You are on page 1of 24

RULE 39 which was previously approved, Panacor

negotiated for a take-out loan with IBA-Finance


Corporation (hereinafter referred to as
IBA-Finance) in the sum of P10 million, P7.5
G.R. No. 175339 December 16, million of which will be released outright in order
2008 to take-out the loan from Premiere Bank and the
balance of P2.5 million (to complete the needed
PREMIERE DEVELOPMENT BANK, petitioner, capital of P4.1 million with Colgate) to be
vs. released after the cancellation by Premiere of
ALFREDO C. FLORES, in his Capacity as the collateral mortgage on the property covered
Presiding Judge of Regional Trial Court of by TCT No. T-3475. Pursuant to the said
Pasig City, Branch 167, ARIZONA take-out agreement, IBA-Finance was
TRANSPORT CORPORATION and PANACOR authorized to pay Premiere Bank the prior
MARKETING CORPORATION, respondents. existing loan obligations of Arizona in an amount
not to exceed P6 million.
DECISION
On October 5, 1995, Iba-Finance sent a letter to
TINGA, J.: Ms. Arlene R. Martillano, officer-in-charge of
Premiere Bank’s San Juan Branch, informing her
This is a Rule 45 petition for review1 of the Court of the approved loan in favor of Panacor and
of Appeals’ decision2 in CA-G.R. SP No. 92908 Arizona, and requesting for the release of TCT
which affirmed the Regional Trial Court’s (RTC’s) No. T-3475. Martillano, after reading the letter,
orders3 granting respondent corporations’ affixed her signature of conformity thereto and
motion for execution of the Court’s 14 April 2004 sent the original copy to Premiere Bank’s legal
decision in G.R. No. 1593524 and office. x x x
5
denying petitioner Premiere Development
Bank’s motion for reconsideration, as well as the On October 12, 1995, Premiere Bank sent a
appellate court’s resolution6 denying Premiere letter-reply to [IBA]-Finance, informing the latter
Development Bank’s motion for reconsideration. of its refusal to turn over the requested
documents on the ground that Arizona had
The factual antecedents of the case, as found by existing unpaid loan obligations and that it was
the Court in G.R. No. 159352, are as follows: the bank’s policy to require full payment of all
outstanding loan obligations prior to the release
The undisputed facts show that on or about of mortgage documents. Thereafter, Premiere
October 1994, Panacor Marketing Corporation Bank issued to IBA-Finance a Final Statement of
(Panacor for brevity), a newly-formed Account showing Arizona’s total loan
corporation, acquired an exclusive indebtedness. On October 19, 1995, Panacor
distributorship of products manufactured by and Arizona executed in favor of IBA-Finance a
Colgate Palmolive Philippines, Inc. (Colgate for promissory note in the amount of P7.5 million.
short). To meet the capital requirements of the Thereafter, IBA-Finance paid to Premiere Bank
exclusive distributorship, which required an initial the amount of P6,235,754.79, representing the
inventory level of P7.5 million, Panacor applied full outstanding loan account of Arizona. Despite
for a loan of P4.1 million with Premiere such payment, Premiere Bank still refused to
Development Bank. After an extensive study of release the requested mortgage documents
Panacor’s creditworthiness, Premiere Bank specifically, the owner’s duplicate copy of TCT
rejected the loan application and suggested that No. T-3475.
its affiliate company, Arizona Transport
Corporation (Arizona for short), should instead On November 2, 1995, Panacor requested
apply for the loan on condition that the proceeds IBA-Finance for the immediate approval and
thereof shall be made available to Panacor. release of the remaining P2.5 million loan to
Eventually, Panacor was granted a P4.1 million meet the required monthly purchases from
credit line as evidenced by a Credit Line Colgate. IBA-Finance explained however, that
Agreement. As suggested, Arizona, which was the processing of the P2.5 million loan
an existing loan client, applied for and was application was conditioned, among others, on
granted a loan of P6.1 million, P3.4 million of the submission of the owner’s duplicate copy of
which would be used to pay-off its existing loan TCT No. 3475 and the cancellation by Premiere
accounts and the remaining P2.7 million as Bank of Arizona’s mortgage. Occasioned by
credit line of Panacor. As security for the P6.1 Premiere Bank’s adamant refusal to release the
million loan, Arizona, represented by its Chief mortgage cancellation document, Panacor failed
Executive Officer Pedro Panaligan and spouses to generate the required capital to meet its
Pedro and Marietta Panaligan in their personal distribution and sales targets. On December 7,
capacities, executed a Real Estate Mortgage 1995, Colgate informed Panacor of its decision
against a parcel of land covered by TCT No. to terminate their distribution agreement.
T-3475 as per Entry No. 49507 dated October 2,
1995. On March 13, 1996, Panacor and Arizona filed a
complaint for specific performance and damages
Since the P2.7 million released by Premiere against Premiere Bank before the Regional Trial
Bank fell short of the P4.1 million credit line
Court of Pasig City, docketed as Civil Case No. of compensation or set-off as the foreclosure of
65577. the mortgaged property does not preclude it from
filing an action to recover any deficiency from
On June 11, 1996, IBA-Finance filed a respondent corporations’ loan. It allegedly did
complaint-in-intervention praying that judgment not file an action to recover the loan deficiency
be rendered ordering Premiere Bank to pay from respondent corporations because of the
damages in its favor. pending Civil Case No. MC03-2202 filed by
respondent corporations before the RTC of
On May 26, 1998, the trial court rendered a Mandaluyong City entitled Arizona Transport
decision in favor of Panacor and IBA-Finance, Corp. v. Premiere Development Bank. That case
the decretal portion of which reads: x x x puts into issue the validity of Premiere
Development Bank’s monetary claim against
Premiere Bank appealed to the Court of Appeals respondent corporations and the subsequent
contending that the trial court erred in foreclosure sale of the mortgaged property.
finding, inter alia, that it had maliciously Premiere Development Bank allegedly had
downgraded the credit-line of Panacor from P4.1 wanted to wait for the resolution of the civil case
million to P2.7 million. before it would file its deficiency claims against
respondent corporations. Moreover, the
In the meantime, a compromise agreement was execution of our decision in G.R. No. 159352
entered into between IBA-Finance and Premiere would allegedly be iniquitous and unfair since
Bank whereby the latter agreed to return without respondent corporations are already in the
interest the amount of P6,235,754.79 which process of winding up.15
IBA-Finance earlier remitted to Premiere Bank to
pay off the unpaid loans of Arizona. On March 11, The Court finds the petition unmeritorious.
1999, the compromise agreement was
approved. A judgment becomes "final and executory" by
operation of law. In such a situation, the
On June 18, 2003, a decision was rendered by prevailing party is entitled to a writ of execution,
the Court of Appeals which affirmed with and issuance thereof is a ministerial duty of the
modification the decision of the trial court, the court.16 This policy is clearly and emphatically
dispositive portion of which reads:7 x x x embodied in Rule 39, Section 1 of the Rules of
Court, to wit:
Incidentally, respondent corporations received a
notice of sheriff’s sale during the pendency of SECTION 1. Execution upon judgments or final
G.R. No. 159352. Respondent corporations orders. ― Execution shall issue as a matter of
were able to secure an injunction from the RTC right, on motion, upon a judgment or order that
but it was set aside by the Court of Appeals in a disposes of the action or proceeding upon the
decision dated 20 August 2004.8 The appellate expiration of the period to appeal therefrom if no
court denied respondent corporations’ motion for appeal has been duly perfected.
reconsideration in a resolution dated 5
November 2004.9 If the appeal has been duly perfected and finally
resolved, the execution may forthwith be applied
The Court, in a resolution dated 16 February for in the court of origin, on motion of the
2005, did not give due course to the petition for judgment obligee, submitting therewith certified
review of respondent corporations as it did not true copies of the judgment or judgments or final
find any reversible error in the decision of the order or orders sought to be enforced and of the
appellate court.10 After the Court had denied with entry thereof, with notice to the adverse party.
finality the motion for reconsideration,11 the
mortgaged property was purchased by Premiere The appellate court may, on motion in the same
Development Bank at the foreclosure sale held case, when the interest of justice so requires,
on 19 September 2005 for P6,600,000.00.12 direct the court of origin to issue the writ of
execution. (Emphasis supplied.)
Respondent corporations filed a motion for
execution dated 25 August 200513 asking for the Jurisprudentially, the Court has recognized
issuance of a writ of execution of our decision in certain exceptions to the rule as where in cases
G.R. No. 159352 where we of special and exceptional nature it becomes
awarded P800,000.00 as damages in their imperative in the higher interest of justice to
favor.14 The RTC granted the writ of execution direct the suspension of its execution; whenever
sought. The Court of Appeals affirmed the order. it is necessary to accomplish the aims of justice;
or when certain facts and circumstances
Hence, the present petition for review. transpired after the judgment became final which
could render the execution of the judgment
The only question before us is the propriety of unjust.17
the grant of the writ of execution by the RTC.
None of these exceptions avails to stay the
Premiere Development Bank argues that the execution of this Court’s decision in G.R. No.
lower courts should have applied the principles 159352. Premiere Development Bank has failed
to show how injustice would exist in executing alleged deficiency claims is contingent upon the
the judgment other than the allegation that case filed by respondent corporations; thus,
respondent corporations are in the process of conducting separate trials thereon will result in a
winding up. Indeed, no new circumstance substantial duplication of the time and effort of
transpired after our judgment had become final the court and the parties.
that would render the execution unjust.
The fear of Premiere Development Bank that
The Court cannot give due course to Premiere they would have difficulty collecting its alleged
Development Bank’s claim of compensation or loan deficiencies from respondent corporations
set-off on account of the pending Civil Case No. since they were already involuntarily dissolved
MC03-2202 before the RTC of Mandaluyong due to their failure to file reportorial requirements
City. For compensation to apply, among other with the Securities and Exchange Commission is
requisites, the two debts must be liquidated and neither here nor there. In any event, the law
demandable already.18 specifically allows a trustee to manage the
affairs of the corporation in liquidation, and the
A distinction must be made between a debt and dissolution of the corporation would not serve as
a mere claim. A debt is an amount actually an effective bar to the enforcement of rights for
ascertained. It is a claim which has been formally or against it.
passed upon by the courts or quasi-judicial
bodies to which it can in law be submitted and As early as 1939,23 this Court held that, although
has been declared to be a debt. A claim, on the the time during which the corporation, through its
other hand, is a debt in embryo. It is mere own officers, may conduct the liquidation of its
evidence of a debt and must pass thru the assets and sue and be sued as a corporation is
process prescribed by law before it develops into limited to three years from the time the period of
what is properly called a debt.19 Absent, dissolution commences, there is no time limit
however, any such categorical admission by an within which the trustees must complete a
obligor or final adjudication, no legal liquidation placed in their hands. What is
compensation or off-set can take place. Unless provided in Section 12224 of the Corporation
admitted by a debtor himself, the conclusion that Code is that the conveyance to the trustees must
he is in truth indebted to another cannot be be made within the three-year period. But it may
definitely and finally pronounced, no matter how be found impossible to complete the work of
convinced he may be from the examination of liquidation within the three-year period or to
the pertinent records of the validity of that reduce disputed claims to judgment. The
conclusion the indebtedness must be one that is trustees to whom the corporate assets have
admitted by the alleged debtor or pronounced by been conveyed pursuant to the authority of
final judgment of a competent court.20 At best, Section 122 may sue and be sued as such in all
what Premiere Development Bank has against matters connected with the liquidation.
respondent corporations is just a claim, not a
debt. At worst, it is a speculative claim. Furthermore, Section 145 of the Corporation
Code clearly provides that "no right or remedy in
The alleged deficiency claims of Premiere favor of or against any corporation, its
Development Bank should have been raised as stockholders, members, directors, trustees, or
a compulsory counterclaim before the RTC of officers, nor any liability incurred by any such
Mandaluyong City where Civil Case No. corporation, stockholders, members, directors,
MC03-2202 is pending. Under Section 7, Rule 6 trustees, or officers, shall be removed or
of the 1997 Rules of Civil Procedure, a impaired either by the subsequent dissolution of
counterclaim is compulsory when its object said corporation." Even if no trustee is appointed
"arises out of or is necessarily connected with or designated during the three-year period of the
the transaction or occurrence constituting the liquidation of the corporation, the Court has held
subject matter of the opposing party’s claim and that the board of directors may be permitted to
does not require for its adjudication the presence complete the corporate liquidation by continuing
of third parties of whom the court cannot acquire as "trustees" by legal implication.25 Therefore, no
jurisdiction". In Quintanilla v. CA21 and reiterated injustice would arise even if the Court does not
in Alday v. FGU Insurance Corporation,22 the stay the execution of G.R. 159352.
"compelling test of compulsoriness"
characterizes a counterclaim as compulsory if Although it is commendable for Premiere
there should exist a "logical relationship" Development Bank in offering to deposit with the
between the main claim and the counterclaim. RTC the P800,000.00 as an alternative prayer,
There exists such a relationship when the Court cannot allow it to defeat or subvert the
conducting separate trials of the respective right of respondent corporations to have the final
claims of the parties would entail substantial and executory decision in G.R. No. 159352
duplication of time and effort by the parties and executed. The offer to deposit cannot suspend
the court; when the multiple claims involve the the execution of this Court’s decision for this
same factual and legal issues; or when the cannot be deemed as consignation.
claims are offshoots of the same basic Consignation is the act of depositing the thing
controversy between the parties. Clearly, the due with the court or judicial authorities
recovery of Premiere Development Bank’s whenever the creditor cannot accept or refuses
to accept payment, and it generally requires a properties which he could levy on. He alleged
prior tender of payment. In this case, it is that he was given a certification that there was
Premiere Development Bank, the judgment none. So he made a return of service stating that
debtor, who refused to pay respondent defendants were insolvent. He denied calling up
corporations P800,000.00 and not the other way complainant for her to collect defendant’s
around. Neither could such offer to make a payment by means of promissory notes. But he
deposit with the RTC provide a ground for this advised her to secure an alias writ of execution
Court to issue an injunctive relief in this case. so he could eventually go after defendants’ real
properties in Tandag, Surigao del Sur.
WHEREFORE, the petition for review is DENIED.
The decision of the Court of Appeals in CA-G.R. We referred the complaint to the Office of the
SP No. 92908 is AFFIRMED. Court Administrator (OCA) for review, evaluation
and recommendation. The OCA found the
SO ORDERED. complaint meritorious and respondent sheriff
guilty of misconduct and gross ignorance of the
A.M. No. P-04-1857. March 16, 2005 law. It recommended that respondent be fined
₱5,000, with a warning that the commission of a
MERLINDA L. DAGOOC, Complainant, similar act in the future shall be dealt with more
vs. severely.
ROBERTO A. ERLINA, Sheriff IV, RTC,
Branch 40, Tandag, Surigao del We find it strange and highly unusual, to say the
Sur, Respondents. least, that respondent sheriff did not know his
duties and functions under Section 9, Rule 39 of
RESOLUTION the Revised Rules of Court which clearly states
how the execution of money judgments should
CORONA, J.: be made.

