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Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-!!" Ma# $!% !&!
JOSE MOVIDO% plainti'-appellant%
(s.
REHABILITATION FINANCE CORPORATION and
THE PROVINCIAL SHERIFF OF SAMAR, )efen)ants-
appellees.
*+ancisco Astilla fo+ appellant.
,esus A. A(ance-a% Rica+)o .. Ga+cia an) L#)ia
*lo+en)o-.eloso fo+ appellee R*C.
O/ce of the Solicito+ Gene+al A0b+osio Pa)illa an)
Solicito+ *+ine C. 1aballe+o fo+ appellee P+o(incial
She+i' of Sa0a+.
PA23LLA% ,.4
On ,ul# !56 the .et. B+os. 7 Co0pan#% 3nc.
0o+t8a8e) to ,ose S. Mo(i)o its +i8hts% title% inte+est
an) pa+ticipation 9in a co0plete sa:0ill in ba++io
Mauo% Allen% Sa0a+% :ith all its 0achine+ies% tools an)
e;uip0ent in 8oo) +unnin8 con)ition9 to secu+e the
pa#0ent of a loan of P&%""" an) inte+est at the +ate
of $< pe+ annu0 obtaine) b# the fo+0e+ f+o0 the
latte+ =E>hibits A? -B% Saba++e? -B% R*C@. On $A
*eb+ua+# !5B the chattel 0o+t8a8e :as +e8iste+e) in
the O/ce of the Re8ist+a+ of 2ee)s in an) fo+ the
p+o(ince of Sa0a+ =E>hibit A-@.
On $A ,ul# !5A ,ose S. Mo(i)o b+ou8ht an action
a8ainst .et. B+os. 7 Co0pan#% 3nc. in the Cou+t of *i+st
3nstance of Le#te to +eco(e+ the su0 of PC%5!5.C&
:ith the inte+est at the +ate of $< pe+ annu0 f+o0
,ul# !5A until the p+incipal is full# pai) an) P$%""" b#
:a# of )a0a8es an) e>penses of liti8ation =ci(il No.
55? E>hibits ? E>hibits -A% Saba++e? -A% R*C@.
On B *eb+ua+# !5! the pa+ties the+eto% assiste) b#
thei+ +especti(e counsel% ente+e) into an) sub0itte) to
the Cou+t a co0p+o0ise a8+ee0ent te+0inatin8 thei+
)ispute an) +enouncin8 thei+ +especti(e clai0s fo+
)a0a8es an) fo+ an# othe+ clai0 in connection :ith
the subDect 0atte+ of the case :hich :as app+o(e) an)
the cou+t +en)e+e) Du)80ent in acco+)ance the+e:ith
=E>hibits -C% Saba++e? -C% R*C? -2% Saba++e? -2%
R*C@.
On C Ma+ch !5!% b# an inst+u0ent )ul# e>ecute)% .et
B+os. 7 Co0pan#% 3nc. an) the spouses Si0eon G.
To+ibio an) Ma>i0iana Escoba+ )e To+ibio 0o+t8a8e)
the +eal estate an) chattels the+ein enu0e+ate) an)
)esc+ibe) in fa(o+ of the Rehabilitation Enance
Co+po+ation to secu+e the pa#0ent of a loan of P56%"""
=E>hibit A% R*C@% an) on B Ma# !5! on 9a))en)u0 to
chattel 0o+t8a8e9 )esc+ibin8 the 0achine+# an)
lo88in8 e;uip0ent pu+chase) out of the p+ocee)s of
the loan :as )ul# e>ecute) b# the 0o+t8a8o+s =E>hibit
!% R*C@. On 5 Ma+ch !5! an) A Ma# !5! the chattel
0o+t8a8es :e+e +e8iste+e) in the +e8ist+# of )ee)s fo+
the p+o(ince of Sa0a+ =E>hibit !% R*C@.
On 5 Ap+il !&C% upon petition of the Rehabilitation
*inance Co+po+ation% the p+o(incial she+i' of Sa0a+
a)(e+tiFe) a public auction sale to be hel) on 5 Ma#
!&C f+o0 =!4"" oGclocH in the 0o+nin8 to 54"" oGclocH
in the afte+noon at the 0unicipal buil)in8 of Allen%
Sa0a+% un)e+ the p+o(isions of Act No. CC&% as
a0en)e) b# Act No. 5A% of the chattels enu0e+ate)
an) )esc+ibe) in E>hibits A% R*C an) !% R*C 9to appl#
the p+ocee)s of the sale to the pa#0ent of the a0ount
of PC%6&.$ co0pute) as of ,anua+# $"% !&C%
inclu)in8 inte+est the+eon up to the )ate of the sale%
plus PC%5&.&! the+eafte+% plus "< of sai) a0ount as
atto+ne#Gs fees% an) plus the she+i' fees an) inci)ental
e>penses49 =E>hibit G-@. On $5 Ap+il !&C ,ose S.
