCE SHE

WAS NOT A DEFENDANT NOR A PARTY IN INTEREST IN CC NO.
4238-M (BRANCH VII, CFI, BULACAN);

2. THAT THE COMPLAINT FOR ANNULMENT OF DECISION IS

BARRED FOR REASON OF RES JUDICATA, SINCE BETWEEN
LRC-750 AND CC 5418-M, THERE IS AN IDENTITY OF PARTIES
AND SUBJECT MATTER, AND CAUSES OF ACTIONS. (Rollo, pp.
10-11)

There are certain facts overlooked by the Court of Appeals which call for the setting aside of its
decision.

Civil Case No. 4238-M was an action for sum of money filed by Atty. Suntay against liberty Dizon
and her minor children in an effort to collect attorney's fees in the guardianship case he handled for
them. The guardianship court authorized the payment of P5,000.00. According to the Court of
Appeals, the collection case was between Suntay on one hand and Dizon and her children on the
other. It ruled that petitioner Obaa the buyer of the lot, is not a party in interest and had neither
personality nor cause of action to ask for the annulment of the judgment in that case.

This may be so, if the facts end there. However, the judgment in Civil Case No. 4238-M, while
against Dizon and her children was executed against property belonging to petitioner Obaa.

The house and lot in Quezon City which Dizon sold to Obaa for P150,000.00 was executed upon
by the Sheriff to satisfy the P10,000.00 attorney's fees in the Dizon guardianship case and another
P5,000.00 awarded to Suntay for his fees in prosecuting his own collection case. The house and lot
were sold for P17,402.90 to respondent Suntay. According to the petitioner, the Property she
purchased for P150,000.00 on May 16, 1973 is now worth over Pl,000,000.00.
The sheriffs sale was affected without any personal notice to Liberty H. Dizon on the ground that she
had moved out of her old address and her "present address" was unknown. No notice was served on
Obaa because she was not a party in the collection case. All notices and summonses in the
collection case filed on November 9, 1972 including the copy of the complaint, the original summons,
the alias summons, the notice of levy on attachment of the disputed property, the notice of levy on
execution and the notice of sheriffs sale were served through mail to defendant Dizon at 34-H
Caingin Road, Cypress Village, Quezon City. As earlier stated, because the Sheriff could not serve
the complaint and the summons on Dizon who had moved out of the above address, service by
publication upon Dizon was authorized by the court in the collection case.

In the annulment of judgment case which led to this petition, the trial court ruled:

On the question as to whether the Bulacan Court of First Instance had acquired
jurisdiction over the defendants in the civil case in question thru summons by
publication, the latest case law on the matter is to the affect that in an action
strictly in personam personal service of summons within the forum is essential to the
acquisition of jurisdiction over the person of the defendant who does not voluntarily
submit to the authority of the court. In other words by publication cannot
consistently with the due process clause in the Bill of Rights confer upon the court
jurisdiction over said defendants (Magdalena Estate, Inc. v. Nieto, et al. G. R. No.
54242, November 25, 1983, citing Citizens Surety & , Inc. v. Judge Melencio Herrera,
et al. 38 SCRA 369 [1971]; see also Pantaleon v. Asuncion, 105 Phil. 761 [1059];
contra Fontanillal v. Dominguez, 73 Phil. 579 [1042]). There is no question that Civil
Case No. 4238-M filed before the Court of First of Bulacan was a personal action
being one for the recovery of a sum of money as it prayed for judgment ordering the
defendants jointly and severally to pay plaintiff the sum of P10,000.00 with legal
interest thereon from the date of the filing of this complaint; the sum of P5,000.00 as
attorney's fees plus actual, moral and exemplary damages upon such amounts as
this Honorable Court may deem just and equitable and the costs of suit. The creditor,
however, in an action in personam can take the recourse to locate properties, real or
personal of the resident 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 orquasi 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-C-00565 through her
counsel, herein private respondent Suntay (Exh. Q, original records). He could not have been
unaware that the house and lot he was attaching had been sold to Obaa because the sale of the
Dalmar property was authorized by the guardianship court in the case where he was counsel for the
guardian.

Considering all the foregoing circumstances, the order in LRC 750 which is based on irregular
proceedings in the prior case and which directed the cancellation of Obaa's transfer certificate of
title cannot assume finality. The respondent court committed reversible error in using it as a basis
for res judicata. There is the added factor that a land registration court in a cancellation of title case
could not possibly inquire into the controversial matters raised in the annulment of judgment case.
(See Register of Deeds of Iloilo v. Hodges, 7 SCRA 149 [1963]; Sunpongco v. Heirs of Nicolas
Ronquillo, 36 SCRA 395 [1970] and Development Bank of the Philippines v. Jimenez, 36 SCRA 426
[1976]).

The respondent court ruled that Liberty H. Dizon and her wards should have been joined as plaintiffs
by petitioner Obaa in the action to annul the judgment in the collection case. This ruling ignores the
fact that Dizon could not even be summoned in the collection case; her whereabouts are unknown:
the judgment against her was a default judgment; she has apparently no more interest whatsoever in
the house and lot she sold to Obaa and she still owes Atty. Suntay P10,000.00.

And finally in our capacity as a court of equity in addition to being a court of law, we cannot close our
eyes to the rank injustice whereby the owner of a minion peso house and lot is compelled to give up
her property to answer for a P10,000.00 attorney's fee incurred by its former owner and which the
lawyer cannot apparently collect from his own client.

WHEREFORE, the petition is hereby GRANTED. The questioned decision of the Court of Appeals is
REVERSED and SET ASIDE. The decision of the trial court in Civil Case No. 5418-M which reads:

"Premises considered, the judgment issued in Civil Case No. 4238-OM as well as the
proceedings, orders and notices issued therein including the writ of attachment, levy
and execution sale are hereby declared null and void. The Register of Deeds is
therefore permanently restrained from effecting the cancellation of title in the name of
 herein plaintiff. For moral damages, the said plaintiff is hereby awarded the amount
of P10,000.00, and for attorney's fees, the amount of P15,000.00. Costs against the
defendant." (p. 35, Rollo)

is REINSTATED.

SO ORDERED.

G.R. No. 156580 June 14, 2004

LUZ DU, petitioner,

vs.
STRONGHOLD INSURANCE Promulgated: 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 Review1 under Rule 45 of the Rules of Court, seeking to nullify the March
19, 2002 Decision2 and the December 5, 2002 Resolution3 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/T-3. Sometime in January 1989, De Leon sold the
property to Luz Du under a Conditional Deed of Sale wherein said vendee paid a down
payment of P75,000.00 leaving a balance 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 defrauding Stronghold and
misappropriating the companys fund by falsifying and simulating purchases of documentary
stamps. The action was accompanied by a prayer for a writ of preliminary attachment duly
annotated at the back of Transfer Certificate of Title No. 2200 on August 7, 1990.

"On her part, on December 21, 1990, Luz Du initiated Civil Case No. 60319 against Aurora
de Leon and the spouses Caliwag for the annulment of the sale by De Leon in favor of the
Caliwags, anchored on the earlier mentioned Deed of Conditional Sale.

"On January 3, 1991, Luz Du caused the annotation of a Notice Of Lis Pendens at the back
of Transfer Certificate of Title No. 2200.

"On February 11, 1991, the decision was handed down in Civil Case No. 90-1848 in favor
of Stronghold,ordering the spouses Caliwag jointly and severally to pay the
plaintiff P8,691,681.60, among others. When the decision became final and executory, on
March 12, 1991, a notice of levy on execution was annotated on Transfer Certificate of Title
No. 2200 and the attached property was sold in a public auction. On [August] 5, 1991,5 the
certificate of sale and the final Deed of Sale in favor of Stronghold were inscribed and
annotated leading to the cancellation of Transfer Certificate of Title No. 2200 and in lieu
thereof, Transfer Certificate of Title No. 6444 was issued in the name of Stronghold.

"It came to pass that on August 5, 1992, Luz Du too was able to secure a favorable judgment
in Civil Case No. 60319 and which became final and executory sometime in 1993, as well.

"Under the above historical backdrop, Luz Du commenced the present case (docketed as
Civil Case No. 64645) to cancel Transfer Certificate of Title No. 6444 in the name
of Stronghold with damages claiming priority rights over the property by virtue of her Notice
Of Lis Pendens under Entry No. 13305 and inscribed on January 3, 1991, and the final and
executory decision in Civil Case No. 60319 she filed against spouses Enrique and Rosita
Caliwag. According to Luz Du, despite her said notice of lis pendens
annotated,Stronghold still proceeded with the execution of the decision in Civil Case No.
90-1848 against the subject lot and ultimately the issuance of Transfer Certificate of Title No.
6444 in its (Strongholds) name."6

The trial court ruled that Stronghold had superior rights over the property because of the prior
registration of the latters notice of levy on attachment on Transfer Certificate of Title (TCT) No.
2200. For this reason, it found no basis to nullify TCT No. 6444, which was issued in the name of
respondent after the latter had purchased the property in a public auction.

Ruling of the Court of Appeals

Sustaining the trial court in toto, the CA held that Strongholds notice of levy on attachment had been
registered almost five (5) months before petitioners notice of lis pendens. Hence, respondent
enjoyed priority in time. Such registration, the appellate court added, constituted constructive notice
to petitioner and all third persons from the time of Strongholds entry, as provided under the Land
Registration Act -- now the Property Registration Decree.

The CA also held that respondent was a purchaser in good faith. The necessary sequels of
execution and sale retroacted to the time when Stronghold registered its notice of levy on
attachment, at a time when there was nothing on TCT No. 2200 that would show any defect in the
title or any adverse claim over the property.

Hence, this Petition.7

Issues

Petitioner submits the following issues for our consideration:

"I.

"Whether a Notice of Levy on Attachment on the property is a superior lien over that of the
unregistered right of a buyer of a property in possession pursuant to a Deed of Conditional
Sale.

"II.

"Whether the acquisition of the subject property by Respondent Stronghold was tainted with
bad faith."8

The Courts Ruling

The Petition has no merit.

Main Issue:

Superiority of Rights

Petitioner submits that her unregistered right over the property by way of a prior conditional sale in
1989 enjoys preference over the lien of Stronghold -- a lien that was created by the registration of
respondents levy on attachment in 1990. Maintaining that the ruling in Capistrano v. PNB was
improperly applied by the Court of Appeals, petitioner avers that unlike the circumstances in that
case, the property herein had been sold to her beforethe 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 Case No. 1182 on August 3, 1949, and their subsequent sale to appellee Brillo (which
retroacts to the date of the levy) still takes precedence over and must be preferred to
appellants deeds of sale which were registered only on November 5, 1949.

"This result is a necessary consequence of the fact that the properties herein involved were
duly registered under Act No. 496, and of the fundamental principle that registration is the
operative act that conveys and binds lands covered by Torrens titles (sections 50, 51, Act
496). Hence, if appellants became owners of the properties in question by virtue of the
recording of the conveyances in their favor, their title arose already subject to the levy in
favor of the appellee, which had been noted ahead in the records of the Register of
Deeds."12 (Citations omitted, italics supplied)

The Court has steadfastly adhered to the governing principle set forth in Sections 51 and 52 of
Presidential Decree No. 1529:13

"SEC. 51. Conveyance and other dealings by registered owner. - An owner of registered
land may convey, mortgage, lease, charge or otherwise deal with the same in accordance
with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary
instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary
instrument, except a will purporting to convey or affect registered land shall take effect as a
conveyance or bind the land, but shall operate only as a contract between the parties and as
evidence of authority to the Registry of Deeds to make registration.
 "The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, and in all cases under this Decree, the registration shall be made in
the office of the Register of Deeds for the province or the city where the land lies.

"SEC. 52. Constructive notice upon registration. - Every conveyance, mortgage, lease,
lien, attachment, order, judgment, instrument or entry affecting registered land shall, if
registered, filed or entered in the office of the Register of Deeds for the province or city
where the land to which it relates lies, be constructive notice to all persons from the time of
such registering, filing or entering."(Italics supplied)
1avvphil.net

As the property in this case was covered by the torrens system, the registration of Strongholds
attachment14 was the operative act that gave validity to the transfer and created a lien upon the land
in favor of respondent.15

Capistrano Ruling

Correctly Applied

The preference created by the levy on attachment is not diminished even by the subsequent
registration of the prior sale.16 That was the import of Capistrano v. PNB,17 which held that
precedence should be given to a levy on attachment or execution, whose registration
was before that of the prior sale.