This is a complaint for misconduct and ignorance Section 9. Execution of judgments for money,
of the law filed by Merlinda L. Dagooc of how enforced. – (a) Immediate payment on
Diatagon, Lianga, Surigao del Sur, against demand. – The officer shall enforce an execution
deputy sheriff Roberto A. Erlina of the Regional of a judgment for money by demanding from the
Trial Court, Branch 40, Tandag, Surigao del Sur. judgment obligor the immediate payment of the
full amount stated in the writ of execution and all
Complainant alleged that she was the plaintiff in lawful fees. The judgment obligor shall pay in
Civil Case No. L-695 before the Regional Trial cash, certified bank check payable to the
Court, Branch 28, Diatagon, Lianga, Surigao del judgment obligee, or any other form of
Sur. The court rendered judgment by payment acceptable to the latter, the amount
compromise agreement which immediately of the judgment debt under proper receipt
became final and executory. Complainant directly to the judgment obligee or his authorized
moved for the execution of the decision and, on representative if present at the time of payment.
February 28, 2002, a writ of execution was The lawful fees shall be handed under proper
issued which was endorsed to respondent receipt to the executing sheriff who shall turn
deputy sheriff Erlina for execution. The over the said amount within the same day to the
defendants, however, could not pay the money clerk of court of the court that issued the writ.
judgment. Instead of levying on the properties of (emphasis ours)
the defendants to satisfy the judgment, however,
sheriff Erlina asked them to execute promissory The law mandates that in the execution of a
notes in favor of complainant which he asked the money judgment, the judgment debtor shall pay
latter to collect from the defendants. either in cash, certified bank check payable to
Complainant further alleged that respondent the judgment obligee, or any other form of
sheriff indicated in his return of service that payment acceptable to the latter. Nowhere does
defendants were insolvent. But upon verification the law mention promissory notes as a form of
with the assessor’s office of Tandag, Surigao del payment. The only exception is when such form
Sur, complainant discovered that defendants of payment is acceptable to the judgment debtor.
owned real properties, as evidenced by the real But it was obviously not acceptable to
property field appraisal and assessment sheet. complainant, otherwise she would not have filed
this case against respondent sheriff. In fact, she
In his comment, respondent sheriff averred that objected to it because the promissory notes of
he served a copy of the writ of execution on the the defendants did not satisfy the money
defendants but they could not pay the money judgment in her favor.
judgment despite repeated demands. So he
went to the residence of the defendants to levy If the judgment debtor cannot pay all or part of
on some of their personal properties but he the obligation in cash, certified bank check or
found them to be exempt from execution other mode of payment acceptable to the
pursuant to Section 13, Rule 39 of the Rules of judgment obligee, the money judgment shall be
Court. He then went to the office of the provincial satisfied by levying on the properties of the
assessor to verify if the defendants owned real judgment debtor. Thus,
Section 9(b) Satisfaction by levy. – If the The garnishment shall cover only such amount
judgment obligor cannot pay all or part of the as will satisfy the judgment and all lawful fees.
obligation in cash, certified bank check or other
mode of payment acceptable to the judgment Either to desperately cover his tracks after it was
obligee, the officer shall levy upon the properties pointed out to him that the defendants were not
of the judgment obligor of every kind and nature insolvent at all or out of sheer ignorance of the
whatsoever which may be disposed of for value law, respondent sheriff advised complainant to
and not otherwise exempt from execution giving file a motion for the issuance of an alias writ of
the latter the option to immediately choose which execution allegedly so that he could levy on the
property or part thereof may be levied upon, properties of the defendants. But there was no
sufficient to satisfy the judgment. If the judgment need for an alias writ of execution for him to levy
obligor does not exercise the option, the officer on the real properties of the defendants. The life
shall first levy on the personal properties, if any, of the writ was for five years and the judgment of
and then on the real properties if the personal the court had not yet been fully satisfied. Section
properties are insufficient to answer for the 14, Rule 39 of the Revised Rules of Court states
judgment. that:

x x x x x x x x x1 Section 14. Return of writ of execution. – The


writ of execution shall be returnable to the court
Levy is defined as the act or acts by which an issuing it immediately after the judgment has
officer of the law and court sets apart or been satisfied in part or in full. If the judgment
appropriates a part or the whole of the loser’s cannot be satisfied in full within thirty (30) days
(judgment debtor’s) property for the purpose of after his receipt of the writ, the officer shall report
eventually conducting an execution sale to the to the court and state the reason therefor. Such
end that the writ of execution may be satisfied, writ shall continue in effect during the period
and the judgment debt, paid.2 However, not all of within which the judgment may be enforced
the judgment debtor’s properties may be levied by motion. The officer shall make a report to the
upon because the law exempts some of them court every thirty (30) days on the proceedings
from execution.3 But the right of exemption from taken thereon until the judgment is satisfied in
execution is a personal privilege granted to the full, or its effectivity expires. x x x (emphasis
judgment debtor and, as such, it must be ours)
claimed not by the sheriff but by the judgment
debtor himself at the time of the levy or within a Sheriffs, as public officers, are repositories of
reasonable period thereafter.4 public trust and are under obligation to perform
the duties of their office honestly, faithfully and to
Respondent sheriff not only failed to levy on the the best of their ability. They are bound to use
properties of the judgment debtor when they utmost skill and diligence in the performance of
could not pay the money judgment in cash but their official duties particularly where the rights of
also claimed the exemption for them. His individuals may be jeopardized by their
conduct blatantly manifested his incompetence neglect.5Here, we find respondent sheriff utterly
and ineptitude in discharging his functions. wanting in zeal and dedication. He was highly
Moreover, respondent sheriff was seriously incompetent, downright inefficient and grossly
remiss in his duties when he stated in his return ignorant of the law when he did not faithfully
of service that the defendants were insolvent execute the writ of execution to the prejudice of
without first diligently verifying such fact. As it complainant.
turned out, the defendants had real properties he
could have levied on to satisfy the money Considering that respondent sheriff’s primary
judgment. duty was the execution of the writ strictly
according to its terms, there was apparently
But even assuming that the more than mere "harmless" ignorance involved
defendants/judgment debtors were insolvent, here, which makes us wonder about the very
respondent sheriff should have garnished their lame and docile penalty of ₱5,000 being
salaries (being paid employees) to enforce the recommended by the OCA. Applying Rule 4,
judgment in the subject case as provided for in Section 52 B(2) of the Revised Uniform Rules on
Section 9(c), Rule 39 of the Revised Rules of Administrative Cases in the Civil Service, we find
Court. respondent guilty of inefficiency and
incompetence in the performance of his official
(c) Garnishment of debts and credits. – The duties and suspend him from the service for one
officer may levy on debts due the judgment (1) year.
obligor and other credits, including bank
deposits, financial interests, royalties, WHEREFORE, in view of the foregoing, we find
commissions and other personal property not respondent sheriff ROBERTO A. ERLINA of the
capable of manual delivery in the possession or Regional Trial Court, Branch 40, Tandag,
control of third parties. Levy shall be made by Surigao del Sur, GUILTY of inefficiency and
serving notice upon the person owing such debts incompetence in the performance of his official
or having in his possession or control such duties. He is hereby SUSPENDED from the
credits to which the judgment obligor is entitled. service for one (1) year and WARNED that the
commission of a similar act in the future shall be presentation of a duly executed affidavit of
dealt with more severely. consolidation of ownership.

SO ORDERED. On April 13,1982, the DBP sold the lot to


Francisco Peria in a Deed of Absolute Sale and
G.R. No. 81552 May 28, 1990 the same was registered on April 15, 1982 in the
Office of the Register of Deeds of Ilocos Sur.
DIONISIO FIESTAN and JUANITA Subsequently, the DBP's title over the lot was
ARCONADO, petitioners cancelled and in lieu thereof TCT T-19229 was
vs. issued to Francisco Peria.
COURT OF APPEALS; DEVELOPMENT BANK
OF THE PHILIPPINES, LAOAG CITY BRANCH; After title over said lot was issued in his name,
PHILIPPINE NATIONAL BANK, VIGAN Francisco Peria secured a tax declaration for
BRANCH, ILOCOS SUR, FRANCISCO PERIA said lot and accordingly paid the taxes due
and REGISTER OF DEEDS OF ILOCOS thereon. He thereafter mortgaged said lot to the
SUR, respondents. PNB Vigan Branch as security for his loan of
P115,000.00 as required by the bank to increase
Pedro Singson Reyes for petitioners. his original loan from P49,000.00 to P66,000.00
until it finally reached the approved amount of
The Chief Legal Counsel for PNB. P115,000.00. Since petitioners were still in
possession of Lot No. 2-B, the Provincial Sheriff
Public Assistance Office for Francisco Peria. ordered them to vacate the premises.

Ruben O. Fruto, Bonifacio M. Abad and David C. On the other hand, petitioners filed on August 23,
Frez for DBP Laoag Branch. 1982 a complaint for annulment of sale,
mortgage and cancellation of transfer certificates
of title against the DBP-Laoag City, PNB Vigan
Branch, Ilocos Sur, Francisco Peria and the
FERNAN, C.J.: Register of Deeds of Ilocos Sur, docketed as
Civil Case No. 3447-V before the Regional Trial
In this petition for review on certiorari, petitioners Court of Vigan, Ilocos Sur.
spouses Dionisio Fiestan and Juanita Arconada
owners of a parcel of land (Lot No. 2B) situated After trial, the RTC of Vigan, Ilocos Sur, Branch
in Ilocos Sur covered by TCT T-13218 which 20, rendered its decision 2 on November 14,
they mortgaged to the Development Bank of the 1983 dismissing the complaint, declaring therein,
Philippines (DBP) as security for their as valid the extrajudicial foreclosure sale of the
P22,400.00 loan, seek the reversal of the mortgaged property in favor of the DBP as
decision of the Court of Appeals 1 dated June 5, highest bidder in the public auction sale held on
1987 affirming the dismissal of their complaint August 6, 1979, and its subsequent sale by DBP
filed against the Development Bank of the to Francisco Peria as well as the real estate
Philippines, Laoag City Branch, Philippine mortgage constituted thereon in favor of PNB
National Bank, Vigan Branch, Ilocos Sur, Vigan as security for the P115,000.00 loan of
Francisco Peria and the Register of Deeds of Francisco Peria.
Ilocos Sur, for annulment of sale, mortgage, and
cancellation of transfer certificates of title. The Court of Appeals affirmed the decision of the
RTC of Vigan, Ilocos Sur on June 20, 1987.
Records show that Lot No. 2-B was acquired by
the DBP as the highest bidder at a public auction The motion for reconsideration having been
sale on August 6, 1979 after it was extrajudicially denied 3 on January 19, 1988, petitioners filed
foreclosed by the DBP in accordance with Act the instant petition for review on certiorari with
No. 3135, as amended by Act No. 4118, for this Court. Petitioners seek to annul the
failure of petitioners to pay their mortgage extrajudicial foreclosure sale of the mortgaged
indebtedness. A certificate of sale was property on August 6, 1979 in favor of the
subsequently issued by the Provincial Sheriff of Development Bank of the Philippines (DBP) on
Ilocos Sur on the same day and the same was the ground that it was conducted by the
registered on September 28, 1979 in the Office Provincial Sheriff of Ilocos Sur without first
of the Register of Deeds of Ilocos Sur. Earlier, or effecting a levy on said property before selling
on September 26, 1979, petitioners executed a the same at the public auction sale. Petitioners
Deed of Sale in favor of DBP which was likewise thus maintained that the extrajudicial foreclosure
registered on September 28, 1979. sale being null and void by virtue of lack of a
valid levy, the certificate of sale issued by the
Upon failure of petitioners to redeem the Provincial Sheriff cannot transfer ownership over
property within the one (1) year period which the lot in question to the DBP and consequently
expired on September 28, 1980, petitioners' TCT the deed of sale executed by the DBP in favor of
T-13218 over Lot No. 2-B was cancelled by the Francisco Peria and the real estate mortgage
Register of Deeds and in lieu thereof TCT constituted thereon by the latter in favor of PNB
T-19077 was issued to the DBP upon Vigan Branch are likewise null and void.
The Court finds these contentions untenable. the rule and practice in a judicial foreclosure sale
to an extrajudicial foreclosure sale in a similar
The formalities of a levy, as an essential case considering that the governing provisions
requisite of a valid execution sale under Section of law as mandated by Section 6 of Act No. 3135,
15 of Rule 39 and a valid attachment lien under as amended, specifically Sections 29, 30 and 34
Rule 57 of the Rules of Court, are not basic of Rule 39 of the Rules of Court (previously
requirements before an extrajudicially foreclosed Sections 464, 465 and 466 of the Code of Civil
property can be sold at public auction. At the Procedure) are silent on the matter. The said
outset, distinction should be made of the three ruling cannot, however, be construed as the
different kinds of sales under the law, namely: an legal basis for applying the requirement of a levy
ordinary execution sale, a judicial foreclosure under Section 15 of Rule 39 of the Rules of
sale, and an extrajudicial foreclosure sale, Court before an extrajudicially foreclosed
because a different set of law applies to each property can be sold at public auction when
class of sale mentioned. An ordinary execution none is expressly required under Act No. 3135,
sale is governed by the pertinent provisions of as amended.
Rule 39 of the Rules of Court. Rule 68 of the
Rules of Court applies in cases of judicial Levy, as understood under Section 15, Rule 39
foreclosure sale. On the other hand, Act No. of the Rules of Court in relation to execution of
3135, as amended by Act No. 4118 otherwise money judgments, has been defined by this
known as "An Act to Regulate the Sale of Court as the act whereby a sheriff sets apart or
Property under Special Powers Inserted in or appropriates for the purpose of satisfying the
Annexed to Real Estate Mortgages" applies in command of the writ, a part or the whole of the
cases of extrajudicial foreclosure sale. judgment-debtor's property. 5

