Province of Bataan vs. Villafuerte Jr.

Facts:
On February 12, 1988, the Provincial Treasurer of Bataan advertised for auction sale
pursuant to the Real Property Tax Code of 1974 (PD 464) the Bataan Shipyard and
Engineering Corporation (BASECO) for Php 7,914,281.72 due to real estate tax
delinquency. At that time, no there were no bidders who offered to buy the property.
Because of this, the Provincial Treasurer of Bataan acquired the said property under the
name of the Province of Bataan. The owner was given a one-year redemption period, but
it failed to redeem the same, resulting in the consolidation of herein petitioner of the title
to the subject property.

Sometime later, Provincial Governor Enrique Garcia entered into a 10-year lease contract
with 7-R Port Services, Inc. for the rental of some portions of the BASECO property,
including the facilities and other improvements for Php 18,000,000 per year. On the 10th
of May 1993, herein petitioner entered into another contract with Marina Ports Services
over the lease of 10-hectare portion of the BASECO property.

On the following day, the Philippine Commission on Good Governance (PCGG) filed a
complaint for annulment of sale in behalf of BASECO before the RTC of Bataan,
alleging that the auction sale on February 12, 1988 was void for having been conducted
in (1) defiance of an injunctive order issued by the PCGG under EO 1, Series of 1986;
(2) it is in contravention with PD 464; (3) It is the subject of a pending litigation; and (4)
it has an inscription in the sequestration order at the back of each title of the BASECO
property.

PCGG filed an urgent motion for the issuance of a writ of preliminary injunction to stop
herein petitioner from entering into a lease contract with Marina Port Services Inc. or any
other entity. However, the RTC denied the motion, stating that the lease contract with
Marina was already fait accompli. On June 30, 1993, the PCGG filed an Urgent Motion
to Deposit Lease Rentals with the RTC, which ordered the Province of Bataan to deposit
in the RTC the lease rentals that it may receive from Marina and 7-R. Aggrieved, herein
petitioner appealed the decision before the CA, but to no avail. The CA affirmed the
assailed decision.

Hence, this petition.

Issue:
Whether or not the escrow order issued by the RTC in the civil suit of annulment of sale
is proper.

Ruling:

Yes. While originally, the doctrine of escrow applied only to deeds by way of grant,14 or
as otherwise stated, instruments for the conveyance of land,15 under modern theories of
law, the term escrow is not limited in its application to deeds, but is applied to the deposit
of any written instrument with a third person.

To trace its source, the court’s authority proceeds from its jurisdiction and power to
decide, adjudicate and resolve the issues raised in the principal suit. Stated differently, the
deposit of the rentals in escrow with the bank, in the name of the lower court, “is only an
incident in the main proceeding.” To be sure, placing property in litigation under judicial
possession, whether in the hands of a receiver, an administrator, or as in this case, in a
government bank, is an ancient and accepted procedure.

IN VIEW WHEREOF, the instant petition is herebyDENIED for lack of merit. ACCORDINGLY,
the assaileddecision of the Court of Appeals is hereby AFFIRMED.