In Capistrano, the sale of the land in question -- though made as far back as 1946 -- was registered
only in 1953, after the property had already been subjected to a levy on execution by the Philippine
National Bank. The present case is not much different. The stipulation of facts shows that Stronghold
had already registered its levy on attachment before petitioner annotated her notice of lis pendens.
As in Capistrano, she invokes the alleged superior right of a prior unregistered buyer to overcome
respondents lien.

If either the third-party claim or the subsequent registration of the prior sale was insufficient to defeat
the previously registered attachment lien, as ruled by the Court in Capistrano, it follows that a notice
of lis pendens is likewise insufficient for the same purpose. Such notice does not establish a lien or
an encumbrance on the property affected.18 As the name suggests, a notice of lis pendens with
respect to a disputed property is intended merely to inform third persons that any of their
transactions in connection therewith -- if entered into subsequent to the notation -- would be subject
to the result of the suit.

In view of the foregoing, 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.

"The rule is not altered by the fact that at the time of the execution sale the Philippine
National Bank had information that the land levied upon had already been deeded by the
judgment debtor and his wife to Capistrano. The auction sale being a necessary sequel to
the levy, for this was effected precisely to carry out the sale, the purchase made by the bank
at said auction should enjoy the same legal priority that the levy had over the sale in favor of
plaintiff. In other words, the auction sale retroacts to the date of the levy. Were the rule
otherwise, the preference enjoyed by the levy of execution in a case like the present would
be meaningless and illusory."19 (Citations omitted, italics supplied)
 Second Issue:

Taking in Bad Faith

We now tackle the next question of petitioner: whether Stronghold was a purchaser in good faith.
Suffice it to say that when Stronghold registered its notice of attachment, it did not know that the land
being attached had been sold to petitioner. It had no such knowledge precisely because the sale,
unlike the attachment, had not been registered. It is settled that a person dealing with registered
property may rely on the title and be charged with notice of only such burdens and claims as are
annotated thereon.20 This principle applies with more force to this case, absent any allegation or
proof that Stronghold had actual knowledge of the sale to petitioner before the registration of its
attachment.

Thus, the annotation of respondents notice of attachment was a registration in good faith, the kind
that made its prior right enforceable.21

Moreover, it is only after the notice of lis pendens is inscribed in the Office of the Register of Deeds
that purchasers of the property become bound by the judgment in the case. As Stronghold is
deemed to have acquired the property -- not at the time of actual purchase but at the time of the
attachment -- it was an innocent purchaser for value and in good faith.

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
CA-G.R. SP No. 43082 entitled, "Candelario Damalerio and Aurea Damalerio v. Honorable Antonio
S. Alano, et al."1

There is no dispute as to the following facts:

On 05 December 1995, Bernardo Valdevieso (petitioner) bought from spouses Lorenzo and Elenita
Uy a parcel of land consisting of 10,000 square meters, more or less, located at Bo. Tambler,
General Santos City, and covered by Transfer Certificate of Title (TCT) No. T-30586.2

The deed of sale was not registered, nor was the title of the land transferred to petitioner.3

On 07 December 1995, the said property was immediately declared by petitioner for taxation
purposes as Tax Declaration No. l6205 with the City Assessors Office.4
It came to pass that on 19 April 1996, spouses Candelario and Aurea Damalerio (respondents) filed
with the Regional Trial Court (RTC) of General Santos City, a complaint for a sum of money against
spouses Lorenzo and Elenita Uy docketed as Civil Case No. 5748 with application for the issuance
of a Writ of Preliminary Attachment.5

On 23 April 1996, the trial court issued a Writ of Preliminary Attachment by virtue of which the
property, then still in the name of Lorenzo Uy but which had already been sold to petitioner, was
levied. The levy was duly recorded in the Register of Deeds of General Santos City and annotated
upon TCT No. T-30586.6

On 06 June 1996, TCT No. T-30586 in the name of Lorenzo Uy was cancelled and, in lieu thereof,
TCT No. T-74439 was issued in the name of petitioner.7 This new TCT carried with it the attachment
in favor of respondents.

On 14 August 1996, petitioner filed a third-party claim in Civil Case No. 5748 to discharge or annul
the attachment levied on the property covered by TCT No. T-74439 on the ground that the said
property belongs to him and no longer to Lorenzo and Elenita Uy.8

In a resolution dated 21 October 1996, the trial court ruled for the petitioner.9 Citing Manliguez v.
Court of Appeals10and 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.1awphi1.nt

Respondents sought reconsideration thereof which was denied by the trial court in a resolution dated
03 January 1997.12

From the unfavorable resolution of the trial court in the third-party claim, respondents appealed to
the Court of Appeals. The appellate court reversed the resolution and by judgment promulgated on
25 September 1997, it declared that an attachment or levy of execution, though posterior to the sale,
but if registered before the sale is registered, takes precedence over the sale.13 The writ of
attachment in favor of the respondents, being recorded ahead of the sale to petitioner, will therefore
take precedence.

Petitioner moved for reconsideration but this was denied by the Court of Appeals in its Resolution of
10 February 1998.14

Hence, this Petition for Review on Certiorari.

The sole issue in this case is whether or not a registered writ of attachment on the land is a superior
lien over that of an earlier unregistered deed of sale.

Petitioner maintains that he has a superior right over the questioned property because when the
same was attached on 23 April 1996, this property was no longer owned by spouses Uy against
whom attachment was issued as it was already sold to petitioner on 05 December 1995. The
ownership thereof was already transferred to petitioner pursuant to Article 147715 in relation to Article
149816 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. 1awphi1.nt

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.21The 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,
l^vvphi1.net

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.1awphi 1.nt

As to petitioners invocation of equity, we cannot, at this instance, yield to such principle in the
presence of a law clearly applicable to the case. We reiterate that this Court, while aware of its
equity jurisdiction, is first and foremost, a court of law.23 While equity might tilt on the side of one
party, the same cannot be enforced so as to overrule positive provisions of law in favor of the
other.24 Equity cannot supplant or contravene the law.25 The rule must stand no matter how harsh it
may seem. Dura lex sed lex.

WHEREFORE, the appealed Decision of the Court of Appeals in CA-G.R. SP No. 43082 dated 25
September 1997, and its Resolution dated 10 February 1998, are hereby AFFIRMED. No costs.

SO ORDERED.

[G.R. No. 5534. December 23, 1909. ]

HERBERT S. WALKER and W. J. ROHDE, Plaintiffs-Appellees, v. JOSE MCMICKING, Defendant-

Appellant.

OBrien & De Witt for Appellant.

 Roman Lacson for Appellees.

SYLLABUS

1. ATTACHMENT; SHERIFFS LIABILITY. Defendant as sheriff attached certain property under a writ of
execution. The attachment became invalid because the defendant did not maintain control over the
property, either personally or by his representative. Plaintiffs innocently, in good faith, and under a right
acquired possession of the property. Subsequently defendant obtained possession of and sold the property:
Held, That the defendant is liable either to return the property or its value.

DECISION

JOHNSON, J. :

On the 5th day of February, 1909, the plaintiff commenced an action in the Court of First Instance of the
city of Manila to recover the possession of certain personal property mentioned in paragraph 1 of the
complaint, or in default thereof the sum of P1,500, its value, and costs. The defendant filed a general
denial.

After hearing the evidence adduced during the trial of the cause, the lower court rendered a judgment
adjudging to Herbert S. Walker, the right to recover the articles mentioned in paragraph 1 of the complaint,
of the defendant, or in default, the sum of P539, with interest at the rate of 5 per cent per annum, from
February 6, 1909.

From this judgment the defendant appealed and made the following assignments of error: jgc: chan roble s.com.p h

"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." cralaw virtua1aw l ibra ry

Under the first above assignment of error, the appellant contends that the lower court committed an error in
holding that 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:jgc:chanro bles. com.ph

"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 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 surrendered 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 v. Goodale,
21 Am. Dec., 674; Jones v. Howard, 59 Am. St. Rep., 231; Miles v. 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 not too soon be declared." cralaw virt ua1aw li bra ry

The facts presented by a preponderance of the evidence seem to be as follows: chan rob1e s virtual 1aw lib rary

The plaintiff, Walker, was the owner of a Filipino carriage factory. The building in which the factory was
operated and its contents were, on the 30th of June, 1908, sold to a partnership known as "Arenas & Co.,"
by plaintiff, Walker, whose ownership, at the time of the sale, was not disputed by any of the parties to this
action. The contract was evidenced by a writing (Exhibit A), from which it appears that the said company
was to pay for the said factory and its contents the sum of p3,200, P600 of which was paid at the time of
the sale (June 30, 1908) and the balance was to be paid in three installments, due, respectively, P600 on
the 15th of July, 1908, P1,000 due on the 15th of September, 1908, and P1,000 due on the 31st of
December, 1908. The said company paid the installment due on the 15th of July, 1908, but failed to pay
said installments due in September and December. Paragraph 4 of said contract (Exhibit A) contains the
following provision: jg c:chan roble s.com.p h

"That, should the said firm of Arenas & Co. not pay me the amount agreed to on the dates stated in the
previous paragraph or within the thirty days following any of the 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." cralaw virtua1aw l ibra ry

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 the 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 and 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."cralaw virtua 1aw lib rary

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. 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 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, 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 conclusion 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 defendant 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." cralaw virtua 1aw lib rary

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 or 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 v. Goodale, 8 Conn., 332, 21 Am.
Dec., 674; Jones v. 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 his substantial presence and possession.
(Corniff v. 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 Procedure in Civil Actions. There is no pretension, however, in the record, on the
part of the defendant, that he attached said property and held the same by virtue of such attachment. Even
though 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 the 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 prescription 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 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 of 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
cites 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 force sale is not a fair criterion for the purpose of ascertaining the true value of such property.

We have discussed at length the assignments of error made by the appellant, but in our opinion the whole
case may be stated briefly as follows: cha nrob 1es vi rtual 1aw lib rary

First. The defendant attached certain property under a writ of execution issued by one of the courts of the
city of Manila, which attachment 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.

PANGANIBAN, J.:

Sheriffs play an important role in the administration of justice. They form an integral part thereof
because they are called upon to serve court writs, execute all processes, and carry into effect the
orders of the court with due care and utmost diligence. 1 As agents of the law, high standards are
expected of them. In the present case, respondent sheriff failed to live up to these standards.

A complaint against Respondent Deputy Provincial Sheriff Rodolfo G. Tuliao of the Regional Trial
Court of Cauayan, Isabela, Branch 20 was filed by Santiago N. Salvador before the Tuguegarao
Sub-Office (TUGSO) of the National Bureau of Investigation ("NBI"). 2 An investigation was conducted
by Agent-in-Charge Franklin Javier and Agent Raul A. Ancheta. On November 24, 1994, complainant
gave his statement 3 to Agent Paul Gino Rivera. Invoking his right to remain silent, respondent sheriff
refused to "submit himself to custodial investigation" before Agent Javier. Instead, he submitted a
Compliance 4 dated July 22, 1995 and an Answer 5 dated August 4, 1995.

After the investigation, Agents Javier and Ancheta recommended, inter alia, the filing of an
administrative case with the Office of the Court Administrator. 6 Atty. Gerarda G. Galang, Chief of the
NBI Legal and Evaluation Division, concurred with said recommendation. 7 On November 13, 1995,
Director Mariano M. Mison of the NBI transmitted to this Court a copy of the evaluation with the
recommendation that appropriate action be taken against respondent. 8

Hence, this administrative complaint now before us.

The Facts

Complainant Salvador bought a passenger jeep from Lito G. Ignacio to be paid in monthly
installments of P7,000.00 with a down payment of P50,000.00. After remitting the down payment,
complainant diligently paid all monthly amortizations until March 1994 when, in the absence of
Ignacio, the complainant was forced to pay to an unnamed brother of the seller the amounts due for
the months of April and May 1994. However, the brother failed to remit said amount to the seller;
thus, the latter filed with the Regional Trial Court of Cauayan, Isabela, Branch 20 9 a suit for collection
docketed as Civil Case No. 20-757, entitled Pisces Motor Works, Represented by Lito D. Ignacio vs.
Santiago Salvador.

Subsequently, an order was issued by the RTC directing respondent sheriff to attach the passenger
jeep. Complainant, through counsel, filed a motion to discharge attachment upon filing of a
counterbond for the release of the vehicle in his favor. Due to some defects in the aforementioned
motion, a second motion with counterbond was filed. On July 13, 1994, the trial court issued an
order, the decretal portion of which reads, to wit: 10

WHEREFORE, and in view of the foregoing, the counterbond of the defendant, is

hereby approved. The Sheriff is hereby ordered to release to the defendant the
attached vehicle bearing Motor No. 6D-57-51813 with Plate No. UV BBR-127.