The case at bar, as the facts disclose, involves In extrajudicial foreclosure of mortgage, the
an extrajudicial foreclosure sale. The public property sought to be foreclosed need not be
auction sale conducted on August 6, 1979 by the identified or set apart by the sheriff from the
Provincial Sheriff of Ilocos Sur refers to the whole mass of property of the mortgagor for the
"sale" mentioned in Section 1 of Act No. 3135, purpose of satisfying the mortgage indebtedness.
as amended, which was made pursuant to a For, the essence of a contract of mortgage
special power inserted in or attached to a real indebtedness is that a property has been
estate mortgage made as security for the identified or set apart from the mass of the
payment of money or the fulfillment of any other property of the debtor-mortgagor as security for
obligation. It must be noted that in the mortgage the payment of money or the fulfillment of an
contract, petitioners, as mortgagor, had obligation to answer the amount of indebtedness,
appointed private respondent DBP, for the in case of default of payment. By virtue of the
purpose of extrajudicial foreclosure, "as his special power inserted or attached to the
attorney-in-fact to sell the property mortgaged mortgage contract, the mortgagor has
under Act No. 3135, as amended, to sign all authorized the mortgagee-creditor or any other
documents and perform any act requisite and person authorized to act for him to sell said
necessary to accomplish said purpose .... In property in accordance with the formalities
case of foreclosure, the Mortgagor hereby required under Act No. 3135, as amended.
consents to the appointment of the mortgagee or
any of its employees as receiver, without any The Court finds that the formalities prescribed
bond, to take charge of the mortgaged property under Sections 2, 3 and 4 of Act No. 3135, as
at once, and to hold possession of the same ... 4 amended, were substantially complied with in
the instant case. Records show that the notices
There is no justifiable basis, therefore, to apply of sale were posted by the Provincial Sheriff of
by analogy the provisions of Rule 39 of the Rules Ilocos Sur and the same were published in Ilocos
of Court on ordinary execution sale, particularly Times, a newspaper of general circulation in the
Section 15 thereof as well as the jurisprudence province of Ilocos Sur, setting the date of the
under said provision, to an extrajudicial auction sale on August 6, 1979 at 10:00 a.m. in
foreclosure sale conducted under the provisions the Office of the Sheriff, Vigan, Ilocos Sur. 6
of Act No. 3135, as amended. Act No. 3135, as
amended, being a special law governing The nullity of the extrajudicial foreclosure sale in
extrajudicial foreclosure proceedings, the same the instant case is further sought by petitioners
must govern as against the provisions on on the ground that the DBP cannot acquire by
ordinary execution sale under Rule 39 of the purchase the mortgaged property at the public
Rules of Court. auction sale by virtue of par. (2) of Article 1491
and par. (7) of Article 1409 of the Civil Code
In that sense, the case of Aparri vs. Court Of which prohibits agents from acquiring by
Appeals, 13 SCRA 611 (1965), cited by purchase, even at a public or judicial auction
petitioners, must be distinguished from the either in person or through the mediation of
instant case. On the question of what should be another, the property whose administration or
done in the event the highest bid made for the sale may have been entrusted to them unless
property at the extrajudicial foreclosure sale is in the consent of the principal has been given.
excess of the mortgage debt, this Court applied
The contention is erroneous. SO ORDERED.

The prohibition mandated by par. (2) of Article G.R. No. 107282 March 16, 1994
1491 in relation to Article 1409 of the Civil Code
does not apply in the instant case where the sale THE MANILA REMNANT CO., INC., petitioner,
of the property in dispute was made under a vs.
special power inserted in or attached to the real HON. COURT OF APPEALS, AND SPS.
estate mortgage pursuant to Act No. 3135, as OSCAR C. VENTANILLA AND CARMEN
amended. It is a familiar rule of statutory GLORIA DIAZ, respondents.
construction that, as between a specific statute
and general statute, the former must prevail Tabalingcos & Associates Law Office for
since it evinces the legislative intent more clearly petitioner.
than a general statute does. 7 The Civil Code
(R.A. 386) is of general character while Act No. Oscar C. Ventanilla, Jr. and Augusto Garmaitan
3135, as amended, is a special enactment and for private respondents.
therefore the latter must prevail. 8

Under Act No. 3135, as amended, a


mortgagee-creditor is allowed to participate in CRUZ, J.:
the bidding and purchase under the same
conditions as any other bidder, as in the case at The present petition is an offshoot of our
bar, thus: decision in Manila Remnant Co., Inc., (MRCI) v.
Court of Appeals, promulgated on November 22,
Section 5. At any sale, the creditor, trustee, or 1990.
other person authorized to act for the creditor,
may participate in the bidding and purchase That case involved parcels of land in Quezon
under the same conditions as any other bidder, City which were owned by petitioner MRCI and
unless the contrary has been expressly provided became the subject of its agreement with A.U.
in the mortgage or trust deed under which the Valencia and Co., Inc., (AUVCI) by virtue of
sale is made. which the latter was to act as the petitioner's
agent in the development and sale of the
In other words, Section 5 of Act No. 3135, as property. For a stipulated fee, AUVCI was to
amended, creates and is designed to create an convert the lands into a subdivision, manage the
exception to the general rule that a mortgagee or sale of the lots, execute contracts and issue
trustee in a mortgage or deed of trust which official receipts to the lot buyers. At the time of
contains a power of sale on default may not the agreement, the president of both MRCI and
become the purchaser, either directly or through AUVCI was Artemio U. Valencia.
the agency of a third person, at a sale which he
himself makes under the power. Under such an Pursuant to the above agreement, AUVCI
exception, the title of the mortgagee-creditor executed two contracts to sell dated March 3,
over the property cannot be impeached or 1970, covering Lots 1 and 2, Block 17, in favor of
defeated on the ground that the mortgagee spouses Oscar C. Ventanilla and Carmen Gloria
cannot be a purchaser at his own sale. Diaz for the combined contract price of
P66,571.00, payable monthly in ten years. After
Needless to state, the power to foreclose is not ten days and without the knowledge of the
an ordinary agency that contemplates Ventanilla couple, Valencia, as president of
exclusively the representation of the principal by MRCI, resold the same parcels to Carlos
the agent but is primarily an authority conferred Crisostomo, one of his sales agents, without any
upon the mortgagee for the latter's own consideration. Upon orders of Valencia, the
protection. It is an ancillary stipulation supported monthly payments of the Ventanillas were
by the same cause or consideration for the remitted to the MRCI as payments of Crisostomo,
mortgage and forms an essential and for which receipts were issued in his name. The
inseparable part of that bilateral receipts were kept by Valencia without the
agreement. 9 Even in the absence of statutory knowledge of the Ventanillas and Crisostomo.
provision, there is authority to hold that a The Ventanillas continued paying their monthly
mortgagee may purchase at a sale under his installments.
mortgage to protect his own interest or to avoid a
loss to himself by a sale to a third person at a On May 30, 1973, MRCI informed AUVCI that it
price below the mortgage debt. 10 The express was terminating their agreement because of
mandate of Section 5 of Act No. 3135, as discrepancies discovered in the latter's
amended, amply protects the interest of the collections and remittances. On June 6, 1973,
mortgagee in this jurisdiction. Valencia was removed by the board of directors
of MRCI as its president.
WHEREFORE, in view of the foregoing, the
petition is DENIED for lack of merit and the On November 21, 1978, the Ventanilla spouses,
decision of the Court of Appeals dated June 20, having learned of the supposed sale of their lots
1987 is hereby AFFIRMED. No cost. to Crisostomo, commenced an action for specific
performance, annulment of deeds, and damages The Ventanillas accepted the amount of
against Manila Remnant Co., Inc., A.U. Valencia P210,000.00 as damages and attorney's fees
and Co., Inc., and Carlos Crisostomo. It was but opposed the reimbursement offered by MRCI
docketed as Civil Case No. 26411 in the Court of in lieu of the execution of the absolute deed of
First Instance of Quezon City, Branch sale. They contended that the alleged sale to
7-B. Samuel Marquez was void, fraudulent, and in
contempt of court and that no claim of ownership
On November 17, 1980, the trial court rendered over the properties in question had ever been
a decision declaring the contracts to sell in favor made by Marquez.
of the Ventanillas valid and subsisting, and
annulling the contract to sell in favor of On July 19, 1991, Judge Elsie Ligot-Telan
Crisostomo. It ordered the MRCI to execute an issued the following order:
absolute deed of sale in favor of the Ventanillas,
free from all liens and encumbrances. Damages To ensure that there is enough amount to cover
and attorney's fees in the total amount of the value of the lots involved if transfer thereof to
P210,000.00 were also awarded to the plaintiff may no longer be effected, pending
Ventanillas for which the MRCI, AUVCI, and litigation of said issue, the garnishment made by
Crisostomo were held solidarily liable. the Sheriff upon the bank account of Manila
Remnant may be lifted only upon the deposit to
The lower court ruled further that if for any the Court of the amount of P500,000.00 in cash.
reason the transfer of the lots could not be
effected, the defendants would be solidarily MRCI then filed a manifestation and motion for
liable to the Ventanillas for reimbursement of the reconsideration praying that it be ordered to
sum of P73,122.35, representing the amount reimburse the Ventanillas in the amount of
paid for the two lots, and legal interest thereon P263,074.10 and that the garnishment of its
from March 1970, plus the decreed damages bank deposit be lifted. This motion was denied
and attorney's fees. Valencia was also held by the trial court in its order dated September 30,
liable to MRCI for moral and exemplary 1991. A second manifestation and motion filed
damages and attorney's fees. by MRCI was denied on December 18, 1991.
The trial court also required MRCI to show cause
From this decision, separate appeals were filed why it should not be cited for contempt for
by Valencia and MRCI. The appellate court, disobedience of its judgment.
however, sustained the trial court in toto.
These orders were questioned by MRCI in a
MRCI then filed before this Court a petition petition for certiorari before the respondent court
for certiorari to review the portion of the decision on the ground that they were issued with grave
of the Court of Appeals upholding the solidary abuse of discretion.
liability of MRCI, AUVCI and Carlos Crisostomo
for the payment of moral and exemplary The Court of Appeals ruled that the contract to
damages and attorney's fees to the Ventanillas. sell in favor of Marquez did not constitute a legal
impediment to the immediate execution of the
On November 22, 1990, this Court affirmed the judgment. Furthermore, the cash bond fixed by
decision by the Court of Appeals and declared the trial court for the lifting of the garnishment
the judgment of the trial court immediately was fair and reasonable because the value of
executory. the lot in question had increased considerably.
The appellate court also set aside the
The Present Case show-cause order and held that the trial court
should have proceeded under Section 10, Rule
On January 25, 1991, the spouses Ventanilla 39 of the Rules of Court and not Section 9
filed with the trial court a motion for the issuance thereof.1
of a writ of execution in Civil Case No. 26411.
The writ was issued on May 3, 1991, and served In the petition now before us, it is submitted that
upon MRCI on May 9, 1991. the trial court and the Court of Appeals
committed certain reversible errors to the
In a manifestation and motion filed by MRCI with prejudice of MRCI.
the trial court on May 24, 1991, the petitioner
alleged that the subject properties could not be The petitioner contends that the trial court may
delivered to the Ventanillas because they had not enforce it garnishment order after the
already been sold to Samuel Marquez on monetary judgment for damages had already
February 7, 1990, while their petition was been satisfied and the amount for
pending in this Court. Nevertheless, MRCI reimbursement had already been deposited with
offered to reimburse the amount paid by the the sheriff. Garnishment as a remedy is intended
respondents, including legal interest plus the to secure the payment of a judgment debt when
aforestated damages. MRCI also prayed that its a well-founded belief exists that the erring party
tender of payment be accepted and all will abscond or deliberately render the execution
garnishments on their accounts lifted. of the judgment nugatory. As there is no such
situation in this case, there is no need for a Second, the petitioner did not invoke the contract
garnishment order. with Marquez during the hearing on the motion
for the issuance of the writ of execution filed by
It is also averred that the trial court gravely the private respondents. It disclosed the contract
abused its discretion when it arbitrarily fixed the only after the writ of execution had been served
amount of the cash bond for the lifting of the upon it.
garnishment order at P500,000.00.
Third, in its manifestation and motion dated
MRCI further maintains that the sale to Samuel December 21, 1990, the petitioner said it was
Marquez was valid and constitutes a legal ready to deliver the titles to the Ventanillas
impediment to the execution of the absolute provided that their counterclaims against private
deed of sale to the Ventanillas. At the time of the respondents were paid or offset first. There was
sale to Marquez, the issue of the validity of the no mention of the contract to sell with Marquez
sale to the Ventanillas had not yet been resolved. on February 7, 1990.
Furthermore, there was no specific injunction
against the petitioner re-selling the property. Fourth, Marquez has not intervened in any of
these proceedings to assert and protect his
Lastly, the petitioner insists that Marquez was a rights to the subject property as an alleged
buyer in good faith and had a right to rely on the purchaser in good faith.
recitals in the certificate of title. The subject
matter of the controversy having passed to an At any rate, even if it be assumed that the
innocent purchaser for value, the respondent contract to sell in favor of Marquez is valid, it
court erred in ordering the execution of the cannot prevail over the final and executory
absolute deed of sale in favor of the Ventanillas. judgment ordering MRCI to execute an absolute
deed of sale in favor of the Ventanillas. No less
For their part, the respondents argue that the importantly, the records do not show that
validity of the sale to them had already been Marquez has already paid the supposed balance
established even while the previous petition was amounting to P616,000.00 of the original price of
still pending resolution. That petition only over P800,000.00.2
questioned the solidary liability of MRCI to the
Ventanillas. The portion of the decision ordering The Court notes that the petitioner stands to
the MRCI to execute an absolute deed of sale in benefit more from the supposed contract with
favor of the Ventanillas became final and Marquez than from the contract with the
executory when the petitioner failed to appeal it Ventanillas with the agreed price of only
to the Supreme Court. There was no need then P66,571.00. Even if it paid the P210,000.00
for an order enjoining the petitioner from damages to the private respondents as decreed
re-selling the property in litigation. by the trial court, the petitioner would still earn
more profit if the Marquez contract were to be
They also point to the unusual lack of interest of sustained.
Marquez in protecting and asserting his right to
the disputed property, a clear indication that the We come now to the order of the trial court
alleged sale to him was merely a ploy of the requiring the posting of the sum of P500,000.00
petitioner to evade the execution of the absolute for the lifting of its garnishment order.
deed of sale in their favor.
While the petitioners have readily complied with
The petition must fail. the order of the trial court for the payment of
damages to the Ventanillas, they have, however,
The validity of the contract to sell in favor of the refused to execute the absolute deed of sale. It
Ventanilla spouses is not disputed by the parties. was for the purpose of ensuring their compliance
Even in the previous petition, the recognition of with this portion of the judgment that the trial
that contract was not assigned as error of either court issued the garnishment order which by its
the trial court or appellate court. The fact that the term could be lifted only upon the filling of a cash
MRCI did not question the legality of the award bond of P500,000.00.
for damages to the Ventanillas also shows that it
even then already acknowledged the validity of The petitioner questions the propriety of this
the contract to sell in favor of the private order on the ground that it has already partially
respondents. complied with the judgment and that it has
always expressed its willingness to reimburse
On top of all this, there are other circumstances the amount paid by the respondents. It says that
that cast suspicion on the validity, not to say the there is no need for a garnishment order
very existence, of the contract with Marquez. because it is willing to reimburse the Ventanillas
in lieu of execution of the absolute deed of sale.
First, the contract to sell in favor of Marquez was
entered into after the lapse of almost ten years The alternative judgment of reimbursement is
from the rendition of the judgment of the trial applicable only if the conveyance of the lots is
court upholding the sale to the Ventanillas. not possible, but it has not been shown that
there is an obstacle to such conveyance. As the
main obligation of the petitioner is to execute the Against the unjustified refusal of the petitioner to
absolute deed of sale in favor of the Ventanillas, accept payment of the balance of the contract
its unjustified refusal to do so warranted the price, the remedy of the respondents is
issuance of the garnishment order. consignation, conformably to the following
provisions of the Civil Code:
Garnishment is a species of attachment for
reaching credits belonging to the judgment Art. 1256. If the creditor to whom tender of
debtor and owing to him from a stranger to the payment has been made refuses without just
litigation.3 It is an attachment by means of which cause to accept it, the debtor shall be released
the plaintiff seeks to subject to his claim property from responsibility by the consignation of the
of the defendant in the hands of a third person or thing or sum due. . .
money owed by such third person or garnishee
to the defendant.4The rules on attachment also Art. 1258. Consignation shall be made by
apply to garnishment proceedings. depositing the things due at the disposal of the
judicial authority, before whom the tender of
A garnishment order shall be lifted if it payment shall be proved, in a proper case, and
established that: the announcement of the consignation in other
cases.
(a) the party whose accounts have been
garnished has posted a counterbond or has The consignation having been made, the
made the requisite cash deposit;5 interested parties shall also be notified thereof.