Mo(i)o Ele) :ith the She+i' a thi+) pa+t# clai0 on the
chattels a)(e+tise) fo+ sale at public auction asse+tin8
a p+io+ an) supe+io+ +i8ht in the0 because of his
chattel 0o+t8a8e +eco+)e) befo+e that of the
Rehabilitation *inance Co+po+ation an) b# (i+tue of a
Du)80ent in his fa(o+ +en)e+e) b# the Cou+t of *i+st
3nstance of Le#te in ci(il case No. 55 =E>hibit B@.
2espite such clai0 the She+i' p+ocee)e) to ca++# out
the sale an) on ,une !&C% afte+ the sale ha) been
successi(el# postpone) to 5 Ma# an) $A Ma#% sol) the
chattels% e>cept those e>p+essl# e>clu)e) f+o0 the
public auction sale% to the successful bi))e+s. The
p+ocee)s of the sale in the a0ount of P"%B!5 :as
tu+ne) o(e+ to the Rehabilitation *inance Co+po+ation
=E>hibit C@. On $6 ,une !&C% o+ & )a#s afte+ the
auction sale% a :+it of e>ecution :as issue) in ci(il case
No. 55 =E>hibits -*% Saba++e an) -*% R*C@.
On Ma+ch !&& ,ose S. Mo(i)o b+ou8ht in the Cou+t of
*i+st 3nstance of Le#te an action a8ainst the
Rehabilitation *inance Co+po+ation an) the P+o(incial
She+i' of Sa0a+ cha+8in8 the latte+ :ith ha(in8
unla:full#% f+au)ulentl# an) 0aliciousl# )is+e8a+)e) his
thi+) pa+t# clai0 on the chattels an) sol) the0 at
public auction on ,une !&C% upon the +e;uest an)
fo+ the beneEt of the fo+0e+% the+eb# causin8 hi0
actual )a0a8es in the su0 of P&%""" in a))ition to the
e>pense of P$%""" fo+ atto+ne#Gs fee.
Ie p+a#e) that the Rehabilitation *inance Co+po+ation
be o+)e+e) to in)e0nif# hi0 fo+ actual an) 0o+al
)a0a8es an) fo+ atto+ne#Gs fee? an) the She+i' to
in)e0nif# hi0 fo+ an# an) :hate(e+ liabilit# he ha)
incu++e) b# +eason of the e>t+aDu)icial fo+eclosu+e of
the 0o+t8a8e 0a)e at the instance an) fo+ the beneEt
of his co-)efen)ants% an) both% to pa# costs =Ci(il No.
A!6@.
The )efen)ants Ele) sepa+ate ans:e+s. The
Rehabilitation *inance Co+po+ation set up the )efense
that b# Elin8 a co0plaint a8ainst the .et B+os 7
Co0pan#% 3nc. in the Cou+t of *i+st 3nstance of Le#te
=ci(il No. 55@% to +eco(e+ the su0 )ue f+o0 it4
@the plainti' :ai(e) his +i8ht to fo+eclose the
0o+t8a8e an) fo+ that +eason aban)one) his 0o+t8a8e
lien on the chattels?
$@that the plainti'Gs thi+) pa+t# clai0 :as not (ali) an)
su/cient in fo+0 an) substance to stop an) f+ust+ate
the public auction sale in ;uestion% it bein8 a 0e+e

clai0 fo+ p+efe+ence in the )ist+ibution of the p+ocee)s


of the public auction sale? t
C@that the alle8e) chattel 0o+t8a8e of the plainti' :as
in(ali) an) )i) not bin) the chattels? that its 0o+t8a8e
lien in the +eal estate an) chattels :as p+io+% p+efe++e)
an) supe+io+ to that of the plainti'Gs?
5@that it ha) not )one o+ cause) to be )one an#
actionable :+on8 o+ ha+0 to the plainti' to 0aHe it
liable fo+ )a0a8es clai0e) to ha(e been sustaine) b#
the plainti'. 3t p+a#e) that the co0plaint be )is0isse)
:ith cost a8ainst the plainti' an) that he be o+)e+e) to
pa# it the su0 of P$%""" as )a0a8es su'e+e) because
of the b+in8in8 of an unfoun)e) suit.