Respondent refused to comply with the said order. Instead, he released the passenger jeep to
Ignacio after the latter had executed a receipt therefor together with an undertaking that he would
produce the jeep whenever required by the court. Respondent justified such release by saying that
the court had no storage building that would protect the jeep from damage or loss. 11

Despite the pendency of a motion for contempt 12 filed by complainant against respondent, the case
was dismissed 13 on August 31, 1994 because jurisdiction over the case had been transferred to the
municipal trial court as mandated by Republic Act No. 7691 which expanded said court's jurisdiction.

After receipt of respondent's 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 complainant's possession in accordance with the court's 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 Court's Ruling

Respondent's 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 sheriff's 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, . . .

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, respondent's 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 sheriff's 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
sheriff's duty in attachment, as
follows: 16

. . . 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 . . . to constitute a valid levy of an attachment, the officer levying it
must take actual possession of the property attached as far as . . . 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 sheriff's 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]), . . .

Leaving the attached property in the possession of the attaching creditor makes a farce of the
attachment. This is not compliance with the issuing court's 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
Respondent's 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 court's 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 attacked property.

That he exerted efforts in going to the creditor's 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 isSUSPENDED 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.18 The property
attached shall then be released and delivered to the adverse party; and the money deposited shall
be applied under the direction of the court to the satisfaction of any judgment that may be rendered
in favor of the prevailing party.19

In the instant case, respondent judge had 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.23 The 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 Order27 granting 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.36 Certainly, mere
error of judgment is not a ground for disciplinary proceedings.37

Complainants alleged that respondent judge committed another violation of the Rules of Court when
he 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.711wphi1

"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."74Reasonable 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,83observing 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 hereby SUSPENDED for one month and one day without pay, with a warning
that a repetition of the same or of a similar act in the future shall be dealt with more severely.

SO ORDERED.

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

REYNALDO SEBASTIAN, complainant,
vs.
SHERIFF ALBERTO A. VALINO, respondent.

QUIASON, J.:

Marblecraft, Inc., represented by its Assistant General Manager, Reynaldo Sebastian, charges
Alberto A. Valino, Senior Deputy Sheriff, Office of the Regional Sheriff, Pasig, Metro Manila, with (1)
gross abuse of authority committed in connection with the implementation of the writ issued by the
Regional Trial Court, Makati, Metro Manila, in Civil Case No. 89-3368, and (2) refusal to enforce the
trial court's for the return of the seized items.

Complainant alleges that:

1. On March 3, 1989, Private Development Corporation of the Philippines (PDCP) filed a replevin
suit against Marblecraft, Inc., in Civil Case No. 89-3368, in order to foreclose the chattels mortgaged
by Marblecraft. On March 30, 1989, the Regional Trial Court, Makati, issued a writ of seizure
directed against Marblecraft covering the chattels sought to be replevied.

2. The enforcement of the writ of seizure was delayed because of the writ of preliminary injunction
enjoining PDCP from proceeding with the foreclosure sale issued by the Regional Trial Court, Pasig,
Metro Manila in Civil Case No. 58006, It was only on October 31,1990, when the Regional Trial
Court, Pasig, dissolved the writ of preliminary injunction.

3. On November 9, 1990, at around 10:37 A.M., respondent, accompanied by several policemen and
PDCP employees, went to the office of Marblecraft at Barrio Santolan, Pasig, to implement the writ
of seizure. Respondent and his companions forcibly opened the lockers and desk drawers of the
employees of complainant and took their personal belongings, as well as some office equipment
issued to them. The employees filed with the Office of the Provincial Prosecutor of Rizal two criminal
complaints for robbery against respondent and his companions.

4. Respondent only showed to complainant's counsel a copy of the writ but did not furnish him with a
copy of the application for the writ, the supporting affidavit and the bond.

5. In the course of the implementation of the writ, which lasted for four days, several pieces of
machinery and equipment were destroyed or taken away by respondent.

6. Respondent turned over the seized articles to the counsel of PDCP and allowed these items to be
stored in PDCP's warehouse in Taguig, Metro Manila.

7. On November 14, 1990, complainant posted a counterbond. In an order issued on the same day,
the Regional Trial Court, Makati, approved the bond and directed the immediate return of the seized
items. After denying PDCP's motion to set aside the November 14 Order, the trial court reiterated the
directive for the return of the seized items in its November 26 Order. Respondent did not implement
the orders.

8. PDCP filed a motion for reconsideration of the November 26 Order, which was denied in an Order
dated December 11, 1990.

In his comment, respondent branded the administrative complaint against him as pure harassment
filed by Marblecraft after he had refused to defer the implementation of the writ of seizure. He said
that if he did not implement the writ, he would have been accused by PDCP of non-performance of
his duties as a sheriff. He pointed out that the criminal complaints for theft filed against him by the
employees of complainant were dismissed by the Provincial Prosecutor of Rizal.

The administrative complaint was referred to Judge Martin S. Villarama Jr. of the Regional Trial
Court, Pasig, for investigation, report and recommendation.

In his report, Judge Villarama, found respondent guilty of partiality when he immediately turned over
the seized items to PDCP, and of willful refusal to enforce the November 14, 26 and December 11,
1990 Orders of the Regional Trial Court, Makati.

Under the Revised Rules of Court, the property seized under a writ of replevin is not to be delivered
immediately to the plaintiff. The sheriff must retain it in his custody for five days and shall return it to
the defendant, If the latter, as in the case, requires its return and files a counterbond (Sec. 4, Rule
60, Revised Rules of Court). In violation of said Rule, respondent immediately turned over the seized
articles to PDCP. His claim that the Office of the Regional Sheriff did not have a place to store the
seized items, cannot justify his violation of the Rule. As aptly noted by the Investigating Judge, the
articles could have been deposited in a bonded warehouse.

Respondent must serve on Marblecraft not only a copy of the order of seizure but also a copy of the
application, affidavit and bond (Sec. 4, Rule 60, Revised Rules of Court). Respondent did not furnish
defendant with a copy of the application, affidavit and bond. By his own admission, he only served it
with a copy of the order of seizure (Rollo, p. 37).

The more serious infraction of respondent is his refusal to implement the order of the Regional Trial
Court, Makati for him to return to complainant the articles seized pursuant to the writ of seizure dated
March 30, 1990.

The Order dated November 14, 1990 directed him "to immediately return to defendant all its
properties seized and taken from its premises pursuant to the writ of seizure of March 30, 1989, from
receipt of this Order (sic)" (Rollo,
p. 42)

The Order dated November 26, 1990 directed him "to implement the Order of this Court dated
November 14, 1990 and to immediately return to defendant all its properties seized and taken from
its premises pursuant to the writ of seizure dated March 30, 1989 from receipt of this Order (sic)"
(Rollo,
p. 44).

The Order dated December 11, 1990 directed him "to implement the Order of this Court dated
November 26, 1990, within three (3) days from the receipt hereof, otherwise this Court will be
constrained to appoint and deputize another sheriff to implement the order dated November 26,
1990" (Rollo, p. 47).

The only action taken by respondent to implement the Order dated December 11, 1990 was to write
a letter on December 12, 1990, addressed to the counsel of PDCP, requesting the turnover of seized
articles. As expected, PDCP's counsel refused to part with the possession of the seized articles and
to issue a letter of authorization to withdraw the same from the warehouse. Instead of taking
possession of the articles, respondent merely reported to the Regional Trial Court that "[i]t is now
clear that the undersigned cannot implement the Court order dated December 11, 1990 by reason of
the refusal of PDCP to accept or to honor said Court order" (Rollo, p.48).
The petition for certiorari of PDCP to question the orders of the Regional Trial Court, Makati, was
filed with the Court of Appeals only on December 17, 1990. The Court of Appeals issued a
temporary restraining order only on December 21, 1990. Respondent therefore had more than seven
days within which to enforce the orders of the trial court if he was minded to do so.

Respondent could have avoided getting into his present predicament had he not turned over the
possession of the seized goods prematurely to the PDCP.

The complainant cannot be blamed if it harbored the suspicion that respondent was beholden to
PDCP. The zeal with which respondent enforced the order of seizure in favor of PDCP was in sharp
contrast with his inaction in enforcing the three orders of the trial court directing him to return the
seized items to complainant.

It is not for respondent to question the validity of the orders of the trial court. It is for him to execute
them. As observed by the Investigating Judge, "[t]here is therefore no excuse for respondent's wilfull
refusal to implement the Order of the Court" (Report and Recommendation, p. 10). Disobedience by
court employees of orders of the court is not conducive to the orderly administration of justice. The
display of partially in favor of a party as against the other party erodes public confidence in the
integrity of the courts.

IN VIEW OF THE FOREGOING, the Court finds respondent guilty of serious misconduct and
RESOLVED to impose upon him the penalty of FOUR (4) MONTHS SUSPENSION without pay, the
period of which should not be charged to his accumulated leave, with a WARNING that a repetition
of the same or of acts calling for disciplinary action will be dealt with more severely. This resolution is
IMMEDIATELY EXECUTORY, and respondent is hereby ordered to forthwith desist from performing
any further official functions appertaining to said office.

SO ORDERED.

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

MARIANETTE VILLAREAL, complainant,

vs.
ROLANDO T. RARAMA, RESTITUTO MADRAZO, FIDEL CASUYON, and AGUINALDO DEL
CAMPO,respondents.

REGALADO, J.:

The present administrative case arose from a sworn complaint 1 filed by Marianette Villareal against
respondents Rolando T. Rarama, Restituto Madrazo, Fidel Casuyon, and Aguinaldo del Campo who are
all serving as Sheriff III in Branches V, VII, II, and III, respectively, of the Municipal Trial Courts in cities
(MTCC), Davao City, for allegedly "conniving and confederating in maliciously serving a writ of execution
intended for another person who is living in another place." Pursuant to the First Indorsement of Deputy
Court Administrator Reynaldo L. Suarez dated August 24, 1994, 2 the complaint was referred to
respondent Sheriff Rolando T. Rarama, through Judge Roberto Q. Canete, MTCC, Branch 5, Davao City,
for comment. Subsequently, respondents submitted their joint counter-affidavit 3 to which a reply 4 was
filed by herein complainant. A rejoinder to complainant's reply 5 was also submitted by respondents.

It appears that an action for collection of a sum of money was filed by the Cooperative Rural Bank of
Davao City against the spouses Marianette (herein complainant) and Roy Villareal, Lito Lacorda and
Felimon Cangrejo before the MTCC, Branch 5, of Davao City docketed as Civil Case No. 548-E-M.
The records show that summons was served upon respondent Cangrejo who, however, failed to file
his answer, as a consequence of which he was declared in default. On April 19, 1989,
judgment 6 was rendered against him in favor of the plaintiff bank without prejudice to his right to proceed
against his co-debtors. On March 29, 1994, an alias writ of execution 7 was issued by the trial court
against Cangrejo.

According to complainant, at around 1:30 P.M. of April 25, 1994, respondent Rarama arrived at her
house in Digos, Davao del Sur, together with the other respondents and three employees of the
Cooperative Rural Bank of Davao City, Inc., including one Vic Belo who is a collector of the bank.
Respondent Rarama introduced himself as a sheriff of Davao City and informed her that they were
going to attach her properties because she lost in a case. Complainant denied having been charged
in court, much more of having lost in a case, and that she did not owe anything to the bank. When
respondent Rarama persisted in getting her properties, she demanded and was shown the writ of
execution. She objected thereto, claiming that the same was not addressed to her but to Felimon
Cangrejo and that the writ was being served after more than five years from the date the decision
was rendered. The reply given her was that she is the principal borrower and the only one who is
solvent.

Despite the pleas of complainant and a neighbor for the postponement of the implementation of the
writ until she shall have consulted her lawyer, respondents immediately proceeded to pull out from
complainant's house the following items, viz.: one VHS player, one Singer sewing machine, one
Chinese cabinet, and another Chinese cabinet with glass shelves. Allegedly, complainant was forced
to sign an inventory receipt because she would otherwise not be able to get back her things. She
hastened to add that when she signed the receipt, the words "with my conformity" were not written
thereon.