(b) the order was improperly or irregularly Art. 1260. Once the consignation has been duly
issued6 as where there is no ground for made, the debtor may ask the judge to order the
garnishment7 or the affidavit and/or bond filed cancellation of the obligation.
therefor are defective or insufficient;8
Accordingly, upon consignation by the
(c) the property attached is exempt from Ventanillas of the sum due, the trial court may
execution, hence exempt from preliminary enter judgment canceling the title of the
attachment9 or petitioner over the property and transferring the
same to the respondents. This judgment shall
(d) the judgment is rendered against the have the same force and effect as conveyance
attaching or garnishing creditor.10 duly executed in accordance with the
requirements of the law.
Partial execution of the judgment is not included
in the above enumeration of the legal grounds In sum, we find that:
for the discharge of a garnishment order. Neither
does the petitioner's willingness to reimburse 1. No legal impediment exists to the execution,
render the garnishment order unnecessary. As either by the petitioner or the trial court, of an
for the counterbond, the lower court did not err absolute deed of sale of the subject property in
when it fixed the same at P500,000.00. As favor of the respondent Ventanillas; and
correctly pointed out by the respondent court,
that amount corresponds to the current fair 2. The lower court did not abuse its discretion
market value of the property in litigation and was when it required the posting of a P500,000.00
a reasonable basis for determining the amount cash bond for the lifting of the garnishment
of the counterbond. order.

Regarding the refusal of the petitioner to execute WHEREFORE, the petition is DENIED and the
the absolute deed of sale, Section 10 of Rule 39 challenged decision of the Court of Appeals is
of the Rules of Court reads as follows: AFFIRMED in toto, with costs against the
petitioner. It is so ordered.
Sec. 10. Judgment for specific act; vesting title
— If a judgment directs a party to execute a Davide, Jr., Bellosillo, Quiason and Kapunan, JJ.,
conveyance of land, or to deliver deeds or other concur.
documents, or to perform any other specific act,
and the party fails to comply within the time
specified, the court may direct the act to be done
at the cost of the disobedient party by some G.R. No. L-53998 May 31, 1989
other person appointed by the court and the act
when so done shall have like effect as if done by SPOUSES ENRICO MALONZO and AVELINA
the party. If real or personal property is within the MALONZO, BARBARA BROWN, and
Philippines, the court in lieu of directing a BONIFACIA MONZON, petitioners,
conveyance thereof may enter judgment vs.
divesting the title of any party and vesting it in HON. HERMINIO MARIANO, Judge, CFI,
others and such judgment shall have the force Manila, Br. IV, BANCO FILIPINO SAVINGS
and effect of a conveyance executed in due form AND MORTGAGE BANK and THE CITY
of law. SHERIFF OF MANILA, respondents.
Benjamin B. Bernardino & Associates for mortgagor's title,) Transfer Certificate of Title No.
petitioners. 67992 of the Register of Deeds of Manila.

Bienvenido A. Tan, Jr. for Banco Filipino Savings Among the persons named in the petition as
and Mortgage Bank. "claiming (rights) under" Universal Ventures, Inc.,
were petitioners Avelina Malonzo, Barbara
Brown, and Bonifacia Monzon. 5 The petition
contained a "Notification" addressed to the Clerk
NARVASA, J.: of Court to set the hearing thereon on July 30,
1976 at 9:00 o'clock in the morning; and copies
The principal issue raised in the special civil were served on the Universal Ventures, Inc. and
action of prohibition at bar is whether or not a the persons alleged to be claiming rights under
writ of possession issued by a Court of First it. 6
Instance (Regional Trial Court) in accordance
with Act 3135, to give possession of property After hearings were had on the petition, Judge
sold at an extrajudicial foreclosure sale to the Herminio Mariano issued the order now assailed,
purchaser thereof, may be enforced against under date of September 20, 1979, the
persons other than the mortgagor dispositive portion whereof reads as follows:7

The property in question consists of two (2) WHEREFORE, let the corresponding Writ of
parcels of land and the apartment and Possession be issued directing the Sheriff of
commercial building thereon standing, located at Manila or his duly authorized representative to
R. Magsaysay Boulevard, Sta. Mesa, Manila. A place the herein petitioner in actual possession
mortgage was constituted over this property by of the foreclosed properties described in
its owner then, Universal Ventures, Inc., in favor Transfer Certificate of Title No. 67992 and to
of Banco Filipino Mortgage & Savings Bank, as eject therefrom the herein respondent, its
security for the payment of a loan of officers, agents and other persons claiming
P350,000.00. 1 The mortgage deed authorized under said respondent.
the extra-judicial foreclosure of the property in
the event of default in the repayment of the loan. The writ of possession issued on March 4, 1980
It was later amended to extend to and cover an and on the strength thereof, the Sheriff of Manila
additional and total consolidated loan of attempted to evict the persons in occupancy of
P400,000.00. 2 Universal Ventures, Inc. failed to the property. 8
repay the loan. Consequently, Banco Filipino
caused the extra-judicial foreclosure of the Three of the persons sought to be evicted,
property by the City Sheriff of Manila. The Enrico Malonzo, husband of Avelina Malonzo,
foreclosure sale took place in due course; the Barbara Brown, and Bonifacia Monzon, filed suit
mortgaged property was struck off to the bank, against Banco Filipino and the City Sheriff in the
as highest bidder, and the bank registered the same Court of First Instance of Manila seeking to
sheriff's certificate of sale with the Register of perpetually restrain the enforcement of the writ
Deeds of Manila and on July 27, 1976 obtained a of possession against them, and to recover
certificate of title in its name, numbered 122496, damages resulting from the defendants' attempts
in lieu of that of the mortgagor, which was to enforce it. 9 The action was docketed as Civil
accordingly cancelled. 3 Case No. 132075. In their complaint, they
alleged that they were occupying their respective
On the same day that title was issued to it, premises in the foreclosed property "by virtue of
Banco Filipino filed a petition for a writ of a verbal lease contract with Universal Ventures,
possession with the Court of First Instance of lnc.," that "there being no ejectment case filed
Manila.4 The petition recited the foregoing facts against them neither were they made a party to
and the additional circumstances that (1) the the Petition for Writ of Possession of
mortgagor, Universal Ventures, Inc., had failed defendant BANCO FILIPINO ..." they were
to redeem the property within the one-year entitled to remain in possession and could not be
period allowed by law, and (2) the mortgagor ousted under the writ of possession; moreover,
was still in possession of the property, as well as "under Presidential Decree No. 20 and Batas
certain other persons claiming rights under said Pambansa Blg. 25, transfer of ownership
mortgagor although said rights had not been whether by virtue of sale or mortgage will not be
recorded in the Register of Deeds, and prayed a ground for ejectment."

