Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 124642

February 23, 2004

ALFREDO CHING and ENCARNACION CHING, petitioners

vs.
THE HON. COURT OF APPEALS and ALLIED BANKING
CORPORATION, respondents.
DECISION
CALLEJO, SR., J.:
This petition for review, under Rule 45 of the Revised Rules of Court,
assails the Decision1 of the Court of Appeals (CA) dated November 27,
1995 in CA-G.R. SP No. 33585, as well as the Resolution2 on April 2,
1996 denying the petitioners motion for reconsideration. The
impugned decision granted the private respondents petition
for certiorari and set aside the Orders of the trial court dated
December 15, 19933 and February 17, 19944 nullifying the attachment
of 100,000 shares of stocks of the Citycorp Investment Philippines
under the name of petitioner Alfredo Ching.
The following facts are undisputed:
On September 26, 1978, the Philippine Blooming Mills Company, Inc.
(PBMCI) obtained a loan of P9,000,000.00 from the Allied Banking
Corporation (ABC). By virtue of this loan, the PBMCI, through its
Executive Vice-President Alfredo Ching, executed a promissory note
for the said amount promising to pay on December 22, 1978 at an
interest rate of 14% per annum.5 As added security for the said loan,
on September 28, 1978, Alfredo Ching, together with Emilio Taedo
and Chung Kiat Hua, executed a continuing guaranty with the ABC
binding themselves to jointly and severally guarantee the payment of
all the PBMCI obligations owing the ABC to the extent

of P38,000,000.00.6 The loan was subsequently renewed on various

dates, the last renewal having been made on December 4, 1980.7
Earlier, on December 28, 1979, the ABC extended another loan to the
PBMCI in the amount of P13,000,000.00 payable in eighteen months
at 16% interest per annum. As in the previous loan, the PBMCI,
through Alfredo Ching, executed a promissory note to evidence the
loan maturing on June 29, 1981.8 This was renewed once for a period
of one month.9
The PBMCI defaulted in the payment of all its loans. Hence, on August
21, 1981, the ABC filed a complaint for sum of money with prayer for a
writ of preliminary attachment against the PBMCI to collect
the P12,612,972.88 exclusive of interests, penalties and other bank
charges. Impleaded as co-defendants in the complaint were Alfredo
Ching, Emilio Taedo and Chung Kiat Hua in their capacity as sureties
of the PBMCI.
The case was docketed as Civil Case No. 142729 in the Regional Trial
Court of Manila, Branch XVIII.10 In its application for a writ of
preliminary attachment, the ABC averred that the "defendants are
guilty of fraud in incurring the obligations upon which the present
action is brought11 in that they falsely represented themselves to be in
a financial position to pay their obligation upon maturity thereof."12 Its
supporting affidavit stated, inter alia, that the "[d]efendants have
removed or disposed of their properties, or [are] ABOUT to do so,
with intent to defraud their creditors."13
On August 26, 1981, after an ex-parte hearing, the trial court issued an
Order denying the ABCs application for a writ of preliminary
attachment. The trial court decreed that the grounds alleged in the
application and that of its supporting affidavit "are all conclusions of
fact and of law" which do not warrant the issuance of the writ prayed
for.14 On motion for reconsideration, however, the trial court, in an
Order dated September 14, 1981, reconsidered its previous order and
granted the ABCs application for a writ of preliminary attachment on
a bond of P12,700,000. The order, in relevant part, stated:

With respect to the second ground relied upon for the grant of the writ
of preliminary attachment ex-parte, which is the alleged disposal of
properties by the defendants with intent to defraud creditors as
provided in Sec. 1(e) of Rule 57 of the Rules of Court, the affidavits can
only barely justify the issuance of said writ as against the defendant
Alfredo Ching who has allegedly bound himself jointly and severally to
pay plaintiff the defendant corporations obligation to the plaintiff as a
surety thereof.
WHEREFORE, let a writ of preliminary attachment issue as against
the defendant Alfredo Ching requiring the sheriff of this Court to
attach all the properties of said Alfredo Ching not
exceeding P12,612,972.82 in value, which are within the jurisdiction of
this Court and not exempt from execution upon, the filing by plaintiff
of a bond duly approved by this Court in the sum of Twelve Million
Seven Hundred Thousand Pesos (P12,700,000.00) executed in favor
of the defendant Alfredo Ching to secure the payment by plaintiff to
him of all the costs which may be adjudged in his favor and all
damages he may sustain by reason of the attachment if the court shall
finally adjudge that the plaintiff was not entitled thereto.
SO ORDERED.15
Upon the ABCs posting of the requisite bond, the trial court issued a
writ of preliminary attachment. Subsequently, summonses were
served on the defendants,16 save Chung Kiat Hua who could not be
found.
Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly
filed a petition for suspension of payments with the Securities and
Exchange Commission (SEC), docketed as SEC Case No. 2250, at the
same time seeking the PBMCIs rehabilitation.17
On July 9, 1982, the SEC issued an Order placing the PBMCIs
business, including its assets and liabilities, under rehabilitation
receivership, and ordered that "all actions for claims listed in Schedule
"A" of the petition pending before any court or tribunal are hereby
suspended in whatever stage the same may be until further orders

from the Commission."18 The ABC was among the PBMCIs creditors
named in the said schedule.
Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching
jointly filed a Motion to Dismiss and/or motion to suspend the
proceedings in Civil Case No. 142729 invoking the PBMCIs pending
application for suspension of payments (which Ching co-signed) and
over which the SEC had already assumed jurisdiction.19 On February
4, 1983, the ABC filed its Opposition thereto.20
In the meantime, on July 26, 1983, the deputy sheriff of the trial court
levied on attachment the 100,000 common shares of Citycorp stocks
in the name of Alfredo Ching.21
Thereafter, in an Order dated September 16, 1983, the trial court
partially granted the aforementioned motion by suspending the
proceedings only with respect to the PBMCI. It denied Chings motion
to dismiss the complaint/or suspend the proceedings and pointed out
that P.D. No. 1758 only concerns the activities of corporations,
partnerships and associations and was never intended to regulate
and/or control activities of individuals. Thus, it directed the individual
defendants to file their answers.22
Instead of filing an answer, Ching filed on January 14, 1984 a Motion
to Suspend Proceedings on the same ground of the pendency of SEC
Case No. 2250. This motion met the opposition from the ABC. 23
On January 20, 1984, Taedo filed his Answer with counterclaim and
cross-claim.24 Ching eventually filed his Answer on July 12, 1984.25
On October 25, 1984, long after submitting their answers, Ching filed
an Omnibus Motion,26 again praying for the dismissal of the complaint
or suspension of the proceedings on the ground of the July 9, 1982
Injunctive Order issued in SEC Case No. 2250. He averred that as a
surety of the PBMCI, he must also necessarily benefit from the
defenses of his principal. The ABC opposed Chings omnibus motion.
Emilio Y. Taedo, thereafter, filed his own Omnibus Motion27 praying
for the dismissal of the complaint, arguing that the ABC had

"abandoned and waived" its right to proceed against the continuing

guaranty by its act of resorting to preliminary attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the amount
of his preliminary attachment bond from P12,700,000
to P6,350,000.28 Alfredo Ching opposed the motion,29 but on April 2,
1987, the court issued an Order setting the incident for further hearing
on May 28, 1987 at 8:30 a.m. for the parties to adduce evidence on the
actual value of the properties of Alfredo Ching levied on by the
sheriff.30
On March 2, 1988, the trial court issued an Order granting the motion
of the ABC and rendered the attachment bond of P6,350,000.31
On November 16, 1993, Encarnacion T. Ching, assisted by her
husband Alfredo Ching, filed a Motion to Set Aside the levy on
attachment. She alleged inter alia that the 100,000 shares of stocks
levied on by the sheriff were acquired by her and her husband during
their marriage out of conjugal funds after the Citycorp Investment
Philippines was established in 1974. Furthermore, the indebtedness
covered by the continuing guaranty/comprehensive suretyship
contract executed by petitioner Alfredo Ching for the account of
PBMCI did not redound to the benefit of the conjugal partnership.
She, likewise, alleged that being the wife of Alfredo Ching, she was a
third-party claimant entitled to file a motion for the release of the
properties.32 She attached therewith a copy of her marriage contract
with Alfredo Ching.33
The ABC filed a comment on the motion to quash preliminary
attachment and/or motion to expunge records, contending that:
2.1 The supposed movant, Encarnacion T. Ching, is not a party
to this present case; thus, she has no personality to file any
motion before this Honorable Court;
2.2 Said supposed movant did not file any Motion for
Intervention pursuant to Section 2, Rule 12 of the Rules of
Court;