The following day, complainant and her husband went to the bank to inquire about the status of her
loan and she was informed that, unless she settled her account, her properties would not be
released. Complainant avers that because of this she was constrained to pay the amount of
P10,000.00 despite earlier representations made with the bank that she had fully paid her loan to the
bank collector. She further asserts that she was thereafter forced to write a promissory note as
dictated by the assistant manager of the bank, Gerry Alag, and the bank's lawyer, Atty. Herbert
Arteg. Eventually, after she presented the receipt of payment and the promissory note to respondent
Rarama, the attached properties were released to herein complainant.

On the other hand, respondent Rarama claims that on April 25, 1994, he went to Digos, together
with Vic Belo and Bading dela Fuente, employees of the bank, to coordinate with Provincial Sheriff
Andres regarding the implementation of the alias writ of execution issued in the aforementioned Civil
Case No. 548-E-M. However, he was informed that he would have to implement the writ on his own
because the other sheriffs were not available. On their way out of the Hall of Justice, they met
respondents Madrazo, Casuyon and del Campo who, upon learning that Rarama's group was going
to Digos where they all lived, decided to join the group so they could get a free ride.

Upon the suggestion of Vic Belo, the bank collector, the group first went to the house of complainant
purportedly to ask for the exact address of Felimon Cangrejo against whom the writ was issued.
When they reached the house of complainant, respondent Rarama introduced himself and his other
companions, and then inquired from the former about the address of Cangrejo. When complainant
asked why they were asking her, Rarama showed her the writ of execution and the court decision. It
was then that complainant stated that she was the principal defendant in the case.
Respondents further allege that complainant requested Rarama not to implement the writ against
Cangrejo because he was merely her co-maker who never benefited from the loan extended to her
by the Rural Bank of Davao, after which she offered to pay her obligations in monthly installments.
Respondent Rarama did not agree to the proposal since he was not authorized to enter into that
compromise but, at the same time, he suggested that complainant deposit some of her personal
properties as security for the settlement of her obligation, and the latter allegedly agreed. Much later,
the properties hereinbefore mentioned were released to complainant by virtue of a letter from the
creditor bank.

In addition, respondents controvert the claims of complainant that they forcibly entered her house
and took possession of her personal properties without her consent. On the contrary, they insist that
complainant deposited her personal properties voluntarily and of her own free will. They likewise
contend that it is not true that complainant has never been charged in court for in fact there was a
pending criminal case for violation of the law on bouncing checks, as well as a civil case for
collection of a sum of money, filed against her.

In her aforesaid reply to respondents' counter-affidavit, complainant maintains her original stand that
she did not voluntarily deposit her personal properties with respondents and declares as untrue
respondents' claim that they merely came to see her to ask for the address of Felimon Cangrejo.

On January 16, 1995, this Court issued a resolution, 8 as recommended by Deputy Court Administrator
Reynaldo L. Suarez, referring the case to Executive Judge Augusto B. Breva of the Regional Trial Court
of Davao City for investigation, report and recommendation within sixty (60) days from receipt of the
records thereof.

Thereafter, Judge Breva submitted his report dated July 12, 1995, with the recommendation that
respondent sheriff Rolando T. Rarama be declared guilty of an administrative offense and that he be
suspended for three months, with a stern warning that a repetition of a similar offense will be dealt
with more severely. He further recommended that the three other respondents be exonerated.

We quote with approval the findings of the investigating judge regarding the propriety of the
respective claims of the parties and the culpability, or absence thereof, with 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 "4-25-94" (Exh. "5-A"), the date of the taking of the
four items. Service of the writ on her was indicative of the intent to implement it against her
personal interests.

(2) The RECEIPT (Exh. "6") issued by Rarama to the complainant, for the four items,
positively shows that it was prepared in advance. The opening paragraph is typewritten and
reads: "Received from defendants MARIANETTE & ROY VILLAREAL the personal
properties mentioned and particularly described below, to wit:" Thus the fact that the names
"MARIANETTE & ROY VLLLAREAL" had already been typewritten beforehand is a further
indication of said intent, otherwise their names would have been handwritten like the
descriptions of the four items appearing therein.

(3) There is nothing in the RECEIPT showing that the items were only deposited. On the
contrary, it contains a typewritten paragraph which reads: "That the above-mentioned
personal property/ies was/were levied and attached by virtue of the Writ of Execution issued
by Honorable ROBERTO Q. CANETE, Presiding Judge, MTCC, Branch 5, Davao City, dated
March 29, 1994".

(4) The four items were not brought to the plaintiff bank (which would have been the case if
they were merely deposited by private arrangement) but to the MTCC which issued
the alias writ and from which the complainant recovered them after paying P10,000.00 to the
bank.

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

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 re-direct examination as the one who wrote down the descriptions of the
four items taken from her house, writing as the things were accordingly being pulled out "by
the other sheriffs" without naming them (TSN 6-5-95 pp. 46-47). She did not even identify
them during the hearing, and she got the names of Madrazo and del Campo only days later
from the Court upon instruction of her adviser, then Provincial Prosecutor Aves (same TSN
p. 39). She did not particularize the 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 co-maker, the fact remains that Cangrejo was the sole debtor
adjuged liable for the loan obtained from the Cooperative Rural Bank of Davao City, Inc. and the
alias writ of execution was directed only against him. Hence, respondent Rarama had no authority to
implement the same against herein complainant considering that, although she was named as a
defendant in the collection case, there was no judgment against her as of the date of the incident.

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/Ex-officio Naga City Sheriff, respondent.

RESOLUTION

ROMERO, J.:

This resolution disposes of two related complaints of Domingo Balantes, one of which is against
respondent Judge Julian Ocampo III (A.M. No. MTJ-
93-853) 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 for certiorari(SPL. Civil Action No. RTC 91-2467) before the same RTC, Branch 23, Naga
City where Judge Gregorio A. Manio declared said order of demolition and the writ issued pursuant
thereto as null and void, having been issued with grave abuse of discretion and enjoined respondent
Judge from issuing any further writs of demolition in Civil Case No. 8339.

Despite this directive, respondent Judge exhibited a defiant attitude by issuing another writ of
demolition dated August 19, 1992. Said order was the subject of another petition
for certiorari/prohibition (SPL. Civil Action No. 92-2651) wherein Judge Antonio N. Gerona of Branch
27, RTC, Naga City issued an order dated September 2, 1992 restraining the implementation of the
aforesaid writ of demolition by the sheriff of MTC, Naga City.

As regards the charge against respondent Clerk of Court and Ex-Officio Sheriff Lilia S. Buena, the
same is dismissed, it appearing from the certification she issued that the Temporary Restraining
Order issued by the RTC, Branch 27, Naga City was received by her on September 2, 1992 at 2:15
p.m., after the demolition had been completely effected and the premises delivered to the plaintiff at
1:30 p.m. of same date. It appears that respondent Buena was not aware of the existing TRO which
she received within the hour after the demolition had taken place, thus rendering said restraining
order a fait accompli. The rule is that when a writ is placed in the hands of a sheriff, it is his duty, in
the absence of instructions, to proceed with reasonable celerity and promptness to execute it
according to its mandate. He may not apply his discretion as to whether to execute it or not. 4

WHEREFORE, in view of the foregoing, respondent Judge Julian Ocampo III, MTCC, Branch I,
Naga City is hereby ordered to pay a FINE of P5,000.00 with WARNING that a repetition of the
same or similar infraction in the future will merit a stiffer penalty. The complaint against respondent
Clerk of Court and 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 non-performance
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.

ROQUE vs. CA supra.

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

SUMMIT TRADING AND DEVELOPMENT CORPORATION, petitioner,

vs.
JUDGE HERMINIO A. AVENDANO, Court of First Instance of Laguna, Binan Branch I,
SEGUNDO PILIPINIA and EDGARDO MINDO, represented by ERNESTO
PILIPINIA, respondents.

AQUINO, J.:

This case is about the summons intended for defendant Summit Trading and Development
Corporation. As background, it should be stated that Segundo Pilipinia and Edgardo Mindo in 1973
acquired under Land Authority Administrative Order No. 4 two registered lots with a total area of 2
hectares located at Barrio San Vicente, San Pedro, Laguna.
The titles of the lots contain the annotation that should Pilipinia and Mindo sell the same, they have
the right to redeem the lots within five years from the date of the sale (Exh. H and I).

Pilipinia and Mindo sold the lots for P16,000 and P12,000 to Gavino Ortega on February 14 and
April 19, 1977. They have retained possession of the lots which are ricelands. They became tenants
thereof.

At the instance of Ortega, the said annotation was cancelled by Judge Avendao in his order of
September 24, 1979 ostensibly because the lots would be converted into commercial, industrial or
residential sites (Exh. M). That conversion has not taken place. At present the two lots are still
ricelands.

In a letter dated October 16, 1979, Ortega advised Ernesto Pilipinia (attorney-in-fact of Segundo and
Mindo) that he and his father would have the right of first refusal in case the lots were sold (Exh. E
and O).

Ortega resold the two lots on November 14, 1979 for P16,000 and P11,000 to Summit Trading
through its president, Virgilio P. Balaguer (Exh. N and N-1).

On August 10, 1981, or within the five-year period, Pilipinia and Mindo filed a complaint against
Ortega and Summit Trading for the redemption or repurchase of the two lots. They deposited
P100,000 with the Royal Savings and Loan Association for that purpose.

Ortega was duly summoned. He failed to answer the complaint. He was declared in default. Summit
Trading was also declared in default. In his judgment by default dated October 29, 1981, Judge
Avendano (the same judge who ordered the cancellation of the annotation) gave plaintiffs Pilipinia
and Mindo 15 days from notice within which to redeem the lots for P16,000 and P12,000 and
ordered Summit Trading to execute the corresponding deeds of sale and surrender the Torrens
titles. If it failed to do so, the clerk of court was directed to perform that task. The register of deeds
was ordered to issue new titles to Pilipinia and Mindo.

The default judgment was rendered on the assumption that Summit Trading was duly summoned
through Marina Saquilayan as secretary of Summit Trading. She received the summons on August
28, 1981. A copy of the judgment was also served on her on November 13, 1981 (Exh. B, pp. 31-32,
64, Record).

Actually, Saquilayan received the summons as secretary of Balaguer, already mentioned as the
president of Summit Trading which purchased the lots from Ortega. Bonifacio Tiongson was the
corporate secretary.

Nineteen days after Saquilayan received a copy of the decision, Summit Trading filed a motion for
reconsideration on the ground that the trial court did not acquire jurisdiction over it because
summons was not served upon it in accordance with Rule 14 of the Rules of Court which provides:

SEC. 13. Service upon private domestic corporation or partnership.-If the defendant
is a corporation organized under the laws of the Philippines or a partnership duly
registered, service may be made on the president, manager, secretary, cashier,
agent, or any of its directors.

It is true that Saquilayan is not among the persons mentioned in section 13. However, she, being
under the control of Summit Trading, has not explained what she has done with the summons and
complaint. The logical assumption is that she delivered it to her boss, the president of Summit
Trading. As already stated, she received a copy of the decision and Summit Trading became aware
of it. Summit Trading's motion for reconsideration was denied.

While Summit Trading is technically correct in contending that there was no strict compliance with
section 13, we cannot close our eyes to the realities of the situation. Under the facts of this case,
Saquilayan, being the secretary of the president (whose contact with the outside world is normally
through his secretary), may be regarded as an "agent" within the meaning of section 13.(See Villa
Rey Transit, Inc. vs. Far East Motor Corporation, L-31339, January 31, 1978, 81 SCRA 298; Filoil
Marketing Corporation vs. Marine Development Corporation of the Phil., L-29636, September 30,
1982, 117 SCRA 86.)

Hence summons was validly served upon Summit Trading. Its negligence in not answering the
complaint was inexcusable. In fact, up to this time, Summit Trading has not bothered to state its
defenses to the action nor stated whether it has a meritorious case warranting the setting aside of
the default judgment.

The cases of Delta Motor Sales Corporation vs. Mangosing, L-41667, April 30,1976, 70 SCRA 598
and ATM Trucking Inc. vs. Buencamino, G.R. No. 62445, August 31, 1983, 124 SCRA 434 are not in
point because the summons in the two cases was served upon mere clerks or employees of the
corporations who cannot be relied upon to know what to do with the legal papers served upon them.

In the instant case, service was made on the president's secretary who could have easily notified the
president that an action was filed against the corporation just as she had apprised him of the
judgment in this case.