Fourteen (14) days later, these same persons —
. . . that after due notice and hearing, ... (the) Enrico Malonzo, Barbara Brown and Bonifacia
Court forthwith issue in accordance with Section Monzon — and Enrico's wife, Avelina Malonzo,
7 of Act No. 3135, as amended by Act No. 4118, instituted a second action, this time, a special
a writ of possession of the property in favor of civil action for prohibition, commenced in this
the petitioner and against the respondent and all Court by petition dated June 6, 1980. Named
persons claiming under it, to vacate the respondents were the same defendants in Civil
premises ... covered by and embraced in (the Case No. 132075 — Banco Filipino and the City
Sheriff of Manila — as well as Judge Mariano,
who had issued the writ of possession. The carry out or consummate the extra-judicial
petition recited substantially the same facts as foreclosure of the mortgage — may be enforced
those set out in the complaint in Civil Case No. by the sheriff against persons other than the
132075, and submitted the same thesis, that mortgagor who are in occupancy of the
they could not be evicted from the foreclosed property. To this question this Court
premises "there being no ejectment case filed has already had occasion to give an affirmative
against them neither were they made a party to answer, grounded particularly on the provisions
the petition for writ of possessioned filed by of Section 35, Rule 39 of the Rules of Court
respondent Bank," and "under Presidential which are inter alia suppletory to act 3135. 14
Decree No. 20 and further reiterated in Batas
Pambansa Bilang 25, transfer of ownership Under section 6 of Act No. 3135 and Sections 29
whether by virtue of sale or mortgage will not be to 31 and Section 35 Rule 39 of the Revised
a ground for ejectment ... . " Rules of Court, in case of an extra-judicial
foreclosure of a real estate mortgage, the
Section 7 of Act 3135, as amended by Act 4118, possession of the property sold may be given to
grants to the purchaser at an extra-judicial the purchaser by the sheriff after the period of
foreclosure sale, an absolute right to possession redemption had expired, unless a third person is
of the property sold during the one-year period of actually holding the property adversely to the
redemption and a fortiori after the lapse of said mortgagor. An ordinary action for the recovery of
period without any redemption being possession is not necessary. There is no law in
made.10 Possession may be obtained under a this jurisdiction whereby the purchaser at a
writ which may be applied for ex parte. Section 7 sheriffs sale of real property is obliged to bring a
reads as follows: separate and independent suit for possession
after the one year period for redemption has
SEC. 7. In any sale made under the provisions of expired and after he has obtained the sheriffs
this Act, the purchaser may petition the Court of final certificate of sale. (Tan Soo Huat vs.
First Instance of the province or place where the Ongwico 63 Phil. 746, 749). The same rule was
property or any part thereof is situated, to give followed in a judicial foreclosure of mortgage and
him possession thereof during the redemption in an execution sale (Rivera vs. Court of First
period, furnishing bond in an amount equivalent Instance of Nueva Ecija, 61 Phil. 201 and
to the use of the property for a period of twelve Republic vs. Nable, L-4979, April 30, 1952). If
months, to indemnify the debtor in case it be the court can issue a writ of possession during
shown that the sale was made without violating the period of redemption there is no reason why
the mortgage or without complying with the it should not also have the same power after the
requirements of this Act. Such petition shall be expiration of that period.15
made under oath and filed in form of an ex
parte motion in the registration or cadastral The petitioners cannot be deemed third parties
proceedings if the property is registered, or in "actually holding the property adversely" to the
special proceedings in the case of property mortgagor. They derive their rights to the
registered under the Mortgage Law or under possession of the property exclusively from the
section one hundred and ninety-four of the mortgagor, in virtue of verbal agreements of
Administrative Code or of any other real property lease. They derive their rights to the possession
encumbered with a mortgage duly registered in of the property exclusively from the mortgagor, in
the office of any register of deeds in accordance virtue of verbal agreements of lease. They were
with any existing law, and in each case the clerk lessees at the time that the property occupied by
of the court shall, upon the filing of such petition, them was mortgaged by their lessor to
collect the fees specified in paragraph eleven of respondent Banco Filipino. And of that mortgage
section one hundred and fourteen of Act they were charged with constructive knowledge
Numbered Four hundred and ninety-six, as upon its registration in the Registry of Property, if
amended by Act Numbered Twenty-eight they did not indeed, actually know of it. The right
hundred and sixty-six, and the court shall, upon pertaining to them in this situation was that of
approval of the bond, order that a writ of being notified of the application for a writ of
possession issue, addressed to the sheriff of the possession and of being accorded an
province in which the property is situated, who opportunity at a hearing to oppose the same, as
shall execute said order immediately. by showing that they were "actually holding the
property adversely" to the mortgagor. That right
There being no dispute about the fact that no was duly accorded to them. They were served
redemption had been made within one (1) year with copies of the motion or petition for issuance
from registration of the extrajudicial foreclosure of the writ of possession and had ample
sale, there can be no question about the opportunity to oppose the same, to persuade the
absolute right of Banco Filipino, as purchaser, to Court that the writ should not issue or be
a writ of possession, 11 or stated otherwise, the executed against them. The proceedings
ministerial duty of the Court to issue the showed that, by their own assertions, they were
writ, 12 upon mere motion, without need of not holding the property adversely to the
instituting a separate action for the mortgagor, but were exercising rights under,
13
purpose . The question is whether or not that derived from, said mortgagor, who was their
writ of possession which — is the final process to lessor. Upon the cessation of their lessor's rights
over the property, their own also ceased. The QUISUMBING, J.:
writ of possession was therefore properly
enforceable against them. This petition for certiorari and prohibition under
Rule 65 of the Rules of Court seeks the reversal
The situation is not significantly different from of the Resolution1dated August 16, 2006 of the
that contemplated by Section 49 (b) of Rule 39, Court of Appeals in CA-G.R. SP No. 90547
declaring a final and executory judgment or which denied the Application for a Writ of
order conclusive and hence enforceable not only Preliminary Prohibitory Injunction2 filed by
against the parties but also "their successors in petitioner.
interest by title subsequent to the
commencement of the action or special Challenged as well is the Order3 dated August
proceeding." Pursuant to this provision, a 17, 2006 of the Regional Trial Court (RTC) of
judgment in personam directing a party to deliver Naga City, Branch 26 in Civil Case No. RTC
possession of property to another is binding not 2005-0030 for unlawful detainer which granted
only against the former but also against his respondents’ Motion to Issue Writ of
successors in interest by title subsequent to the Execution4 filed on August 16, 2005 and denied
commencement of the action, i.e., those whose petitioner’s Motion for Inhibition5 filed on June 27,
possessory rights are derived from him, 16 e.g., 2005. Concomitantly, the processes issued to
lessees, possessors by tolerance, assignees. As enforce said Order are equally assailed, namely:
regards the latter, it is not required that a the Writ of Execution Pending Appeal6 dated
separate action be instituted against them to August 22, 2006; the Notice to Vacate7 dated
litigate the issue of possession; due process is August 23, 2006; and the Notice of
satisfied by holding a hearing, with notice to Garnishment8 dated August 23, 2006.
them, on the nature of their possession, and
thereafter denying or acceding to the The facts as culled from the rollo of this petition
enforcement of a writ of possession against and from the averments of the parties to this
them as the findings at said hearing shall petition are as follows:
warrant. 17
Macario A. Mariano and Jose A. Gimenez were
WHEREFORE, the petition is DISMISSED for the registered owners of a 229,301-square meter
lack of merit, and the case is remanded to the land covered by Transfer Certificate of Title (TCT)
Court a quo with instructions to forthwith issue in No. 6719 located in Naga City. The land was
favor of respondent bank an alias writ of subdivided into several lots and sold as part of
possession enforceable against the petitioners City Heights Subdivision (CHS).
or their successors in interest, and all other
persons claiming under, or not otherwise actually In a Letter10 dated July 3, 1954, the officers of
holding the property adversely to, the mortgagor, CHS offered to construct the Naga City Hall on a
Universal Ventures, Inc. Costs against two (2)-hectare lot within the premises of the
petitioners. subdivision. Said lot was to be designated as an
open space for public purpose and donated to
SO ORDERED. petitioner in accordance with the rules and
regulations of the National Urban Planning
G.R. No. 174042 July 9, 2008 Commission. By Resolution No. 7511 dated July
12, 1954, the Municipal Board of Naga City
CITY OF NAGA, as represented by Mayor (Municipal Board) asked CHS to increase the
Jesse M. Robredo, Petitioner, area of the land to four (4) hectares. Accordingly,
vs. CHS amended its offer to five (5) hectares.
HON. ELVI JOHN S. ASUNCION, as ponente
and chairman, HON. JUSTICES JOSE C. On August 11, 1954, the Municipal Board
MENDOZA and ARTURO G. TAYAG, as adopted Resolution No. 8912 accepting CHS’
members, 12th DIVISION, COURT OF amended offer. Mariano and Gimenez thereafter
APPEALS, HON. JUDGE FILEMON delivered possession of the lots described as
MONTENEGRO, Presiding Judge, Regional Blocks 25 and 26 to the City Government of
Trial Court, Branch 26, Naga City; ATTY. Naga (city government). Eventually, the contract
JESUS MAMPO, Clerk of Court, RTC, Branch for the construction of the city hall was awarded
26, Naga City, SHERIFF JORGE B. LOPEZ, by the Bureau of Public Works through public
RTC, Branch 26, Naga City, THE HEIRS OF bidding to Francisco O. Sabaria, a local
JOSE MARIANO and HELEN S. MARIANO contractor. This prompted Mariano and Gimenez
represented by DANILO DAVID S. MARIANO, to demand the return of the parcels of land from
MARY THERESE IRENE S. MARIANO, MA. petitioner. On assurance, however, of then Naga
CATALINA SOPHIA S. MARIANO, JOSE City Mayor Monico Imperial that petitioner will
MARIO S. MARIANO, MA. LEONOR S. buy the lots instead, Mariano and Gimenez
MARIANO, MACARIO S. MARIANO and allowed the city government to continue in
ERLINDA possession of the land.
MARIANO-VILLANUEVA, Respondents.
On September 17, 1959, Mariano wrote a
DECISION letter13 to Mayor Imperial inquiring on the status
of the latter’s proposal for the city government to grave and irreparable injury, petitioner’s prayer
buy the lots instead. Then, through a for issuance of a writ of preliminary injunction is
note14 dated May 14, 1968, Mariano directed hereby DENIED. Petitioner had already filed its
Atty. Eusebio Lopez, Jr., CHS’ General Manager, Memorandum. Hence, the private respondents
to disregard the proposed donation of lots and are given fifteen (15) days from notice within
insist on Mayor Imperial’s offer for the city which to submit their Memorandum.
government to purchase them.
SO ORDERED.21
On December 2, 1971, Macario A. Mariano died.
Meanwhile, the city government continued in On August 17, 2006, the RTC issued the
possession of the lots, and constructed the Naga assailed Order, thus:
City Hall on Block 25 and the public market on
Block 26. It also conveyed to other government WHEREFORE, let the corresponding Writ of
offices15 portions of the land which at present, Execution Pending Appeal be issued in this case
house the National Bureau of Investigation (NBI), immediately pursuant to Sec. 21, Rule 70.
Land Transportation Office, and Hall of Justice, However, in view of the MANIFESTATION of
among others. plaintiffs dated October 13, 2005 that they will
not take possession of the land and building
In a Letter16 dated September 3, 2003, Danilo D. where the City Hall, Hall of Justice and National
Mariano, as administrator and representative of Bureau of Investigation are located while this
the heirs of Macario A. Mariano, demanded from case is still pending before the Court of Appeals,
petitioner the return of Blocks 25 and 26 to CHS. this writ of execution shall be subject to the
Alas, to no avail. above-cited exception.

Thus, on February 12, 2004, respondent filed a The Sangguniang [Panlungsod] of Naga City is
Complaint17 for unlawful detainer against hereby directed to immediately appropriate the
petitioner before the Municipal Trial Court (MTC) necessary amount of [₱]2,500,000.00 per month
of Naga City, Branch 1. In a Decision18 dated representing the unpaid rentals reckoned from
February 14, 2005 of the MTC in Civil Case No. November 30, 2003 up to the present from its
12334, the MTC dismissed the case for lack of UNAPPROPRIATED FUNDS to satisfy the claim
jurisdiction. It ruled that the city’s claim of of the plaintiffs, subject to the existing
ownership over the lots posed an issue not accounting and auditing rules and regulations.
cognizable in an unlawful detainer case.
SO ORDERED.22
On appeal, the RTC reversed the court a quo by
Decision19 dated June 20, 2005 in Civil Case No. Consequently, Clerk of Court Atty. Jesus Mampo
RTC 2005-0030. It directed petitioner to issued a writ of execution pending appeal.
surrender physical possession of the lots to Sheriff Jorge B. Lopez on the other hand, served
respondents with forfeiture of all the a notice to vacate on respondents, and a notice
improvements, and to pay ₱2,500,000.00 of garnishment on Land Bank, Naga City
monthly as reasonable compensation for the use Branch.
and occupation of the land; ₱587,159.60 as
attorney’s fees; and the costs of suit. Hence, this petition for certiorari and prohibition.

On June 27, 2005, petitioner filed a Motion for On August 28, 2006, we issued a Temporary
Inhibition against Presiding RTC Judge Filemon Restraining Order23 to maintain the status
B. Montenegro for alleged bias and partiality. quo pending resolution of the petition.
Then, petitioner moved for reconsideration/new
trial of the June 20, 2005 Decision. On July 15, Petitioner raises the following issues for our
2005, the RTC denied both motions. consideration:

On July 22, 2005, petitioner filed a Petition for I.