2.3 Said Motion cannot even be construed to be in the nature

of a Third-Party Claim conformably with Sec. 14, Rule 57 of the
Rules of Court.
3. Furthermore, assuming in gracia argumenti that the supposed
movant has the required personality, her Motion cannot be acted upon
by this Honorable Court as the above-entitled case is still in the
archives and the proceedings thereon still remains suspended. And
there is no previous Motion to revive the same.34
The ABC also alleged that the motion was barred by prescription or by
laches because the shares of stocks were in custodia legis.
During the hearing of the motion, Encarnacion T. Ching adduced in
evidence her marriage contract to Alfredo Ching to prove that they
were married on January 8, 1960;35 the articles of incorporation of
Citycorp Investment Philippines dated May 14, 1979;36 and, the
General Information Sheet of the corporation showing that petitioner
Alfredo Ching was a member of the Board of Directors of the said
corporation and was one of its top twenty stockholders.
On December 10, 1993, the Spouses Ching filed their
Reply/Opposition to the motion to expunge records.
Acting on the aforementioned motion, the trial court issued on
December 15, 1993 an Order37 lifting the writ of preliminary
attachment on the shares of stocks and ordering the sheriff to return
the said stocks to the petitioners. The dispositive portion reads:
WHEREFORE, the instant Motion to Quash Preliminary Attachment,
dated November 9, 1993, is hereby granted. Let the writ of preliminary
attachment subject matter of said motion, be quashed and lifted with
respect to the attached 100,000 common shares of stock of Citycorp
Investment Philippines in the name of the defendant Alfredo Ching,
the said shares of stock to be returned to him and his movant-spouse
by Deputy Sheriff Apolonio A. Golfo who effected the levy thereon on
July 26, 1983, or by whoever may be presently in possession thereof.
SO ORDERED.38

The plaintiff Allied Banking Corporation filed a motion for the

reconsideration of the order but denied the same on February 17,
1994. The petitioner bank forthwith filed a petition for certiorari with
the CA, docketed as CA-G.R. SP No. 33585, for the nullification of the
said order of the court, contending that:
1. The respondent Judge exceeded his authority thereby acted
without jurisdiction in taking cognizance of, and granting a
"Motion" filed by a complete stranger to the case.
2. The respondent Judge committed a grave abuse of
discretion in lifting the writ of preliminary attachment without
any basis in fact and in law, and contrary to established
jurisprudence on the matter.39
On November 27, 1995, the CA rendered judgment granting the
petition and setting aside the assailed orders of the trial court, thus:
WHEREFORE, premises considered, the petition is GRANTED,
hereby setting aside the questioned orders (dated December 15, 1993
and February 17, 1994) for being null and void.
SO ORDERED.40
The CA sustained the contention of the private respondent and set
aside the assailed orders. According to the CA, the RTC deprived the
private respondent of its right to file a bond under Section 14, Rule 57
of the Rules of Court. The petitioner Encarnacion T. Ching was not a
party in the trial court; hence, she had no right of action to have the
levy annulled with a motion for that purpose. Her remedy in such case
was to file a separate action against the private respondent to nullify
the levy on the 100,000 Citycorp shares of stocks. The court stated
that even assuming that Encarnacion T. Ching had the right to file the
said motion, the same was barred by laches.
Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the
presumption in Article 160 of the New Civil Code shall not apply
where, as in this case, the petitioner-spouses failed to prove the source
of the money used to acquire the shares of stock. It held that the levied