The instant petition for certiorari, treated as an appeal under Republic Act No. 5440, was filed out of
time. Considered as a special civil action under Rule 65 of the Rules of Court, it is baseless because
the trial court had acquired jurisdiction over Summit Trading. As already shown, summons was
properly served on the president's secretary.

We are not saying that service on such a secretary is always proper. Generally, it is improper. The
president himself must be served personally with the summons if it is desired to effect the service on
that particular officer. But, as already stated, under the facts of this case, the president's secretary
may be regarded as the "agent" within the meaning of section 13 since service upon her of the
judgment itself came to the notice of Summit Trading.

WHEREFORE, the petition is dismissed. The trial court's judgment is affirmed. Its implementation is
now in order. The restraining order is dissolved. Costs against the petitioner.

SO ORDERED.

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

CHEMPHIL EXPORT & IMPORT CORPORATION (CEIC), petitioner,

vs.
THE HONORABLE COURT OF APPEALS JAIME Y. GONZALES, as Assignee of the Bank of
the Philippine Islands (BPI), RIZAL COMMERCIAL BANKING CORPORATION (RCBC), LAND
BANK OF THE PHILIPPINES (LBP), PHILIPPINE COMMERCIAL & INTERNATIONAL BANK
(PCIB) and THE PHILIPPINE INVESTMENT SYSTEM ORGANIZATION (PISO), respondents.
G.R. No. 113394 December 12, 1995

PHILIPPINE COMMERCIAL INDUSTRIAL BANK (AND ITS ASSIGNEE JAIME Y.

GONZALES) petitioner,
vs.
HONORABLE COURT OR APPEALS and CHEMPHIL EXPORT AND IMPORT CORPORATION
(CEIC),respondents.

KAPUNAN, J.:

Before us is a legal tug-of-war between the Chemphil Export and Import Corporation (hereinafter
referred to as CEIC), on one side, and the PISO and Jaime Gonzales as assignee of the Bank of the
Philippine Islands (BPI), Rizal Commercial Banking Corporation (RCBC), Land Bank of the
Philippines (LBP) and Philippine Commercial International Bank (PCIB), on the other (hereinafter
referred to as the consortium), over 1,717,678 shares of stock (hereinafter referred to as the
"disputed shares") in the Chemical Industries of the Philippines (Chemphil/CIP).

Our task is to determine who is the rightful owner of the disputed shares.

Pursuant to our resolution dated 30 May 1994, the instant case is a consolidation of two petitions for
review filed before us as follows:

In G.R. Nos. 112438-39, CEIC seeks the reversal of the decision of the Court of Appeals (former
Twelfth Division) promulgated on 30 June 1993 and its resolution of 29 October 1993, denying
petitioner's motion for reconsideration in the consolidated cases entitled "Dynetics, Inc., et al. v.
PISO, et al." (CA-G.R. No. 20467) and "Dynetics, Inc., et al. v. PISO, et al.; CEIC, Intervenor-
Appellee" (CA-G.R. CV No. 26511).

The dispositive portion of the assailed decision reads, thus:

WHEREFORE, this Court resolves in these consolidated cases as follows:

1. The Orders of the Regional Trial Court, dated March 25, 1988, and May 20, 1988,
subject of CA-G.R. CV No. 10467, are SET ASIDE and judgment is hereby rendered
in favor of the consortium and against appellee Dynetics, Inc., the amount of the
judgment, to be determined by Regional Trial Court, taking into account the value of
assets that the consortium may have already recovered and shall have recovered in
accordance with the other portions of this decision.

2. The Orders of the Regional Trial Court dated December 19, 1989 and March 5,
1990 are hereby REVERSED and SET ASIDE and judgment is hereby rendered
confirming the ownership of the consortium over the Chemphil shares of stock,
subject of CA-G.R. CV No. 26511, and the Order dated September 4, 1989, is
reinstated.

No pronouncement as to costs.

SO ORDERED. 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:

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

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 intervenor-appellee
CEIC. The said issue would have been relevant had CEIC established its
subrogation to the rights of SBTC.

On 26 March 1993, the Court of Appeals (Special Ninth Division) in CA-G.R. No. SP 20474 rendered
a decision denying due course to and dismissing PCIB's petition for certiorari on grounds that PCIB
violated the rule against forum-shopping and that no grave abuse of discretion was committed by
respondent Regional Trial Court in issuing its assailed orders dated 19 December 1989 and 5 March
1990. PCIB's motion for reconsideration was denied on 11 January 1994. 37

On 7 July 1993, the consortium, with the exception of PISO, assigned without recourse all its rights
and interests in the disputed shares to Jaime Gonzales. 38

On 3 January 1994, CEIC filed the instant petition for review docketed as G.R. Nos. 112438-39 and
assigned the following errors:

I.

THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN SETTING ASIDE

AND REVERSING THE ORDERS OF THE REGIONAL TRIAL COURT DATED
DECEMBER 5, 1989 AND MARCH 5, 1990 AND IN NOT CONFIRMING
PETITIONER'S OWNERSHIP OVER THE DISPUTED CHEMPHIL SHARES
AGAINST THE FRIVOLOUS AND UNFOUNDED CLAIMS OF THE CONSORTIUM.

II.

THE RESPONDENT COURT OF APPEALS GRAVELY ERRED:

(1) In not holding that the Consortium's attachment over the disputed
Chemphil shares did not vest any priority right in its favor and cannot
 bind third parties since admittedly its attachment on 19 July 1985 was
not recorded in the stock and transfer books of Chemphil, and
subordinate to the attachment of SBTC which SBTC registered and
annotated in the stock and transfer books of Chemphil on 2 July
1985, and that the Consortium's attachment failed to comply with
Sec. 7(d), Rule 57 of the Rules as evidenced by the notice of
garnishment of the deputy sheriff of the trial court dated 19 July 1985
(annex "D") which the sheriff served on a certain Thelly Ruiz who was
neither President nor managing agent of Chemphil;

(2) In not applying the case law enunciated by this Honorable

Supreme Court inSamahang Magsasaka, Inc. vs. Gonzalo Chua
Guan, 96 Phil. 974 that as between two attaching creditors, the one
whose claim was registered first in the books of the corporation
enjoys priority, and which respondent Court erroneously
characterized as mere obiter dictum;

(3) In not holding that the dismissal of the appeal of the Consortium
from the order of the trial court dismissing its counterclaim against
Antonio M. Garcia and the finality of the compromise agreement
which ended the litigation between the Consortium and Antonio M.
Garcia in the Dynetics case had ipso jure 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 VS. COURT OF APPEALS, G.R. NOS. 76879
AND 77143, OCTOBER 3, 1990, 190 SCRA 262, AND IN OLIB VS. PASTORAL,
G.R. NO. 81120, AUGUST 20, 1990, 188 SCRA 692 TO THE CONTRARY.

IV. RESPONDENT COURT OF APPEALS EXCEEDED ITS JURISDICTION IN

RULING ON THE MERITS OF THE MAIN CASE NOTWITHSTANDING THAT
THOSE MATTERS WERE NOT ON APPEAL BEFORE IT.

V. RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN

HOLDING THAT PETITIONER IS GUILTY OF FORUM SHOPPING DESPITE THE
FACT THAT SC CIRCULAR NO. 28-91 WAS NOT YET IN FORCE AND EFFECT
AT THE TIME THE PETITION WAS FILED BEFORE RESPONDENT APPELLATE
COURT, AND THAT ITS COUNSEL AT THAT TIME HAD ADEQUATE BASIS TO
BELIEVE THAT CERTIORARI AND NOT AN APPEAL OF THE TRIAL COURT'S
ORDERS WAS THE APPROPRIATE RELIEF. 40

As previously stated, the issue boils down to who is legally entitled to the disputed shares of
Chemphil. We shall resolve this controversy by examining the validity of the claims of each party
and, thus, determine whose claim has priority.

CEIC's claim

CEIC traces its claim over the disputed shares to the attachment lien obtained by SBTC on 2 July
1985 against Antonio Garcia in Civil Case No. 10398. It avers that when FCI, CEIC's predecessor-in-
interest, paid SBTC the due obligations of Garcia to the said bank pursuant to the Deed of Absolute
Sale and Purchase of Shares of Stock, 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 obligation, pays with the express or
tacit approval of the debtor;

(3) When, even without the knowledge of the debtor, a person interested in the
fulfillment of the obligation pays, without prejudice to the effects of confusion as to
the latter's share. (Emphasis ours.)

Despite, however, its multitudinous arguments, CEIC presents an erroneous interpretation of the
concept of subrogation. An analysis of the situations involved would reveal the clear inapplicability of
Art. 1302 (2).

Antonio Garcia sold the disputed shares to FCI for a consideration of P79,207,331.28. FCI, however,
did not pay the entire amount to Garcia as it was obligated to deliver part of the purchase price
directly to SBTC pursuant to the following stipulation in the Deed of Sale:

Manner of Payment

Payment of the Purchase Price shall be made in accordance with the following order
of preferenceprovided that in no instance shall the total amount paid by the Buyer
exceed the Purchase Price:

a. Buyer shall pay directly to the Security Bank and Trust Co. the amount determined
by the Supreme Court as due and owing in favor of the said bank by the Seller.

The foregoing amount shall be paid within fifteen (15) days from the date the
decision of the Supreme Court in the case entitled "Antonio M. Garcia, et al. vs.
Court of Appeals, et al." G.R. Nos. 82282-83 becomes final and
executory. 43 (Emphasis ours.)
Hence, when FCI issued the BA check to SBTC in the amount of P35,462,869.62 to pay Garcia's
indebtedness to the said bank, it was in effect paying with Garcia's money, no longer with its own,
because said amount was part of the purchase price which FCI owed Garcia in payment for the sale
of the disputed shares by the latter to the former. The money "paid" by FCI to SBTC, thus properly
belonged to Garcia. It is as if Garcia himself paid his own debt to SBTC but through a third party
FCI.

It is, therefore, of no consequence that what was used to pay SBTC was a corporate check of FCI.
As we have earlier stated, said check no longer represented FCI funds but Garcia's money, being as
it was part of FCI's payment for the acquisition of the disputed shares. The FCI check should not be
taken at face value, the attendant circumstances must also be considered.

The aforequoted contractual stipulation in the Deed of Sale dated 15 July 1988 between Antonio
Garcia and FCI is nothing more but an arrangement for the sake of convenience. Payment was to be
effected in the aforesaid manner so as to prevent money from changing hands needlessly. Besides,
the very purpose of Garcia in selling the disputed shares and his other properties was to "settle
certain civil suits filed against him." 44

Since the money used to discharge Garcia's debt rightfully belonged to him, FCI cannot be
considered a third party payor under Art. 1302 (2). It was but a conduit, or as aptly categorized by
respondents, merely an agent as defined in Art. 1868 of the Civil Code:

Art. 1868. By the contract of agency a person binds himself to render some service
or to do something in representation or on behalf of another, with the consent or
authority of the latter.

FCI was merely fulfilling its obligation under the aforementioned Deed of Sale.

Additionally, FCI is not a disinterested party as required by Art. 1302 (2) since the benefits of the
extinguishment of the obligation would redound to none other but itself. 45 Payment of the judgment
debt to SBTC resulted in the discharge of the attachment lien on the disputed shares purchased by FCI.
The latter would then have a free and "clean" title to said shares.

In sum, CEIC, for its failure to fulfill the requirements of Art. 1302 (2), was not subrogated to the
rights of SBTC against Antonio Garcia and did not acquire SBTC's attachment lien over the disputed
shares which, in turn, had already been lifted or discharged upon satisfaction by Garcia, through
FCI, of his debt to the said bank. 46

The rule laid down in the case of Samahang Magsasaka, Inc. v. Chua Guan, 47 that as between two
attaching creditors the one whose claim was registered ahead on the books of the corporation enjoys
priority, clearly has no application in the case at bench. As we have amply discussed, since CEIC was not
subrogated to SBTC's right as attaching creditor, which right in turn, had already terminated after Garcia
paid his debt to SBTC, it cannot, therefore, be categorized as an attaching creditor in the present
controversy. CEIC cannot resurrect and claim a right which no longer exists. The issue in the instant
case, then, is priority between an attaching creditor (the consortium) and a purchaser (FCI/CEIC) of the
disputed shares of stock and not between two attaching creditors the subject matter of the aforestated
Samahang Magsasaka case.