Review with Very Urgent Motion/Application for
Temporary Restraining Order and Writ of WHETHER OR NOT PETITIONER
Preliminary Prohibitory Injunction20 with the CAN VALIDLY AVAIL OF THE
Court of Appeals. Respondents thereafter filed a EXTRAORDINARY WRITS OF
Motion to Issue Writ of Execution. CERTIORARI AND PROHIBITION
IN ASSAILING THE
On October 13, 2005, respondents manifested CHALLENGED RESOLUTION,
that they will not seek execution against the NBI, ORDERS AND NOTICES.
City Hall and Hall of Justice in case the writ of
preliminary injunction is denied. On August 16, II.
2006, the appellate court issued the challenged
Resolution, the decretal portion of which reads: WHETHER OR NOT PETITIONER
IS GUILTY OF
WHEREFORE, based on the foregoing premises, FORUM-SHOPPING.
and in the absence of any immediate threat of
III. WHETHER OR NOT PUBLIC
RESPONDENTS JUDGE
WHETHER OR NOT PUBLIC FILEMON B. MONTENEGRO,
RESPONDENT JUDGE ATTY. JESUS MAMPO AND
COMMITTED GRAVE ABUSE OF SHERIFF JORGE B. LOPEZ
DISCRETION IN ALLOWING THE EXCEEDED THEIR AUTHORITY
IMMEDIATE EXECUTION OF ITS AND/OR COMMITTED GRAVE
JUDGMENT ABUSE OF DISCRETION IN
NOTWITHSTANDING THE CAUSING THE GARNISHMENT
CATASTROPHIC OF PETITIONER’S ACCOUNT
CONSEQUENCES IT WILL BEAR WITH LAND BANK OF THE
ON THE DELIVERY OF BASIC PHILIPPINES.
GOVERNMENTAL SERVICES TO
THE GOOD CITIZENS OF NAGA VIII.
CITY; THE INCONCLUSIVENESS
OF PRIVATE RESPONDENTS’ WHETHER OR NOT THE
TITLE AND CLAIM OF HONORABLE COURT OF
POSSESSION OVER THE APPEALS COMMITTED GRAVE
SUBJECT PROPERTY; AND THE ABUSE OF DISCRETION
IMPUTATION OF BIAS AND AMOUNTING TO LACK OR
PARTIALITY AGAINST PUBLIC EXCESS OF JURISDICTION IN
RESPONDENT JUDGE. DENYING THE PETITIONER’S
APPLICATION FOR WRIT OF
IV. PRELIMINARY PROHIBITORY
INJUNCTION.24
WHETHER OR NOT PUBLIC
RESPONDENTS JUDGE The pertinent issues, in our view, are as follows:
FILEMON B. MONTENEGRO, (1) whether petitioner availed of the proper
ATTY. JESUS MAMPO AND remedy to contest the disputed order, resolution,
SHERIFF JORGE B. LOPEZ and notices; (2) whether petitioner was guilty of
EXCEEDED THEIR AUTHORITY forum-shopping in filing the instant petition
AND/OR COMMITTED GRAVE pending the petition for review before the Court
ABUSE OF DISCRETION IN of Appeals; (3) whether RTC Judge Montenegro
TRYING TO EVICT PETITIONER committed grave abuse of discretion in granting
AND VARIOUS DEPARTMENTS execution pending appeal; and (4) whether the
AND OFFICES THEREOF FROM Court of Appeals committed grave abuse of
THE SUBJECT PROPERTY. discretion in denying petitioner’s application for a
writ of preliminary injunction.
V.
Petitioner City of Naga ascribes grave abuse of
WHETHER OR NOT PUBLIC discretion on Judge Montenegro for allowing
RESPONDENT JUDGE FILEMON execution pending appeal and for refusing to
B. MONTENEGRO EXCEEDED inhibit himself from the proceedings. It contends
HIS JURISDICTION AND/OR that its claim of ownership over the lots
COMMITTED GRAVE ABUSE OF behooved the RTC of jurisdiction to try the illegal
DISCRETION IN DIRECTING detainer case. Granting arguendo that the RTC
PETITIONER TO PAY PRIVATE had jurisdiction and its judgment was
RESPONDENTS MONTHLY immediately executory, petitioner insists that the
RENTALS OF ABOUT circumstances in the case at bar warranted
[₱]81,500,000.00. against it. For one, the people of Naga would be
deprived of access to basic social services even
VI. before respondents’ right to possess the land
has been conclusively established. The City of
WHETHER OR NOT THE ORDER Naga assails the validity of the order of
DIRECTING PETITIONER TO execution issued by the court inasmuch as it
PAY PRIVATE RESPONDENT excluded the NBI, City Hall and Hall of Justice
MONTHLY RENTALS from its coverage; ordered garnishment of
[DISREGARDED] THE government funds; and directed
HONORABLE COURT’S the Sangguniang Panlungsod to appropriate
ADMINISTRATIVE CIRCULAR NO. money in violation of the Supreme Court
10-2000 AND THE LAW AND THE Administrative Circular No. 10-2000.25 Petitioner
JURISPRUDENCE CITED likewise claims that Atty. Jesus Mampo and
THEREIN. Sheriff Jorge B. Lopez acted with manifest
abuse when they issued the writ of execution
VII. pending appeal, and served notice to vacate and
notice of garnishment, respectively.
Finally, petitioner imputes grave abuse of appeal may be taken from an interlocutory order
discretion on the Court of Appeals for denying its and an order of execution, respectively. An
application for a writ of preliminary injunction. interlocutory order is one which does not dispose
The appellate tribunal struck down petitioner’s of the case completely but leaves something to
application pending resolution by the RTC of be decided upon.31 Such is the nature of an
respondent’s motion to execute its June 20, order granting or denying an application for
2005 Decision. Also, it found no merit in preliminary injunction; hence, not
petitioner’s claim that grave and irreparable appealable.32 The proper remedy, as petitioner
injury will result to the City of Naga by the did in this case, is to file a petition for certiorari
implementation of said decision. Nevertheless, it and/or prohibition under Rule 65.
excused the NBI, Naga City Hall and Hall of
Justice from execution. Nor can we agree that petitioner was guilty of
forum-shopping. Under the Same Objective
For their part, respondents (Marianos) call for Standard enunciated in the case of First
the dismissal of the instant petition on the Philippine International Bank v. Court of
ground of forum-shopping. They aver that the Appeals,33 the filing by a party of two apparently
petition for review in the Court of Appeals and different actions, but with the same objective,
the present petition are but similar attempts to constitutes forum- shopping.34 Here, the special
stop the immediate enforcement of the June 20, civil action of certiorari before us is an
2005 RTC Decision. They add that the court a independent action. The ultimate purpose of
quo merely acted in obedience to the provisions such action is to keep the inferior tribunal within
of Section 2126 of Rule 70 of the Rules of Court the bounds of its jurisdiction or relieve parties
when it ordered execution. Thus, the writ of from arbitrary acts of the court.35 In contrast, the
execution, notice to vacate and notice of petition for review before the Court of Appeals
garnishment are also valid as incidents of the under Rule 42 involves an evaluation of the case
August 17, 2006 RTC Order. Respondents on the merits. Clearly, petitioner did not commit
agree with the appellate court that there is no forum-shopping.
immediate threat of grave and irreparable injury
to petitioner. In any case, the Marianos suggest Now, we shall proceed to resolve the
that petitioner just seek reparation for damages contentious issues in this case.
should the appellate court reverse the RTC.
Lastly, respondents allege that the court a Section 21, Rule 70 of the Rules of Court is
quo correctly ruled on the merits despite its pertinent:
finding that the MTC erroneously dismissed the
unlawful detainer case for lack of jurisdiction. SEC. 21. Immediate execution on appeal to
The MTC based its decision on the affidavits and Court of Appeals or Supreme Court. – The
position papers submitted by the parties. judgment of the Regional Trial Court against the
defendant shall be immediately executory,
The petition is partly meritorious. without prejudice to a further appeal that may be
taken therefrom.
In the interest of justice, we decided to give due
course to the petition for certiorari and Thus, the judgment of the RTC against the
prohibition concerning the August 17, 2006 defendant in an ejectment case is immediately
Order of the RTC. As a rule, petitions for the executory. Unlike Section 19,36 Rule 70 of the
issuance of such extraordinary writs against an Rules, Section 21 does not provide a means to
RTC should be filed with the Court of Appeals. A prevent execution; hence, the court’s duty to
direct invocation of this Court’s original order such execution is practically
jurisdiction to issue these writs should be 37
ministerial. Section 21 of Rule 70 presupposes
allowed only when there are special and that the defendant in a forcible entry or unlawful
important reasons therefor, clearly and detainer case is unsatisfied with the judgment of
specifically set out in the petition.27 Under the the RTC and decides to appeal to a superior
present circumstance however, we agree to take court. It authorizes the RTC to immediately issue
cognizance of this case as an exception to the a writ of execution without prejudice to the
principle of hierarchy of courts.28 For while it has appeal taking its due course. Nevertheless, it
been held by this Court that a motion for should be stressed that the appellate court may
reconsideration is a condition sine qua non for stay the said writ should circumstances so
the grant of a writ of certiorari, nevertheless such require.38
requirement may be dispensed with where there
is an urgent necessity for the resolution of the Petitioner herein invokes seasonably the
question and any further delay would prejudice exceptions to immediate execution of judgments
the interests of the Government.29 Such is the in ejectment cases cited in Hualam Construction
situation in the case at bar. and Dev’t. Corp. v. Court of
Appeals39 and Laurel v. Abalos,40 thus:
Thus, we find no merit in respondents’
contention that petitioner erred in its choice of Where supervening events (occurring
remedy before this Court. Under Section 1(c) subsequent to the judgment) bring about a
and (f),30 Rule 41 of the Rules of Court, no material change in the situation of the parties
which makes the execution inequitable, or where discretion when it denied petitioner’s application
there is no compelling urgency for the execution for a writ of preliminary injunction because of the
because it is not justified by the prevailing pendency of respondents’ Motion to Issue Writ of
circumstances, the court may stay immediate Execution with the RTC, but ruled on the merits
execution of the judgment.41 of the application at the same time. At most, the
appellate court should have deferred resolution
Noteworthy, the foregoing exceptions were on the application until the RTC has decided on
made in reference to Section 8,42 Rule 70 of the the motion for execution pending appeal.
old Rules of Court which has been substantially Moreover, nothing in the rules allow a qualified
reproduced as Section 19, Rule 70 of the 1997 execution pending appeal that would have
Rules of Civil Procedure. Therefore, even if the justified the exclusion of the NBI, City Hall and
appealing defendant was not able to file a Hall of Justice from the effects of the writ.
supersedeas bond, and make periodic deposits
to the appellate court, immediate execution of In any case, we have ploughed through the
the MTC decision is not proper where the records of this case and we are convinced of the
circumstances of the case fall under any of the pressing need for a writ of preliminary injunction.
above-mentioned exceptions. Yet, Section 21, Be it noted that for a writ of preliminary injunction
Rule 70 of the Rules does not provide for a to be issued, the Rules of Court do not require
procedure to avert immediate execution of an that the act complained of be in clear violation of
RTC decision. the rights of the applicant. Indeed, what the
Rules require is that the act complained of
This is not to say that the losing defendant in an be probably in violation of the rights of the
ejectment case is without recourse to avoid applicant. Under the Rules, probability is enough
immediate execution of the RTC decision. The basis for injunction to issue as a provisional
defendant may, as in this case, appeal said remedy. This situation is different from injunction
judgment to the Court of Appeals and therein as a main action where one needs to
apply for a writ of preliminary injunction. Thus, as establish absolute certainty as basis for a final
held in Benedicto v. Court of Appeals,43 even if and permanent injunction.491avvphi1
RTC judgments in unlawful detainer cases are
immediately executory, preliminary injunction Thus, we have stressed the foregoing distinction
may still be granted.44 to justify the issuance of a writ of preliminary
injunction in actions for unlawful detainer:
In the present case, the Court of Appeals denied
petitioner’s application for a writ of preliminary ...Where the action, therefore, is one of illegal
injunction because the RTC has yet to rule on detainer, as distinguished from one of forcible
respondents’ Motion to Issue Writ of Execution. entry, and the right of the plaintiff to recover the
Significantly, however, it also made a finding that premises is seriously placed in issue in a proper
said application was without merit. On this score, judicial proceeding, it is more equitable and just
we are unable to agree with the appellate court. and less productive of confusion and
disturbance of physical possession, with all its
A writ of preliminary injunction is available to concomitant inconvenience and expenses. For
prevent threatened or continuous irremediable the Court in which the issue of legal possession,
injury to parties before their claims can be whether involving ownership or not, is brought to
thoroughly studied and adjudicated. Its sole restrain, should a petition for preliminary
objective is to preserve the status quo until the injunction be filed with it, the effects of any order
merits of the case can be heard fully.45 Status or decision in the unlawful detainer case in order
quo is the last actual, peaceable and to await the final judgment in the more
uncontested situation which precedes a substantive case involving legal possession or
controversy.46 ownership. It is only where there has been
forcible entry that as a matter of public policy the
As a rule, the issuance of a preliminary injunction right to physical possession should be
rests entirely within the discretion of the court immediately set at rest in favor of the prior
taking cognizance of the case and will not be possession regardless of the fact that the other
interfered with, except in cases of manifest party might ultimately be found to have superior
abuse.47 Grave abuse of discretion implies a claim to the premises involved, thereby to
capricious and whimsical exercise of judgment discourage any attempt to recover possession
tantamount to lack or excess of jurisdiction. The thru force, strategy or stealth and without
exercise of power must have been done in an resorting to the courts.50
arbitrary or a despotic manner by reason of
passion or personal hostility. It must have been Needless to reiterate, grave and irreparable
so patent and gross as to amount to an evasion injury will be inflicted on the City of Naga by the
of positive duty or a virtual refusal to perform the immediate execution of the June 20, 2005 RTC
duty enjoined or to act at all in contemplation of Decision. Foremost, as pointed out by petitioner,
law.48 the people of Naga would be deprived of access
to basic social services. It should not be
Considering the circumstances in this case, we forgotten that the land subject of the ejectment
find that the Court of Appeals abused its case houses government offices which perform
important functions vital to the orderly operation is REVERSEDand SET ASIDE. The Court of
of the local government. As regards the Appeals is ORDERED to issue a writ of
garnishment of Naga City’s account with the preliminary injunction to restrain the execution of
Land Bank, the rule is and has always been that the Decision dated June 20, 2005 of the
all government funds deposited in official Regional Trial Court, Branch 26, Naga City
depositary of the Philippine Government by any pending resolution of the petition for review
of its agencies or instrumentalities, whether by before it;
general or special deposit, remain government
funds. Hence, they may not be subject to (B) The Writ of Execution Pending Appeal dated
garnishment or levy, in the absence of August 22, 2006, Notice to Vacate dated August
corresponding appropriation as required by 23, 2006, and the Notice of Garnishment dated
law.51 For this reason, we hold that the Notice of August 23, 2006 are SET ASIDE.
Garnishment dated August 23, 2006 is void.
Lastly, the Court of Appeals is
Anent Judge Montenegro’s refusal to recuse hereby ENJOINED to resolve the pending
himself from the proceedings, we find no grave petition for review before it, CA-G.R. SP No.
abuse of discretion. We have held time and 90547, without further delay, in a manner not
again that inhibition must be for just and valid inconsistent with this Decision.
causes. The mere imputation of bias and
partiality is not enough ground for judges to SO ORDERED.
inhibit, especially when the charge is without
sufficient basis. This Court has to be shown acts G.R. No. 143312. August 12, 2005
or conduct clearly indicative of arbitrariness or
prejudice before it can brand concerned judges RICARDO S. SILVERIO, JR., ESSES
with the stigma of bias and partiality. Bare DEVELOPMENT CORPORATION, and
allegations of partiality will not suffice "in the TRI-STAR FARMS, INC.,Petitioners,
absence of clear and convincing evidence to vs.
overcome the presumption that the judge will FILIPINO BUSINESS CONSULTANTS,
undertake his noble role to dispense justice INC., Respondent.
according to law and evidence without fear and
favor.52 The Resolution53 of the Court En Banc DECISION
dated June 27, 2006 which dismissed the
complaint filed by Mayor Jesse Robredo against CARPIO, J.:
Judge Montenegro served to negate petitioner’s
allegations. Nevertheless, when the ground The Case
sought for the judge’s inhibition is not among
those enumerated in Section 1,54 Rule 137 of the Before us is a petition for review of the Order of
Rules of Court, a judge may, in the exercise of the Regional Trial Court, Fourth Judicial Region,
his sound discretion, disqualify himself from Branch XI, Balayan, Batangas ("RTC Balayan")
sitting in a case, for just or valid reasons. dated 26 May 2000.1 The order suspended the
enforcement of the writ of possession that the
Similarly, in our view, the charge of grave abuse RTC Balayan had previously issued in favor of
of discretion against Clerk of Court Atty. Jesus petitioners Ricardo S. Silverio, Jr. ("Silverio, Jr."),
Mampo and Sheriff Jorge B. Lopez cannot Esses Development Corporation ("Esses") and
prosper. When Judge Montenegro issued the Tri-Star Farms, Inc. ("Tri-Star"). Filipino
order directing the issuance of a writ of execution, Business Consultants, Inc. ("FBCI"), now Filipino
Atty. Jesus Mampo was left with no choice but to Vastland Company, Inc. sought to suspend the
issue the writ. Such was his ministerial duty in writ of possession on the ground of a
accordance with Section 4,55 Rule 136 of the supervening event. FBCI claimed that it had just
Rules of Court.56 In the same vein, when the writ acquired all the stocks of Esses and Tri-Star. As
was placed in the hands of Sheriff Lopez, it was the new owner of Esses and Tri-Star, FBCI
his duty, in the absence of instructions to the asserted its right of possession to the disputed
contrary, to proceed with reasonable celerity and property. Petitioners Silverio, Jr., Esses and
promptness to implement it in accordance with Tri-Star question the RTC Balayan’s suspension
its mandate. It is elementary that a sheriff’s duty of the writ of possession and its jurisdiction to
in the execution of the writ is purely ministerial; hold hearings on the supervening event.
he is to execute the order of the court strictly to
the letter. He has no discretion whether to The Antecedent Facts
execute the judgment or not. The rule may
appear harsh, but such is the rule we have to The parties are wrangling over possession of a
observe.57 62 hectare-land in Calatagan, Batangas
("Calatagan Property"). Silverio, Jr. is the
WHEREFORE, the instant petition is PARTLY President of Esses and Tri-Star. Esses and
GRANTED, and it is hereby ORDERED that: Tri-Star were in possession of the Calatagan
Property, covered by TCT No. T-55200 and
(A) The Resolution dated August 16, 2006 of the registered in the names of Esses and Tri-Star.
Court of Appeals in CA-G.R. SP No. 90547
On 22 September 1995, Esses and Tri-Star Silverio, Jr., Esses and Tri-Star had no duty to
executed a Deed of Sale with Assumption of reimburse FBCI. The RTC Balayan pointed out
Mortgage in favor of FBCI. Esses and Tri-Star that FBCI offered no evidence to substantiate its
failed to redeem the Calatagan Property. claim for expenses. The 9 November 1999 Order
also restored possession of the Calatagan
On 27 May 1997, FBCI filed a Petition for Property to Silverio, Jr., Esses and Tri-Star
Consolidation of Title of the Calatagan Property pursuant to Rule 39, Section 5 of the 1997 Rules
with the RTC Balayan.2 of Civil Procedure. This provision provides for
restitution in case of reversal of an executed
FBCI obtained a judgment by default. judgment. On 7 January 2000, the RTC Balayan
Subsequently, TCT No. T-55200 in the names of denied FBCI’s motion for reconsideration.
Esses and Tri-Star was cancelled and TCT No.
T-77656 was issued in FBCI’s name. On 20 April On 8 May 2000, the RTC Balayan issued the writ
1998, the RTC Balayan issued a writ of of possession to Silverio, Jr., Esses and Tri-Star.
possession in FBCI’s favor. FBCI then entered
the Calatagan Property. On 12 May 2000, FBCI filed with the RTC
Balayan a Manifestation and Motion to Recall
When Silverio, Jr., Esses and Tri-Star learned of Writ of Possession on the ground that the
the judgment by default and writ of possession, decision of the Court of Appeals in CA-G.R. SP
they filed a petition for relief from judgment and No. 56924 was not yet final and FBCI’s motion
the recall of the writ of possession. Silverio, Jr., for reconsideration was still pending. The RTC
Esses and Tri-Star alleged that the judgment by Balayan set the hearing on 26 May 2000.
default is void because the RTC Balayan did not
acquire jurisdiction over them. FBCI allegedly On 23 May 2000, FBCI filed with the RTC
forged the service of summons on them. Balayan an Urgent Ex-Parte Motion to Suspend
Enforcement of Writ of Possession. FBCI
On 28 December 1998, the RTC Balayan pointed out that it is now the new owner of Esses
nullified and set aside the judgment by default and Tri-Star having purchased the "substantial
and the writ of possession. The RTC Balayan and controlling shares of stocks"4 of the two
found that the summons and the complaint were corporations.
not served on Silverio, Jr., Esses and Tri-Star.
The RTC Balayan directed the service of On the 26 May 2000 hearing, FBCI reiterated its
summons anew on Silverio, Jr., Esses and claim of a supervening event, its ownership of
Tri-Star. Esses and Tri-Star. FBCI informed the RTC
Balayan that a new board of directors for Esses
The RTC Balayan denied FBCI’s motion for and Tri-Star had been convened following the
reconsideration of the order. FBCI then filed a resignation of the members of the board of
petition for certiorari with the Court of Appeals directors. The previous actions of the former
questioning the RTC Balayan’s 28 December board of directors have been abandoned and the
1998 Order.3 On 28 April 2000, the Court of services of Atty. Vicente B. Chuidian, the
Appeals denied FBCI’s petition. The Court of counsel of petitioners Silverio, Jr., Esses and
Appeals also denied FBCI’s motion for Tri-Star, have been terminated.
reconsideration. On 13 August 2001, the
Supreme Court denied FBCI’s petition. On the same day, the RTC Balayan issued the
order suspending the writ of possession it had
On 14 April 1999, the RTC Balayan modified its earlier issued to Silverio, Jr., Esses and Tri-Star.
28 December 1998 Order by upholding FBCI’s The RTC Balayan reasoned that it would violate
possession of the Calatagan Property. The RTC the law on forum shopping if it executed the writ
Balayan ruled that FBCI could not be deprived of while FBCI’s motion for reconsideration of the
possession of the Calatagan Property because Court of Appeals’ decision and urgent motion to
FBCI made substantial improvements on it. suspend the issuance of the writ of possession
Possession could revert to Silverio, Jr., Esses remained pending with the Court of Appeals.
and Tri-Star only if they reimburse FBCI. The The RTC Balayan noted that because of FBCI’s
RTC Balayan gave Silverio, Jr., Esses and strong resistance, Silverio, Jr., Esses and
Tri-Star 15 days to file their responsive Tri-Star have still to take possession of the
pleadings. Calatagan Property. More than ten days had
already passed from the time that the RTC
Silverio, Jr., Esses and Tri-Star moved for the Balayan had issued the writ of possession. FBCI
partial reconsideration of the 14 April 1999 Order. had barricaded the Calatagan Property,
Silverio, Jr., Esses and Tri-Star argued that threatening bloodshed if possession will be
since the judgment by default was nullified, they taken away from it. The RTC Balayan believed
should be restored to their possession of the that if it would not restrain Silverio, Jr., Esses
Calatagan Property. FBCI did not file any and Tri-Star from taking possession of the
opposition to the motion. Calatagan Property, a violent confrontation
between the parties might erupt as reported in
On 9 November 1999, the RTC Balayan the Tempo newspaper in its 26 May 2000 issue.
reversed its 14 April 1999 Order by holding that Without issuing a restraining order, the RTC
Balayan suspended the writ by requesting the involve questions of fact that are still litis
counsel of Silverio, Jr., Esses and Tri-Star to pendentia at the RTC Balayan. And which even
allow the court to study the voluminous records involve an attempt to vary res judicata.
of the case, which are to be presented at the
hearing on 16 June 2000. The hearing would VI
determine the existence of a supervening event.
Contrary to respondent’s claims, that the RTC
On 15 June 2000, the RTC Balayan issued an order of 15 June 2000 has rendered this case
Order cancelling the 16 June 2000 hearing so "moot and academic" – quite on the contrary –
that the Court of Appeals could resolve the issue said order calls upon the Supreme Court to
regarding the existence of a supervening event. decide whether or not, the RTC Balayan may
However, the RTC Balayan declared that the continue to conduct its hearings on suspending
suspension of the writ of possession would be the writ of possession.
lifted on 17 June 2000.
VII
On 8 August 2000, Silverio, Jr., Esses and
Tri-Star filed a complaint for annulment of Respondent’s theory that an order suspending a
contracts with damages with the Regional Trial writ of possession is interlocutory in nature, and
Court of Las Piñas City, Branch 275 ("RTC Las therefore inappealable, is not supported by
Piñas").5 jurisprudence.