shares of stocks belonged to Alfredo Ching, as evidenced by the fact

that the said shares were registered in the corporate books of Citycorp
solely under his name. Thus, according to the appellate court, the RTC
committed a grave abuse of its discretion amounting to excess or lack
of jurisdiction in issuing the assailed orders. The petitioners motion
for reconsideration was denied by the CA in a Resolution dated April
2, 1996.
The petitioner-spouses filed the instant petition for review on
certiorari, asserting that the RTC did not commit any grave abuse of
discretion amounting to excess or lack of jurisdiction in issuing the
assailed orders in their favor; hence, the CA erred in reversing the
same. They aver that the source of funds in the acquisition of the
levied shares of stocks is not the controlling factor when invoking the
presumption of the conjugal nature of stocks under Art. 160, 42 and
that such presumption subsists even if the property is registered only
in the name of one of the spouses, in this case, petitioner Alfredo
Ching.43 According to the petitioners, the suretyship obligation was
not contracted in the pursuit of the petitioner-husbands profession or
business.44 And, contrary to the ruling of the CA, where conjugal assets
are attached in a collection suit on an obligation contracted by the
husband, the wife should exhaust her motion to quash in the main
case and not file a separate suit.45 Furthermore, the petitioners
contend that under Art. 125 of the Family Code, the petitionerhusbands gratuitous suretyship is null and void ab initio,46and that
the share of one of the spouses in the conjugal partnership remains
inchoate until the dissolution and liquidation of the partnership. 47
In its comment on the petition, the private respondent asserts that the
CA correctly granted its petition for certiorari nullifying the assailed
order. It contends that the CA correctly relied on the ruling of this
Court in Wong v. Intermediate Appellate Court. Citing Cobb-Perez v.
Lantin and G-Tractors, Inc. v. Court of Appeals, the private
respondent alleges that the continuing guaranty and suretyship
executed by petitioner Alfredo Ching in pursuit of his profession or
business. Furthermore, according to the private respondent, the right
of the petitioner-wife to a share in the conjugal partnership property is
merely inchoate before the dissolution of the partnership; as such, she
had no right to file the said motion to quash the levy on attachment of
the shares of stocks.

The issues for resolution are as follows: (a) whether the petitionerwife has the right to file the motion to quash the levy on attachment
on the 100,000 shares of stocks in the Citycorp Investment
Philippines; (b) whether or not the RTC committed a grave abuse of
its discretion amounting to excess or lack of jurisdiction in issuing the
assailed orders.
On the first issue, we agree with the petitioners that the petitionerwife had the right to file the said motion, although she was not a party
in Civil Case No. 142729.48
In Ong v. Tating,49 we held that the sheriff may attach only those
properties of the defendant against whom a writ of attachment has
been issued by the court. When the sheriff erroneously levies on
attachment and seizes the property of a third person in which the said
defendant holds no right or interest, the superior authority of the
court which has authorized the execution may be invoked by the
aggrieved third person in the same case. Upon application of the third
person, the court shall order a summary hearing for the purpose of
determining whether the sheriff has acted rightly or wrongly in the
performance of his duties in the execution of the writ of attachment,
more specifically if he has indeed levied on attachment and taken hold
of property not belonging to the plaintiff. If so, the court may then
order the sheriff to release the property from the erroneous levy and to
return the same to the third person. In resolving the motion of the
third party, the court does not and cannot pass upon the question of
the title to the property with any character of finality. It can treat the
matter only insofar as may be necessary to decide if the sheriff has
acted correctly or not. If the claimants proof does not persuade the
court of the validity of the title, or right of possession thereto, the
claim will be denied by the court. The aggrieved third party may also
avail himself of the remedy of "terceria" by executing an affidavit of
his title or right of possession over the property levied on attachment
and serving the same to the office making the levy and the adverse
party. Such party may also file an action to nullify the levy with
damages resulting from the unlawful levy and seizure, which should
be a totally separate and distinct action from the former case. The
above-mentioned remedies are cumulative and any one of them may
be resorted to by one third-party claimant without availing of the
other remedies.50