CEIC, likewise, argues that the consortium's attachment lien over the disputed Chemphil shares is
null and void and not binding on third parties due to the latter's failure to register said lien in the stock
and transfer books of Chemphil as mandated by the rule laid down by the Samahang Magsasaka
v. Chua Guan. 48
The attachment lien acquired by the consortium is valid and effective. Both the Revised Rules of
Court and the Corporation Code do not require annotation in the corporation's stock and transfer
books for the attachment of shares of stock to be valid and binding on the corporation and third
party.

Section 74 of the Corporation Code which enumerates the instances where registration in the stock
and transfer books of a corporation provides:

Sec. 74. Books to be kept; stock transfer agent.

xxx xxx xxx

Stock corporations must also keep a book to be known as the stock and transfer
book, in which must be kept a record of all stocks in the names of the stockholders
alphabetically arranged; the installments paid and unpaid on all stock for which
subscription has been made, and the date of payment of any settlement; a statement
of every alienation, sale or transfer of stock made, the date thereof, and by and to
whom made; and such other entries as the by-laws may prescribe. The stock and
transfer book shall be kept in the principal office of the corporation or in the office of
its stock transfer agent and shall be open for inspection by any director or
stockholder of the corporation at reasonable hours on business days. (Emphasis
ours.)

xxx xxx xxx

Section 63 of the same Code states:

Sec. 63. Certificate of stock and transfer of shares. The capital stock of stock
corporations shall be divided into shares for which certificates signed by the
president or vice-president, countersigned by the secretary or assistant secretary,
and sealed with the seal of the corporation shall be issued in accordance with the by-
laws. Shares of stock so issued are personal property and may be transferred by
delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact
or other person legally authorized to make the transfer. No transfer, however, shall
be valid, except as between the parties, until the transfer is recorded in the books of
the corporation so as to show the names of the parties to the transaction, the date of
the transfer, the number of the certificate or certificates and the number of shares
transferred.

No shares of stock against which the corporation holds any unpaid claim shall be
transferable in the books of the corporation. (Emphasis ours.)

Are attachments of shares of stock included in the term "transfer" as provided in Sec. 63 of the
Corporation Code? We rule in the negative. As succinctly declared in the case of Monserrat
v. Ceron, 49 "chattel mortgage over shares of stock need not be registered in the corporation's stock and
transfer book inasmuch as chattel mortgage over shares of stock does not involve a "transfer of shares,"
and that only absolute transfers of shares of stock are required to be recorded in the corporation's stock
and transfer book in order to have "force and effect as against third persons."

xxx xxx xxx

 The word "transferencia" (transfer) is defined by the "Diccionario de la Academia de
la Lengua Castellana" as "accion y efecto de transfeir" (the act and effect of
transferring); and the verb "transferir", as "ceder or renunciar en otro el derecho o
dominio que se tiene sobre una cosa, haciendole dueno de ella" (to assign or waive
the right in, or absolute ownership of, a thing in favor of another, making him the
owner thereof).

In the Law Dictionary of "Words and Phrases", third series, volume 7, p. 5867, the
word "transfer" is defined as follows:

"Transfer" means any act by which property of one person is vested

in another, and "transfer of shares", as used in Uniform Stock
Transfer Act (Comp. St. Supp. 690), implies any means whereby one
may be divested of and another acquire ownership of stock. (Wallach
vs. Stein [N.J.], 136 A., 209, 210.)

xxx xxx xxx

In the case of Noble vs. Ft. Smith Wholesale Grocery Co. (127 Pac., 14, 17; 34 Okl.,
662; 46 L.R.A. [N.S.], 455), cited in Words and Phrases, second series, vol. 4, p.
978, the following appears:

A "transfer" is the act by which the owner of a thing delivers it to

another with the intent of passing the rights which he has in it to the
latter, and a chattel mortgage is not within the meaning of such term.

xxx xxx xxx. 50

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

Known commentators 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. Such collateral transfers are however not covered by the
registration requirement of Section 63, since our Supreme Court has held that such
provision applies only to absolute transfers thus, the registration in the corporate
books of pledges and chattel mortgages of shares cannot have any legal
effect. 52(Emphasis ours.)

xxx xxx xxx

The requirement that the transfer shall be recorded in the books of the corporation to
be valid as against third persons has reference only to absolute transfers or absolute
conveyance of the ownership or title to a share.
 Consequently, the entry or notation on the books of the corporation of pledges and
chattel mortgages on shares is not necessary to their validity (although it is advisable
to do so) since they do not involve absolute alienation of ownership of stock
(Monserrat vs. Ceron, 58 Phil. 469 [1933]; Chua Guan vs. Samahang Magsasaka,
Inc., 62 Phil. 472 [1935].) To affect third persons, it is enough that the date and
description of the shares pledged appear in a public instrument. (Art. 2096, Civil
Code.) With respect to a chattel mortgage constituted on shares of stock, what is
necessary is its registration in the Chattel Mortgage Registry. (Act No. 1508 and Art.
2140, Civil Code.) 53

CEIC's reliance on the Samahang Magsasaka case is misplaced. Nowhere in the said decision was
it categorically stated that annotation of the attachment in the corporate books is mandatory for its
validity and for the purpose of giving notice to third persons.

The only basis, then, for petitioner CEIC's claim is the Deed of Sale under which it purchased the
disputed shares. It is, however, a settled rule that a purchaser of attached property acquires it
subject to an attachment legally and validly levied thereon. 54

Our corollary inquiry is whether or not the consortium has indeed a prior valid and existing
attachment lien over the disputed shares.

Jaime Gonzales' /Consortium's Claim

Is the consortium's attachment lien over the disputed shares valid?

CEIC vigorously argues that the consortium's writ of attachment over the disputed shares of
Chemphil is null and void, insisting as it does, that the notice of garnishment was not validly served
on the designated officers on 19 July 1985.

To support its contention, CEIC presented the sheriff's notice of garnishment 55 dated 19 July 1985
which showed on its face that said notice was received by one Thelly Ruiz who was neither the president
nor managing agent of Chemphil. It makes no difference, CEIC further avers, that Thelly Ruiz was the
secretary of the President of Chemphil, for under the 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 to secure a contingent lien on

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

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 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 ofcertiorari), 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.

STREET, J.:

On December 10, 1914, one Salvador Farre recovered a joint and several judgment against
Salomon M. Sharruf and Farham M. Sharruf in the Court of First Instance of the city of Manila for the
sum of P1,300, with legal interest from September 5, 1914, and with costs. This judgment having
remained unsatisfied, and execution was upon April 3, 1916, issued thereon at the instance of the
plaintiff.

Meanwhile on March 27, 1915, Salomon M. Sharruf had himself recovered a judgment, also in the
Court of First Instance of the city of Manila, against the Tayabas Land Company and A.M. Ginainati,
for the sum of P6,841.36, with interest and costs; and as there seems to have been no visible
property belonging to Salomon M. Sharruf and Farham M. Sharruf subject to seizure by the sheriff to
satisfy the execution in favor of Salvador Farre, it became important for Farre to subject the
judgment in favor of Salomon M. Sharruf against the Tayabas Land Company and A.M. Ginainati to
the payment of his own claim.

To this end process of garnishment (notification de embargo) was, on April 6, 1916, issued at the
instance of Salvador Farre in aid of his execution against the Sharrufs and was on the same or
succeeding day duly served upon the Tayabas Land Company. By this process the Tayabas Land
Company was informed that levy had, by virtue of the execution aforesaid, been made upon all the
property of S. M. Sharruf in the possession of said Tayabas Land Company and upon all debts
owing by the latter to said Sharruf, and in particular upon all participation and interest of S. M.
Sharruf in the judgment rendered in his favor in the action prosecuted by him against the Tayabas
Land Company and others.

In pursuance of the levy thus effected upon the judgment in favor of Salomon M. Sharruf against the
Tayabas Land Company, the sheriff of the city of Manila, as in ordinary cases of levy upon chattels
of real property, proceeded upon April 15, 1916, to expose to sale all right, title, and interest of said
Sharruf in the judgment aforesaid. At this sale Salvador Farre, the execution creditor himself,
became the purchaser of the judgment in question for the sum of P200; but the Tayabas Land
Company, with a legitimate view to its own protection, afterwards stepped in, and acting through Mr.
Francisco Alvarez, as attorney and intermediary, purchased from Farre, on October 6, 1917, the
judgment of Salomon M. Sharruf against itself, paying to Farre the full amount due him, to wit, the
sum of P1,588.24.
At this point it should be stated that when levy of execution was made in the manner above stated,
upon the judgment in favor of Sharruf against the Tayabas Land Company and others, the time
allowed by law for an appeal in that case of the Supreme Court had not passed; and said cause was
in fact subsequently appealed to the Supreme Court, where final judgment was rendered, affirming
the decision of the lower court, on February 15, 1918.1

It may also be stated that on April 4, 1916, Salomon M. Sharruf, by a public document, which was
duly incorporated in the record in his case against the Tayabas Land Company, et al., sold and
transferred unto O'Brien & Company, a corporation, his right, title, and interest in the judgment
aforesaid to the extent necessary to satisfy a debt for P988.14, owing to O'Brien & Company, for
merchandise purchased from said entity by Sharruf; and upon the same date Messrs. Crossfield &
O'Brien, as attorneys, filed a memorandum of an attorney's lien in their favor to the extent of 25 per
cent of the amount of the judgment. These transactions, as will be seen, had the result of reducing in
a considerable degree the apparent beneficial interest of Salomon M. Sharruf in the result of the
litigation, but they do not affect the fundamentals of the case.

As a consequence of the facts above narrated the Tayabas Land Company supposes that the
judgment obtained by Salomon M. Sharruf against it and A.M. Ginainati has been wholly satisfied,
while Salomon M. Sharruf and those interested under him claim that the execution sale of the
judgment in question was void and that as a consequence said judgment remains wholly unsatisfied.
Proceeding upon this conception of the case, Messrs. Crossfield and O'Brien, as attorneys for the
plaintiff in that action, procured an execution to be issued on August 30, 1918, upon said judgment
for the entire amount of the recovery, including accrued interest and costs, less the sum of P13.21,
which had been secured in a garnishment proceeding against one of the local banks.

Being thus menaced with the levy of an execution upon its property, the Tayabas Land Company
instituted the present action in the Court of First Instance of the city of Manila, Against Salomon M.
Sharruf and others, including the sheriff of the Province of Tayabas, to obtain an order restraining
the threatened levy of execution and perpetually enjoining all proceedings for the enforcement of the
judgment against it. Upon hearing the cause the trial court, while recognizing the validity of the
claims of O'Brien & Company and of Crossfield and O'Brien, held that all other interest in said
judgment pertaining to Salomon M. Sharruf had passed by virtue of the execution sale to Salvador
Farre and thence by transfer through Francisco Alvarez to the Tayabas Land Company. As a
consequence the court declared the preliminary injunction perpetual. From said judgment Salomon
M. Sharruf appealed to this court.

The principal question in the case relates to the validity of the proceedings whereby the judgment
against the Tayabas Land Company and A.M. Ginainati in favor of Salomon M. Sharruf was, on April
15, 1916, exposed to sale by the sheriff under the execution issued in the action of Salvador Farre
against the two Sharrufs; and we believe it will be conducive to clarity in the discussion for us to
proceed at once to consider the manner in which, under the provisions of our Code of Civil
Procedure, a judgment for a sum of money entered in favor of the plaintiff in one case can be
reached and applied to the payment of a judgment in another case against the party who occupies
the position of creditor in the former.

In the first place, we have no hesitancy in saying that a judgment for a sum of money, that is, the
interest of the plaintiff in such a judgment, is liable to execution. A judgment for a sum of money is,
as to the party entitled to payment, a credit; and as to the party who ought to pay the money, a debt.
Furthermore, the interest of the creditor in such a judgment is clearly property, though not capable of
manual delivery. All of these elements of value "debts." "credits," and "all other property not
capable of manual delivery" are expressly declared, in section 450 of the Code of Civil Procedure,
to be liable to execution. It will be noted, however, that under the section just cited, debts, credits,
and other property not capable of manual delivery are to be dealt with in a different manner from that
prescribed in case of the execution of tangible property; for while tangible property is proceeded with
by seizure and sale under execution, debts and credits are to be attached by the citation of the
debtor. The provisions governing the execution of tangible property are found in sections 453 to 457,
inclusive, of the Code of Civil Procedure; while the provisions prescribing the method of reaching
debts and credits are found chiefly in the chapter relating to attachment, consisting principally of
sections 431 to 436, inclusive, of the Code of Civil Procedure.