Issues VIII

Silverio, Jr., Esses and Tri-Star argue that: Respondent’s views on when suspending a writ
of execution is appropriate – would "make the
I exception as rule." And respondent’s reliance
on Flores vs. CA, et al. is totally misplaced. In
An ex parte motion cannot legally constitute an the Flores case, the party being dispossessed
initiatory basis for the RTC Balayan to conduct was a judgment creditor, who was admitted by
additional hearings in order to validate certain the adverse party to be the owner.
new allegations. Neither can said ex
parte motion be the basis for the suspension of a IX
writ of possession being implemented.
The question of jus possessionis on the
II Calatagan Property is already res judicata while
the question of jus possidendi is still under litis
When the RTC Balayan suspended the writ of pendentia. For that reason, respondent has lost
possession, it was barred from hearing all his legal options in retaining the property
intra-corporate disputes. And though Congress procured under a "faked service" of summons.
has now amended our law on the matter, the
RTC still cannot proceed because of due X
process and res judicata reasons.
Respondents arguments in his 11-06-01 Memo –
III on (a) "forum shopping", (b) "petitioners’ lack of
capacity to sue", (c) "service of summons
A final and executory judgment cannot be already served" (d) "no intra-corporate dispute"
enjoined except by an appropriate petition for and (e) "the relief herein preempted by events" –
relief, a direct attack in another action or a are ratiocinations of miniscule weight, meriting
collateral act in another action. only the slightest comment.6