In this case, the petitioner-wife filed her motion to set aside the levy
on attachment of the 100,000 shares of stocks in the name of
petitioner-husband claiming that the said shares of stocks were
conjugal in nature; hence, not liable for the account of her husband
under his continuing guaranty and suretyship agreement with the
PBMCI. The petitioner-wife had the right to file the motion for said
relief.
On the second issue, we find and so hold that the CA erred in setting
aside and reversing the orders of the RTC. The private respondent, the
petitioner in the CA, was burdened to prove that the RTC committed a
grave abuse of its discretion amounting to excess or lack of
jurisdiction. The tribunal acts without jurisdiction if it does not have
the legal purpose to determine the case; there is excess of jurisdiction
where the tribunal, being clothed with the power to determine the
case, oversteps its authority as determined by law. There is grave
abuse of discretion where the tribunal acts in a capricious, whimsical,
arbitrary or despotic manner in the exercise of its judgment and is
equivalent to lack of jurisdiction.51
It was incumbent upon the private respondent to adduce a sufficiently
strong demonstration that the RTC acted whimsically in total
disregard of evidence material to, and even decide of, the controversy
before certiorari will lie. A special civil action for certiorari is a remedy
designed for the correction of errors of jurisdiction and not errors of
judgment. When a court exercises its jurisdiction, an error committed
while so engaged does not deprive it of its jurisdiction being exercised
when the error is committed.52
After a comprehensive review of the records of the RTC and of the CA,
we find and so hold that the RTC did not commit any grave abuse of
its discretion amounting to excess or lack of jurisdiction in issuing the
assailed orders.
Article 160 of the New Civil Code provides that all the properties
acquired during the marriage are presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the
husband, or to the wife. In Tan v. Court of Appeals,53 we held that it is
not even necessary to prove that the properties were acquired with

funds of the partnership. As long as the properties were acquired by

the parties during the marriage, they are presumed to be conjugal in
nature. In fact, even when the manner in which the properties were
acquired does not appear, the presumption will still apply, and the
properties will still be considered conjugal. The presumption of the
conjugal nature of the properties acquired during the marriage
subsists in the absence of clear, satisfactory and convincing evidence
to overcome the same.54
In this case, the evidence adduced by the petitioners in the RTC is that
the 100,000 shares of stocks in the Citycorp Investment Philippines
were issued to and registered in its corporate books in the name of the
petitioner-husband when the said corporation was incorporated on
May 14, 1979. This was done during the subsistence of the marriage of
the petitioner-spouses. The shares of stocks are, thus, presumed to be
the conjugal partnership property of the petitioners. The private
respondent failed to adduce evidence that the petitioner-husband
acquired the stocks with his exclusive money. 55 The barefaced fact that
the shares of stocks were registered in the corporate books of Citycorp
Investment Philippines solely in the name of the petitioner-husband
does not constitute proof that the petitioner-husband, not the conjugal
partnership, owned the same.56 The private respondents reliance on
the rulings of this Court in Maramba v. Lozano 57 and Associated
Insurance & Surety Co., Inc. v. Banzon 58 is misplaced. In the Maramba
case, we held that where there is no showing as to when the property
was acquired, the fact that the title is in the wifes name alone is
determinative of the ownership of the property. The principle was
reiterated in the Associated Insurance case where the uncontroverted
evidence showed that the shares of stocks were acquired during the
marriage of the petitioners.
Instead of fortifying the contention of the respondents, the ruling of
this Court in Wong v. Intermediate Appellate Court 59 buttresses the
case for the petitioners. In that case, we ruled that he who claims that
property acquired by the spouses during their marriage is not conjugal
partnership property but belongs to one of them as his personal
property is burdened to prove the source of the money utilized to
purchase the same. In this case, the private respondent claimed that
the petitioner-husband acquired the shares of stocks from the
Citycorp Investment Philippines in his own name as the owner

thereof. It was, thus, the burden of the private respondent to prove

that the source of the money utilized in the acquisition of the shares of
stocks was that of the petitioner-husband alone. As held by the trial
court, the private respondent failed to adduce evidence to prove this
assertion.
The CA, likewise, erred in holding that by executing a continuing
guaranty and suretyship agreement with the private respondent for
the payment of the PBMCI loans, the petitioner-husband was in the
exercise of his profession, pursuing a legitimate business. The
appellate court erred in concluding that the conjugal partnership is
liable for the said account of PBMCI under Article 161(1) of the New
Civil Code.
Article 161(1) of the New Civil Code (now Article 121[2 and 3]60 of the
Family Code of the Philippines) provides:
Art. 161. The conjugal partnership shall be liable for:
(1) All debts and obligations contracted by the husband for the benefit
of the conjugal partnership, and those contracted by the wife, also for
the same purpose, in the cases where she may legally bind the
partnership.
The petitioner-husband signed the continuing guaranty and
suretyship agreement as security for the payment of the loan obtained
by the PBMCI from the private respondent in the amount
of P38,000,000. In Ayala Investment and Development Corp. v. Court
of Appeals,61 this Court ruled "that the signing as surety is certainly
not an exercise of an industry or profession. It is not embarking in a
business. No matter how often an executive acted on or was persuaded
to act as surety for his own employer, this should not be taken to mean
that he thereby embarked in the business of suretyship or guaranty."
For the conjugal partnership to be liable for a liability that should
appertain to the husband alone, there must be a showing that some
advantages accrued to the spouses. Certainly, to make a conjugal
partnership responsible for a liability that should appertain alone to
one of the spouses is to frustrate the objective of the New Civil Code to