The proceeding thus indicated as proper, in order to subject a debt or credit is known in American
civil procedure as the process of garnishment; and it may be truly said that garnishment is one of the
simplest processes, and the least involved in technicalities, of any proceeding known to the law. It
consists in the citation of some stranger to the litigation, who is debtor to one of the parties to the
action. By this means such debtor stranger becomes a forced intervenor; and the court, having
acquired jurisdiction over his person by means of the citation, requires him to pay his debt, not to his
former creditor, but to the new creditor, who is creditor in the main litigation. It is merely a case of
involuntary novation by the substitution of one creditor for another. Upon principle the remedy is a
species of attachment or execution for reaching any property pertaining to a judgment debtor which
may be found owing to such debtor by a third person.

The situation involved supposes the existence of at least three persons, to wit, a judgment creditor, a
judgment debtor, and the garnishee, or person cited, who in turn is supposed to be indebted to the
first debtor (i.e., judgment debtor).

To proceed a little further with the barest details of the process of garnishment, we note that a
citation issues from the court having jurisdiction of the principal litigations, notifying the garnishee
that the property and credits of the judgment debtor have been levied upon or attached in the hands
of such garnishee, and enjoining him not to deliver, transfer, or otherwise dispose of any effects or
credits belonging to that person, and requiring him furthermore to make a statement to the court of
the property of the judgment debtor in his hands and of the debts owing by the garnishee to such
debtor.

In cases where indebtedness is admitted, as not infrequently occurs, the payment of the money by
the garnishee to the judgment creditor or into court, brings the proceeding to a close, so far as the
garnishee is concerned; but if the garnishee fails to answer, or does not admit the indebtedness, he
may be required to attend before the court in which the action is pending to be examined on oath
respecting the same. Finally, if the liability of the garnishee is made manifest, the officer of the court
may, under paragraph No. 3 of section 436 of the Code of Civil Procedure, collect the money and
pay it to the person entitled.

The circumstances that garnishment has not been made the subject of independent treatment in our
Code of Civil Procedure and that the rules relating thereto are only brought out inferentially in
connection with the subject of attachment has undoubtedly contributed to obscure a matter which
upon principle is simple enough. Additional light on the subject may, however, be acquired by
referring to sections 476, 481, and 486 of the Code of Civil Procedures, which treat of
supplementary proceedings. It will be found that those proceedings are identical in principle with the
proceeding for the citation of debtors explained in the chapter on attachment.

Enough has now been said to show clearly that the action of the sheriff in exposing to public sale the
judgment which had been procured by Salomon M. Sharruf in the action against the Tayabas Land
Company, et al., was wholly unauthorized, and said sale must be considered void. The proper step
would have been for the court to require the Tayabas Land Company, after the judgment against it
had become final, to pay into court, in the cause wherein Salvador Farre was plaintiff, a sufficient
amount of money to satisfy Farre's claim against Sharruf; and if the judgment against the Tayabas
Land Company had been permitted to go to the stage of execution, the proceeds in the hands of the
sheriff would have been applied, under the direction of the court, to the payment of Farre's claim
before any part would have been payable to Sharruf.

In dealing with the problems which have from time to time arisen in connection with garnishment
proceedings, courts have sometimes been perplexed over the matter of protecting the garnishee
from the danger of having to pay his debt twice; and it goes without saying that the procedure must
be so adjusted as not to subject the garnishee to this risk. Otherwise it is a fatal obstacle to the
garnishment. No such difficulty would arise in a case like this, where the two judgments are both of
record in the same court, and where consequently that court has control over the process in both
cases.

Our conclusion that the sale of the judgment in question under process of execution was void is
supported by the decisions of the Supreme Court of California, construing the very section of the
California Code of Civil Procedure from which section 450 of the Code of Civil Procedure of the
Philippine Islands was taken. Thus, in McBride vs. Fallon (65 Cal., 301, 303), the Supreme Court of
that State said:

After enumerating the kinds of property of a judgment debtor liable to execution, the Code
provides that "shares and interests in any corporation or company" and debts and credits . . .
and all other property not capable of manual delivery, may be attached on execution in like
manner as upon writs of attachments.

"Debts and credits and property not capable of manual delivery must be attached in the
mode pointed out by subdivision 5, sec. 542." (Corresponding to section 431 of the
Philippine Code of Civil Procedure.) "That is "by leaving with the person owing the debt or
having in possession or under his control such credits and other personal property" or with
his agent, a copy of the writ, and a notice that the debts owing by him to the defendant, or
the credits and other personal property' in his possession or under his control, belonging to
the defendant are attached in pursuance of such writ.

"The fact that a debt is evidenced by a judgment does not, in our opinion, make it anything
more or less than a debt, or more capable of manual delivery than it would be if not so
evidenced. No provision is made for attaching or levying on evidences of debt. It is the debt
itself which may be attached by writ of attachment, or on execution in like manner as upon
writs of attachment." This we think to be the meaning of the Code, and the mode prescribed
by it is exclusively . . .

In order to avoid misunderstanding, we wish to say that we make no question as to the propriety of
the proceedings up to the time when the judgment in question was advertised and exposed to sale
by the sheriff. The issuance of the execution and the service of the garnishment were appropriate;
and the garnishment was effective for the purpose of preventing the garnishee, the Tayabas Land
Company, from paying the judgment to Salomon M. Sharruf.

Moreover, the garnishment was effective for the purpose of conferring upon the Tayabas Land
Company the right to pay off the judgment which Farre had obtained against Sharruf. This right is
not only recognized in section 481 of the Code of Civil Procedure but also in subsection 3 of article
1210 of the Civil Code; and by satisfying Farre's claim, regardless of the manner in which it was
accomplished, the Tayabas Land Company absolved itself pro tanto from its indebtedness to
Sharruf. It results that, although the judgment against the Tayabas Land Company has not yet been
satisfied in full, said company is entitled to be credited with the sum of P1,588.24, said by it, through
Francisco Alvarez, to Farre on October 6, 1917, with interest.

In the view we take of the case it becomes unnecessary to consider at length the fact that Sharruf's
judgment against the Tayabas Land Company was appealed to the Supreme Court after the process
of garnishment had been served on the company. Suffice is to say that this circumstance would at
most merely postpone the realization of the results without defeating the garnishment.

Reflection upon this feature of the case, however, confirms the opinion that our lawmakers acted
wisely in requiring that debts and credits should be executed by means of the process of
garnishment rather than by exposing them to public sale. In the case before us a judgment for a
large amount was sold for a merely nominal sum, and such would generally be the case at a sale
under similar conditions. This cannot fail to be highly prejudicial to the debtor who is under
immediate execution. The proceeding by garnishment, on the contrary, enables all parties to realize
their rights without unduly disturbing the position of any.

The judgment must be reserved, and the defendants will be absolved from the complaint. It is so
ordered, without express pronouncement as to costs of either instance.

GOTAUCO vs. ROD supra.

G.R. No. 130223 August 19, 2009

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

vs.
THE MANILA MISSION OF THE CHURCH OF JESUS CHRIST OF LATTER DAY SAINTS,
INC., Respondent.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside
the Decision1dated 29 July 1997 of the Court of Appeals in CA-G.R. SP No. 41042 affirming the
Orders dated 9 October 1995 and 27 February 1996 of the Regional Trial Court (RTC), Branch 43,
of Dagupan City, in Civil Case No. D-10583.

Spouses Tomas and Maria Soliven (spouses Soliven) were the registered owners, under Transfer
Certificate of Title (TCT) No. T-125213, of a parcel of land located in Barangay Maninding, Sta.
Barbara, Pangasinan (subject property). On 18 May 1992, the spouses Soliven sold the subject
property to respondent Manila Mission of the Church of Jesus Christ of Latter Day Saints, Inc.
(Manila Mission). However, it was only on 28 April 1994 when TCT No. T-125213 in the name of the
spouses Soliven was cancelled, and TCT No. 195616 was issued in the name of respondent.

In the meantime, on 15 April 1993, petitioner Rural Bank of Sta. Barbara (Pangasinan), Inc. filed with
the RTC a Complaint against the spouses Soliven for a sum of money, docketed as Civil Case No.
D-10583. The Complaint of petitioner included a prayer for the issuance of a Writ of Preliminary
Attachment.

In an Order dated 7 May 1993, the RTC ordered the issuance of the Writ of Attachment petitioner
prayed for, to wit:
WHEREFORE, let a Writ of Attachment be issued against all the properties of [Spouses Soliven] not
exempt from execution or so much thereof as may be sufficient to satisfy the [herein petitioners]
principal claim of P338,000.00 upon filing of [petitioners] bond in the amount of P100,000.00.2

Upon the filing by petitioner of the required bond, the RTC issued the Writ of Attachment on 21 May
1993. Acting on the authority of said Writ, Sheriff Reynaldo C. Daray attached the subject property,
which was then still covered by TCT No. T-125213 in the name of the spouses Soliven. The Writ of
Attachment was annotated on TCT No. T-125213 on 24 May 1993. Thus, when TCT No. T-125213
of the spouses Soliven was cancelled and TCT No. 195616 of petitioner was issued on 28 April
1994, the annotation on the Writ of Attachment was carried from the former to the latter.

While Civil Case No. D-10583 was still pending before the RTC, respondent executed an Affidavit
claiming title and ownership over the subject property, and requested the Ex-Officio Provincial and
City Sheriff to release the said property from attachment. The Sheriff, however, advised respondent
to file a motion directly with the RTC.

On 16 March 1995, respondent filed with the RTC, in Civil Case No. D-10583, a Motion to Release
Property from Attachment, to which petitioner, in turn, filed an Opposition. After hearing, the RTC
issued an Order on 9 October 1995 discharging the subject property from attachment. The RTC
decreed in said Order:

WHEREFORE, the Court hereby directs the Ex-Officio Provincial Sheriff of Pangasinan and City
Sheriff of Dagupan to discharge and release the subject land from attachment and orders the notice
of attachment on T.C.T. No. 195616 of the Register of Deeds of Pangasinan be cancelled.3

Petitioner filed a Motion for Reconsideration of the 9 October 1995 Order of the RTC, arguing that it
had a better right over the subject property and that the filing by respondent with the RTC, in Civil
Case No. D-10583, of a Motion to Release Property from Attachment, was the improper remedy. In
an Order dated 27 February 1996, the RTC denied the Motion for Reconsideration of petitioner for
lack of merit.

On 12 April 1997, petitioner filed a Petition for Certiorari with this Court, alleging that the RTC
committed grave abuse of discretion, amounting to lack or excess of jurisdiction, in canceling the
Writ of Attachment and ordering the release of the subject property. The Petition was docketed as
G.R. No. 124343. In a Resolution dated 27 May 1997, this Court referred the case to the Court of
Appeals for appropriate action.

The Court of Appeals docketed the Petition for Certiorari as CA-G.R. SP No. 41042. On 29 July
1997, the Court of Appeals issued the assailed Decision dismissing the Petition.

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

Propriety of the Motion to Release Property from Attachment

According to petitioner, the Motion to Release Property from Attachment filed by respondent before
the RTC, in Civil Case No. D-10583, is not the proper remedy under Section 14, Rule 57 of the
Rules of Court,4 which provides:

SEC. 14. Proceedings where property claimed by third person.If the property attached is claimed
by any person other than the party against whom attachment had been issued or his agent,
and such person makes an affidavit of his title thereto, or right to the possession thereof, stating the
grounds of such right or title, and serves such affidavit upon the sheriff while the latter has
possession of the attached property, and a copy thereof upon the attaching party, the sheriff shall
not be bound to keep the property under attachment, unless the attaching party or his agent, on
demand of the sheriff, shall file a bond approved by the court to indemnify the third-party claimant in
a sum not less than the value of the property levied upon. In case of disagreement as to such value,
the same shall be decided by the court issuing the writ of attachment. No claim for damages for the
taking or keeping of the property may be enforced against the bond unless the action therefor is filed
within one hundred twenty (120) days from the date of the filing of the bond.

The sheriff shall not be liable for damages for the taking or keeping of such property, to any such
third-party claimant, if such bond shall be filed. Nothing herein contained shall prevent such claimant
or any third person from vindicating his claim to the property, or prevent the attaching party from
claiming damages against a third-party claimant who filed a frivolous or plainly spurious claim, in the
same or a separate action.

When the writ of attachment is issued in favor of the Republic of the Philippines, or any officer duly
representing it, the filing of such bond shall not be required, and in case the sheriff is sued for
damages as a result of the attachment, he shall be represented by the Solicitor General, and if held
liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out
of the funds to be appropriated for the purpose.