The She+i' ans:e+e) that he )i) not +e;ui+e the
Rehabilitation *inance Co+po+ation to Ele an in)e0nit#
bon) an) p+ocee)e) :ith the auction sale% because the
plainti'Gs thi+) pa+t# clai0 on the chattels to be sol)
)i) not sho: su/cient basis fo+ the plainti'Gs clai0
that his lien on the chattels :as p+io+% p+efe++e) an)
supe+io+ to that of the Rehabilitation *inance
Co+po+ation% an) because upon the st+en8th of the
Du)80ent +en)e+e) b# the Cou+t of *i+st 3nstance of
Le#te in ci(il case No. 55 no :+it of e>ecution :as
p+esente) b# hi0% an) p+a#e) that the co0plaint be
)is0isse) :ith costs a8ainst the plainti'? that he be
o+)e+e) to pa# hi0 a +easonable a0ount fo+ 0o+al an)
e>e0pla+# )a0a8es? an) that he be 8+ante) othe+ Dust
an) e;uitable +elief.
The plainti' +eplie) to the ans:e+ of the Rehabilitation
*inance Co+po+ation an) cont+o(e+te) its counte+clai0.
Afte+ t+ial% on A Septe0be+ !&& the Cou+t +en)e+e)
Du)80ent hol)in8 that the co0p+o0ise a8+ee0ent
ente+e) into b# an) bet:een the pa+ties in ci(il case
No. 55 an) the Du)80ent +en)e+e) b# the Cou+t
pu+suant the+eto no(ate) the plainti'Gs c+e)it secu+e)
b# the chattel 0o+t8a8e% an) that :hen the .et. B+os.
Co0pan#% 3nc. an) the spouses Si0eon G. To+ibio an)
Ma>i0iana Escoba+ )e To+ibio 0o+t8a8e) to the
Rehabilitation *inance Co+po+ation the sa0e chattels
an) othe+ p+ope+ties enu0e+ate) in E>hibits A% R*C
an) !% R*C% the plainti'Gs lien on the chattels no lon8e+
e>iste)? an) )is0issin8 the plainti'Gs co0plaint :ith
costs a8ainst hi0 but :ithout a:a+)in8 )a0a8es to the
)efen)ants. Iis 0otion an) a0en)e) 0otion fo+ ne:
t+ial an) 0otion fo+ +econsi)e+ation :e+e )enie).
Ience this appeal o+i8inall# to the Cou+t of Appeals but
ce+tiEe) to this Cou+t on the 8+oun) that onl# ;uestions
of la: a+e in(ol(e).
A 0o+t8a8e :ho sues an) obtains a pe+sonal Du)80ent
a8ainst a 0o+t8a8o+ upon his c+e)it :ai(es the+eb# his
+i8ht to enfo+ce the 0o+t8a8e secu+in8 it. B#
institutin8 ci(il case No. 55 in the Cou+t of *i+st
3nstance of Le#te to +eco(e+ the su0 of PC%5!5.C&
f+o0 the .et. B+os 7 Co0pan#% 3nc.% on $A ,ul# !5A
an) b# secu+in8 a Du)80ent in his fa(o+ upon the
co0p+o0ise a8+ee0ent ente+e) into b# an) bet:een
hi0 an) the )efen)ant the+ein on B *eb+ua+# !5!% the
appellant aban)one) his 0o+t8a8e lien in the chattels
in ;uestion.
Jhen on C Ma+ch !5! an) on B Ma# !5!% the+efo+e%
.et. B+os 7 Co0pan#% 3nc. an) the spouses Si0eon G.
To+ibio an) Ma>i0iana Escoba+ )e To+ibio 0o+t8a8e)
the chattels an) othe+ p+ope+ties )esc+ibe) in E>hibit
A% R*C !% R*C to the appellee% the appellant ha) no
lon8e+ an# lien on the chattels. The +ule in TiFon (s.
.al)eF% 5A Phil.% !" an) MatienFo (s. San ,ose% G.R.
No. C!&"% 6 ,une !C5% +elie) upon b# the
appellants% has been aban)one) in Bach+ach Moto+
Co0pan# (s. 3ca+a-8al% sup+a. Mo+eo(e+% the appellant
secu+e) a :+it of e>ecution of the Du)80ent +en)e+e)
in ci(il case No. 55 on $6 ,une !&C onl# =E>hibits -*%
Saba++e? -*% R*C@% o+ Efteen )a#s afte+ the public
auction sale ha) been ca++ie) out. The Du)80ent
appeale) f+o0 is a/+0e)% :ith cost a8ainst the
appellant.
Pa+as% C.,.% Ben8Fon% Monte0a#o+% Re#es% A.% Bautista
An8elo% Lab+a)o+% Concepcion an) En)encia% ,,.% concu+.
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