IV FBCI raises the following issues:

Respondent FBCI is asking for a suspension of 1. Whether the present case has been rendered
the writ of possession while at the same time moot and academic by the Order of the RTC
threatening violence if the writ of possession Balayan dated 15 June 2000 and the filing of an
were to be implemented. The RTC Balayan had action with the Regional Trial Court of Las Piñas
no lawful basis to suspend the writ under these City;
admitted circumstances.
2. Whether the present appeal should be
V dismissed on the ground of forum shopping;

Respondent has not directly answered 3. Whether the RTC Balayan had the authority to
petitioners’ legal theory. The petition is founded suspend enforcement of the writ of possession
on admitted facts upon which relief is sought and to conduct hearings on a new set of facts;
under Rule 45. Respondent has altered these
facts – presenting its so called 4. Whether the present case involves an
"counterstatements of facts and issues" – which intra-corporate controversy;
5. Whether appeal by certiorari under Rule 45 is being moot. Also, the existence of a supervening
the proper remedy under the given facts of the event is another issue that must be resolved
case.7 since the RTC Balayan had instead submitted to
the "higher courts" the resolution of this issue.
The Ruling of the Court
Third, Silverio, Jr., Esses and Tri-Star are not
The petition has merit. guilty of forum shopping for filing another action
against FBCI with the RTC Las Piñas during the
Procedural Issues pendency of this case with the RTC Balayan.
Forum shopping consists of filing multiple suits
Before resolving the threshold issue, which is the involving the same parties for the same cause of
existence of a supervening event, we first action, either simultaneously or successively, to
address the following procedural issues: (1) obtain a favorable judgment.13
whether appeal is the proper remedy against an
order suspending the execution of a writ of The parties and cause of action in the present
possession; (2) whether the issue of possession case before the RTC Balayan and in the case
was mooted by the 15 June 2000 Order of the before the RTC Las Piñas are different. The
RTC Balayan; and (3) whether the filing of a civil present case was filed by FBCI against Silverio,
case with the RTC Las Piñas constitutes forum Jr., Esses and Tri-Star for the consolidation of
shopping. title over the Calatagan Property. On the other
hand, the case before the RTC Las Piñas was
First, interlocutory orders are those that filed by Silverio, Jr., Esses and Tri-Star against
determine incidental matters that do not touch on FBCI and other defendants for the annulment of
the merits of the case or put an end to the contract with damages, tort and culpa
proceedings.8 The proper remedy to question an aquiliana (civil fraud).
improvident interlocutory order is a petition
for certiorari under Rule 65, not Rule 45.9 A In its complaint before the RTC Las Piñas,
petition for review under Rule 45 is the proper Silverio, Jr., Esses and Tri-Star informed the
mode of redress to question final judgments.10 court that there is a pending case with the RTC
Balayan over the Calatagan Property.14 Silverio,
An order staying the execution of the writ of Jr., Esses and Tri-Star made it clear in the
possession is an interlocutory order.11 Clearly, complaint that the case before the RTC Las
this order cannot be appealed. A petition Piñas will focus on the Makati Tuscany property
for certiorari was therefore the correct remedy. and any reference to the Calatagan Property is
Moreover, Silverio, Jr., Esses and Tri-Star "meant to serve only as proof or evidence of the
pointed out that the RTC Balayan acted on plan, system, scheme, habit, etc., lurking behind
an ex-parte motion to suspend the writ of defendants’ interlocking acts constituting
possession, which is a litigious matter, without interlocking tort and interlocking fraud."15 Clearly,
complying with the rules on notice and hearing. FBCI’s claim of forum shopping against Silverio,
Silverio, Jr., Esses and Tri-Star also assail the Jr., Esses and Tri-Star has no basis.
RTC Balayan’s impending move to accept
FBCI’s evidence on its subsequent ownership of No Supervening Event in this Case
Esses and Tri-Star. In effect, Silverio, Jr., Esses
and Tri-Star accuse the RTC Balayan of acting FBCI took possession of the Calatagan Property
without or in excess of jurisdiction or with grave after the RTC Balayan rendered a judgment by
abuse of discretion, which is within the ambit default in FBCI’s favor. The judgment by default
of certiorari. was nullified after the RTC Balayan found out
that the service of summons on Silverio, Jr.,
However, in the exercise of our judicial discretion, Esses and Tri-Star was procured fraudulently.
we will treat the appeal as a petition under Rule The RTC Balayan thus recalled the writ of
65.12 Technical rules must be suspended possession it had issued to FBCI. Silverio, Jr.,
whenever the purposes of justice warrant it, such Esses and Tri-Star were served anew with
as in this case where substantial and important summons. The RTC Balayan restored
issues await resolution. possession of the Calatagan Property to Silverio,
Jr., Esses and Tri-Star as restitution resulting
Second, the RTC Balayan’s 15 June 2000 Order from the annulment of the judgment by default.
lifting the suspension of the writ of possession The order restoring possession of the Calatagan
was issued to correct its action on Property to Silverio, Jr., Esses and Tri-Star has
FBCI’s ex-parte motion, which did not have the attained finality. This case then proceeded to
required notice and hearing. This issue has thus pre-trial.
become a fait accompli. However, while the 15
June 2000 Order is supposed to have mooted FBCI has resisted the enforcement of the writ of
the suspension of the execution of the writ of possession by barricading the Calatagan
possession by lifting the suspension on 17 June Property and threatening violence if its
2000, Silverio, Jr., Esses and Tri-Star claim that possession of the property is taken away from it.
the writ has not been executed in their favor. To avoid bloodshed, as FBCI also claimed that
Thus, the issues in this petition are far from Silverio, Jr. had armed civilians threatening to
shoot FBCI’s representatives,16 the RTC order of restitution placed the parties in the
Balayan momentarily suspended the execution situation prior to the RTC Balayan’s rendition of
of the writ. The RTC Balayan also had to rule on the void judgment by default. Title to the
FBCI’s claim of a supervening event that would Calatagan Property is still in the names of Esses
allegedly make the execution of the writ and Tri-Star. Possession of the Calatagan
absurd,17 as FBCI alleges it now owns the Property must revert to Esses and Tri-Star as
controlling interest in Esses and Tri-Star. The legal owners of the property.
RTC Balayan lifted the suspension of the writ but
it cancelled the hearings on the supervening However, with the reinstitution of the case for
event to give way to the Court of Appeals’ action consolidation of title with the RTC Balayan,
on this issue. The RTC Balayan decided to await possession of the Calatagan Property is now
the appellate court’s resolution because it did not subject to the outcome of the case. Nonetheless,
want to violate the rule against forum shopping. while this case is still under litigation – it is only in
the pre-trial stage – Esses and Tri-Star in whose
Silverio, Jr., Esses and Tri-Star argue that the names the Calatagan Property is titled and in
RTC Balayan has no power to conduct hearings whose favor the order of restitution was issued,
on the supervening event because res are the ones entitled to possession of the
judicata has set in on the issue. They also property.
contend that the supervening event is an
intra-corporate controversy that is within the We do not agree with Silverio, Jr., Esses and
jurisdiction of the Securities and Exchange Tri-Star’s assertion that the RTC Balayan has no
Commission, not the trial court. Silverio, Jr., power to conduct a hearing on the existence of a
Esses and Tri-Star point out that despite the supervening event because of res judicata. Res
lifting of the suspension RTC Balayan has still to judicata does not set in where the court is
execute the writ of possession in their favor. On without jurisdiction over the subject or person,
the other hand, FBCI maintains that its and therefore, the judgment is a nullity23 such as
acquisition of Esses and Tri-Star is a the judgment by default in this case. The order
supervening event, which the RTC Balayan that voided the judgment by default and the
could hear and is sufficient ground to stay the order of restitution merely recognized the nullity
execution of the writ of possession. of the judgment by default. The orders did not
adjudicate on the merits of the case. Since res
We rule in favor of Silverio, Jr., Esses and judicata had not set in, the case was tried anew
Tri-Star. upon the proper service of summons on Silverio,
Jr., Esses and Tri-Star.
The court may stay immediate execution of a
judgment when supervening events, occurring Moreover, it is the court issuing the writ of
subsequent to the judgment, bring about a possession that has control and supervision over
material change in the situation of the parties.18 its processes.24 The RTC Balayan can therefore
To justify the stay of immediate execution, the hear the evidence on the existence of a
supervening events must have a direct effect on supervening event, provided the subject matter
the matter already litigated and settled.19 Or, the is within the jurisdiction of the court, as this could
supervening events must create a substantial affect the execution of the writ of possession.
change in the rights or relations of the parties
which would render execution of a final judgment We are, therefore, dismayed with the RTC
unjust, impossible or inequitable making it Balayan’s referral of the existence of the
imperative to stay immediate execution in the supervening event to the "higher courts." Courts
interest of justice.20 must not shirk from their duty to rule on an issue.
The duty of the appellate or higher courts is to
In this case, there is no judgment on the merits, review the findings and rulings of the lower
only a judgment on a technicality. Even then, the courts, not to issue advisories. Courts must
judgment of default rendered in FBCI’s favor was execute its processes and should not succumb
voided because the RTC Balayan did not to threats by any of the parties to resort to
acquire jurisdiction over Silverio, Jr., Esses and violence in case of such enforcement. Had the
Tri-Star due to a fraudulent service of summons. RTC Balayan immediately passed upon FBCI’s
The case for consolidation of title, from which allegation of a supervening event, it would have
this petition stemmed, is in fact still being been apparent that this claim is without merit.
litigated before the RTC Balayan. The RTC Balayan should have then enforced
posthaste the writ of possession in Silverio, Jr.,
The issuance of the writ of possession in favor of Esses and Tri-Star’s favor.
Silverio, Jr., Esses and Tri-Star is also not a
judgment on the merits.21 A writ of possession is FBCI’s acquisition of the "substantial and
an order whereby the sheriff is commanded to controlling shares of stocks"25 of Esses and
place a person in possession of real or personal Tri-Star does not create a substantial change in
property. 22 The issuance of the writ of the rights or relations of the parties that would
possession to Silverio, Jr., Esses and Tri-Star is entitle FBCI to possession of the Calatagan
but an order of restitution – a consequence of Property, a corporate property of Esses and
the nullification of the judgment by default. The Tri-Star. Esses and Tri-Star, just like FBCI, are
corporations. A corporation has a personality Farms, Inc. through their representative, Ricardo
distinct from that of its stockholders. As early as S. Silverio, Jr. No costs.
the case of Stockholders of F. Guanzon and
Sons, Inc. v. Register of Deeds of Manila,26 SO ORDERED.
the Court explained the principle of separate
juridical personality in this wise:

A corporation is a juridical person distinct from


the members composing it. Properties registered
in the name of the corporation are owned by it as
an entity separate and distinct from its members.
While shares of stock constitute personal
property, they do not represent property of the
corporation. The corporation has property of its
own which consists chiefly of real estate (Nelson
v. Owen, 113 Ala., 372, 21 So. 75; Morrow v.
Gould, 145 Iowa 1, 123 N.W. 743). A share of
stock only typifies an aliquot part of the
corporation's property, or the right to share in its
proceeds to that extent when distributed
according to law and equity (Hall & Faley v.
Alabama Terminal, 173 Ala 398, 56 So., 235),
but its holder is not the owner of any part of the
capital of the corporation (Bradley v. Bauder, 36
Ohio St., 28). Nor is he entitled to the possession
of any definite portion of its property or assets
(Gottfried v. Miller, 104 U.S., 521; Jones v. Davis,
35 Ohio St., 474). The stockholder is not a
co-owner or tenant in common of the corporate
property (Harton v. Hohnston, 166 Ala., 317, 51
So., 992).

Thus, FBCI’s alleged controlling shareholdings


in Esses and Tri-Star merely represent a
proportionate or aliquot interest in the properties
of the two corporations. Such controlling
shareholdings do not vest FBCI with any legal
right or title to any of Esses and Tri-Star’s
corporate properties. As a stockholder, FBCI has
an interest in Esses and Tri-Star’s corporate
properties that is only equitable or beneficial in
nature. Even assuming that FBCI is the
controlling shareholder of Esses and Tri-Star, it
does not legally make it the owner of the
Calatagan Property, which is legally owned by
Esses and Tri-Star as distinct juridical persons.
As such, FBCI is not entitled to the possession of
any definite portion of the Calatagan Property or
any of Esses and Tri-Star’s properties or assets.
FBCI is not a co-owner or tenant in common of
the Calatagan Property or any of Esses and
Tri-Star’s corporate properties.

We see no reason why the execution of the writ


of possession has been long delayed.
Possession of the Calatagan Property must be
restored to Esses and Tri-Star through their
representative, Silverio, Jr. There is no proof on
record that Silverio, Jr. has ceased to be the
representative of Esses and Tri-Star in this case.

WHEREFORE, we GRANT the petition. The


Regional Trial Court, Branch XI, Balayan,
Batangas is ordered to immediately execute the
writ of possession in Civil Case No. 3356 in favor
of Esses Development Corporation and Tri-Star