Petitioner argues that, pursuant to the aforequoted section, the remedy of a third person claiming to
be the owner of an attached property are limited to the following: (1) filing with the Sheriff a third-
party claim, in the form of an affidavit, per the first paragraph of Section 14; (2) intervening in the
main action, with prior leave of court, per the second paragraph of Section 14, which allows a third
person to vindicate his/her claim to the attached property in the "same x x x action"; and (3) filing a
separate and independent action, per the second paragraph of Section 14, which allows a third
person to vindicate his/her claim to the attached property in a "separate action."

Respondent explains that it tried to pursue the first remedy, i.e., filing a third-party claim with the
Sheriff. Respondent did file an Affidavit of Title and Ownership with the Sheriff, but said officer
advised respondent to file a motion directly with the RTC in the main case. Respondent heeded the
Sheriffs advice by filing with the RTC, in Civil Case No. D-10583, a Motion to Release Property from
Attachment. The Court of Appeals recognized and allowed said Motion, construing the same as an
invocation by respondent of the power of control and supervision of the RTC over its officers, which
includes the Sheriff.

We agree with the Court of Appeals on this score. The filing by respondent of the Motion to Release
Property from Attachment was made on the advice of the Sheriff upon whom respondent served its
Affidavit of Title and Ownership. Respondent should not be faulted for merely heeding the Sheriffs
advice. Apparently, the Sheriff, instead of acting upon the third-party claim of respondent on his own,
would rather have some direction from the RTC. Indeed, the Sheriff is an officer of the RTC and may
be directed by the said court to allow the third-party claim of respondent. Therefore, the filing of the
Motion in question can be deemed as a mere continuation of the third-party claim of respondent, in
the form of its Affidavit of Title and Ownership, served upon the Sheriff, in accord with the first
paragraph of Section 14, Rule 57 of the Rules of Court.

Alternatively, we may also consider the Motion to Release Property from Attachment, filed by
respondent before the RTC, as a Motion for Intervention in Civil Case No. D-10583, pursuant to the
second paragraph of Section 14, Rule 56, in relation to Rule 19 of the Rules of Court. Respondent,
to vindicate its claim to the subject property, may intervene in the same case, i.e., Civil Case No. D-
10583, instituted by petitioner against the spouses Soliven, in which the said property was attached.
Respondent has the personality to intervene, as it "is so situated as to be adversely affected by a
distribution or other disposition of property in the custody of the court or of an officer thereof."5 The
RTC, in acting upon and granting the Motion to Release Property from Attachment in its Order dated
9 October 1995, is deemed to have allowed respondent to intervene in Civil Case No. D-10583.

Moreover, it may do petitioner well to remember that rules of procedure are merely tools designed to
facilitate the attainment of justice. They were conceived and promulgated to effectively aid the court
in the dispensation of justice. Courts are not slaves to or robots of technical rules, shorn of judicial
discretion. In rendering justice, courts have always been, as they ought to be, conscientiously guided
by the norm that on the balance, technicalities take a backseat to substantive rights, and not the
other way around. Thus, if the application of the Rules would tend to frustrate rather than promote
justice, it is always within the power of the Court to suspend the rules, or except a particular case
from its operation.6 Hence, even if the Motion to Release Property from Attachment does not strictly
comply with Section 14, Rule 56 of the Rules of Court, the RTC may still allow and act upon said
Motion to render substantive justice.

This leads us to the substantive issue in this case, on which between the two transactions should be
given priority: the previous yet unregistered sale of the subject property by the spouses Soliven to
respondent, or the subsequent but duly annotated attachment of the same property by petitioner.

Previous yet unregistered sale versus subsequent but duly annotated attachment

Petitioner does not dispute the allegation of respondent that the subject property was sold by the
spouses Soliven to respondent on 18 May 1992, before petitioner instituted Civil Case No. D-10583
against the spouses Soliven on 15 April 1993; the RTC ordered the issuance of the Writ of
Attachment on 7 May 1993; and the attachment of the subject property pursuant to the Writ on 27
May 1993.

Neither did petitioner offer evidence to counter the following documents presented by respondent
establishing the fact of the sale of the subject property to the latter by the spouses Soliven: (1) the
notarized Deed of Sale dated 18 May 1992; (2) BPI Managers Check No. 010685 dated 8 May 1992
in the sum of P42,500.00 to represent the tender of payment of capital gains tax; (3) BIR Official
Receipt No. 0431320 dated 18 May 1992 of BPI Check No. 010625 for the payment of the sum
of P8,5000.00; and (4) a letter dated 11 August 1992 of Manila Missions former counsel, Lim Duran
& Associates, to the Revenue District Officer, District 7, Bureau of Internal Revenue, relative to its
request for the "reconsideration/condonation" of the assessment of the capital gains tax on its
purchase of the subject property.

Petitioner, however, invokes jurisprudence wherein this Court in a number of instances allegedly
upheld a subsequent but duly annotated attachment, as opposed to a previous yet unregistered sale
of the same property. Petitioner particularly calls our attention to the following paragraph in Ruiz, Sr.
v. Court of Appeals7:
[I]n case of a conflict between a vendee and an attaching creditor, an attaching creditor who
registers the order of attachment and the sale of the property to him as the highest bidder acquires a
valid title to the property, as against a vendee who had previously bought the same property from
the registered owner but who failed to register his deed of sale. This is because registration is the
operative act that binds or affects the land insofar as third persons are concerned. It is upon
registration that there is notice to the whole world.

In the more recent case Valdevieso v. Damalerio,8 we have expounded on our foregoing
pronouncement in Ruiz.

On 5 December 1995, therein petitioner Bernardo Valdevieso (Valdevieso) bought a parcel of land
from spouses Lorenzo and Elenita Uy (spouses Uy), the registered owners thereof. On 19 April
1996, therein respondents, spouses Candelario and Aurea Damalerio (spouses Damalario), filed a
Complaint against the spouses Uy for a sum of money before the RTC of General Santos City. On
23 April 1996, the RTC issued a Writ of Preliminary Attachment by virtue of which the subject parcel
of land was levied. The levy was duly recorded in the Register of Deeds, and annotated on the TCT
of the spouses Uy over the subject parcel of land. It was only on 6 June 1996 that the TCT in the
name of the spouses Uy was cancelled, and a new one issued in the name of Valdevieso. As in the
case at bar, the annotation on the attachment was carried over to Valdeviesos TCT. Valdevieso filed
a third-party claim before the RTC seeking to annul the attachment. In a resolution, the RTC ruled in
Valdeviesos favor, but the Court of Appeals reversed said RTC resolution. On appeal, we adjudged:

The sole issue in this case is whether or not a registered writ of attachment on the land is a superior
lien over that of an earlier unregistered deed of sale.

xxxx

The settled rule is that levy on attachment, duly registered, takes preference over a prior
unregistered sale. This result is a necessary consequence of the fact that the property involved was
duly covered by the Torrens system which works under the fundamental principle that registration is
the operative act which gives validity to the transfer or creates a lien upon the land.

The preference created by the levy on attachment is not diminished even by the subsequent
registration of the prior sale. This is so because an attachment is a proceeding in rem. It is against
the particular property, enforceable against the whole world. The attaching creditor acquires a
specific lien on the attached property which nothing can subsequently destroy except the very
dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property
attached is an indebted thing and a virtual condemnation of it to pay the owners debt. The lien
continues until the debt is paid, or sale is had under execution issued on the judgment, or until the
judgment is satisfied, or the attachment discharged or vacated in some manner provided by law.

Thus, in the registry, the attachment in favor of respondents appeared in the nature of a real lien
when petitioner had his purchase recorded. The effect of the notation of said lien was to subject and
subordinate the right of petitioner, as purchaser, to the lien. Petitioner acquired ownership of the land
only from the date of the recording of his title in the register, and the right of ownership which he
inscribed was not absolute but a limited right, subject to a prior registered lien of respondents, a right
which is preferred and superior to that of petitioner.9

It is settled, therefore, that a duly registered levy on attachment takes preference over a prior
unregistered sale.
Nonetheless, respondent argues that there is a special circumstance in the case at bar, which
should be deemed a constructive registration of the sale of the subject property in its favor,
preceding the attachment of the same property by petitioner.

Knowledge of previous yet unregistered sale

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

But where a party has knowledge of a prior existing interest which is unregistered at that time he
acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of
registration as to him. Knowledge of an unregistered sale is equivalent to registration. As held in
Fernandez v. Court of Appeals [189 SCRA 780 (1990)],

Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529), provides that the registration of the deed is
the operative act to bind or affect the land insofar as third persons are concerned. But where the
party has knowledge of a prior existing interest which is unregistered at the time he acquired a right
to the same land, his knowledge of that prior unregistered interest has the effect of registration as to
him. The torrens system cannot be used as a shield for the commission of fraud (Gustillo v.
Maravilla, 48 Phil. 442). As far as private respondent Zenaida Angeles and her husband Justiniano
are concerned, the non-registration of the affidavit admitting their sale of a portion of 110 square
meters of the subject land to petitioners cannot be invoked as a defense because (K)nowledge of an
unregistered sale is equivalent to registration (Winkleman v. Veluz, 43 Phil. 604).

This knowledge of the conveyance to Honorato Hong can not be denied. The records disclose that
after the sale, private respondent was able to introduce improvements on the land such as a
concrete two-door commercial building, a concrete fence around the property, concrete floor of the
whole area and G.I. roofing. Acts of ownership and possession were exercised by the private
respondent over the land. By these overt acts, it can not therefore be gainsaid that petitioner was not
aware that private respondent had a prior existing interest over the land.10

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

Petitioner contends, on the other hand, that respondent failed to present evidence to prove the fact
that a church had already been constructed on the subject property by the time the said property
was attached, thus, constituting notice to petitioner of the claim or right of respondent to the same.
lawph!1

Was there, at the time of the attachment, knowledge on the part of petitioner Rural Bank of the
interest of respondent Manila Mission on the subject property?

If the allegation of respondent Manila Mission anent the building of the chapel even before the
issuance of the writ of attachment is true, this case would be similar to Ruiz where the vendee of the
subject property was able to introduce improvements. However, respondent Manila Mission
presented no evidence of the building of the chapel other than its bare allegation thereof. More
importantly, even assuming for the sake of argument that the chapel was indeed being built at the
time of the attachment of the property, we cannot simply apply Ruiz and conclude that this confirms
knowledge of a previous conveyance of the property at that time. In Ruiz, the attaching party was the
wife of the vendor of the subject property, whom she sued for support. It was thus very probable that
she knew of the sale of the property to the vendee therein, considering that the vendee had already
introduced improvements thereon. In the case at bar, there is no special relationship between
petitioner Rural Bank and the spouses Soliven sufficient to charge the former with an implied
knowledge of the state of the latters properties. Unlike in the sale of real property, an attaching
creditor is not expected to inspect the property being attached, as it is the sheriff who does the
actual act of attaching the property.

Neither did respondent Manila Mission present any evidence of knowledge on the part of petitioner
Rural Bank of the prior existing interest of the former at the time of the attachment. Respondent
Manila Mission merely argues that there was a tacit recognition on the part of petitioner Rural Bank
of the construction of the chapel when the latter did not deny this allegation in its Opposition to the
Motion to Discharge Property from Attachment.

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

In sum, our decisions in Ruiz v. Court of Appeals and Valdevieso v. Damalerio oblige us to rule that
the duly registered levy on attachment by petitioner Rural Bank takes preference over the prior but
then unregistered sale of respondent Manila Mission. There was likewise no evidence of knowledge
on the part of petitioner Rural Bank of any third-party interest in the subject property at the time of
the attachment. We are, therefore, constrained to grant the instant Petition for Review and nullify the
Orders of the RTC discharging the subject property from attachment.

Nevertheless, respondent Manila Mission would not be left without remedy. It could file a counter-
bond pursuant to Section 12, Rule 5711 of the Rules of Court in order to discharge the attachment. If
respondent Manila Mission fails to do the same and the property ends up being subjected to
execution, respondent can redeem the property and seek reimbursement from the spouses Soliven.

WHEREFORE, the instant Petition for Review on Certiorari is hereby GRANTED. The Decision
dated 29 July 1997 of the Court of Appeals in CA-G.R. SP No. 41042 affirming the Orders of the
Regional Trial Court of Dagupan City dated 9 October 1995 and 27 February 1996 issued in Civil
Case No. D-10583 is hereby REVERSED and SET ASIDE. No pronouncement as to costs.

SO ORDERED.