show the utmost concern for the solidarity and well being of the family
as a unit. The husband, therefore, is denied the power to assume
unnecessary and unwarranted risks to the financial stability of the
conjugal partnership.62
In this case, the private respondent failed to prove that the conjugal
partnership of the petitioners was benefited by the petitionerhusbands act of executing a continuing guaranty and suretyship
agreement with the private respondent for and in behalf of PBMCI.
The contract of loan was between the private respondent and the
PBMCI, solely for the benefit of the latter. No presumption can be
inferred from the fact that when the petitioner-husband entered into
an accommodation agreement or a contract of surety, the conjugal
partnership would thereby be benefited. The private respondent was
burdened to establish that such benefit redounded to the conjugal
partnership.63
It could be argued that the petitioner-husband was a member of the
Board of Directors of PBMCI and was one of its top twenty
stockholders, and that the shares of stocks of the petitioner-husband
and his family would appreciate if the PBMCI could be rehabilitated
through the loans obtained; that the petitioner-husbands career
would be enhanced should PBMCI survive because of the infusion of
fresh capital. However, these are not the benefits contemplated by
Article 161 of the New Civil Code. The benefits must be those directly
resulting from the loan. They cannot merely be a by-product or a spinoff of the loan itself.64
This is different from the situation where the husband borrows money
or receives services to be used for his own business or profession. In
the Ayala case, we ruled that it is such a contract that is one within the
term "obligation for the benefit of the conjugal partnership." Thus:
(A) If the husband himself is the principal obligor in the contract, i.e.,
he directly received the money and services to be used in or for his
own business or his own profession, that contract falls within the term
" obligations for the benefit of the conjugal partnership." Here, no
actual benefit may be proved. It is enough that the benefit to the
family is apparent at the time of the signing of the contract. From the

very nature of the contract of loan or services, the family stands to

benefit from the loan facility or services to be rendered to the business
or profession of the husband. It is immaterial, if in the end, his
business or profession fails or does not succeed. Simply stated, where
the husband contracts obligations on behalf of the family business, the
law presumes, and rightly so, that such obligation will redound to the
benefit of the conjugal partnership.65
The Court held in the same case that the rulings of the Court in CobbPerez and G-Tractors, Inc. are not controlling because the husband, in
those cases, contracted the obligation for his own business. In this
case, the petitioner-husband acted merely as a surety for the loan
contracted by the PBMCI from the private respondent.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The
Decision and Resolution of the Court of Appeals are SET ASIDE AND
REVERSED. The assailed orders of the RTC are AFFIRMED.
SO ORDERED.

HECTOR L. ONG, petitioner,

vs.
MARILYN TATING AND ROBERT TATING, ET
AL., respondents.

NARVASA, J.:
The issue in this case concerns the jurisdiction of an inferior Court to
take cognizance of a motion impugning the sheriff's authority to
execute a final judgment in an ejectment case which commands
payment of rentals in arrears against personalty claimed as theirs
by persons formerly residing in the leased premises together with the
evicted defendant-lessee.
An action of desahucio was instituted in the City Court of Quezon City
by petitioner Ong against his lessee, Evangeline Roces. 1 This in time
culminated in a judgment by the Court of First Instance (Branch
XVIII) 2 disposing of the case as follows:

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-61042 April 15, 1987

WHEREFORE, premises considered, the judgment of

the City Court is set aside and in lieu thereof judgment
is rendered ordering defendant Evangeline Roces and
all persons claiming under her to vacate plaintiff's
premises located at 169-D, Tolentino St., San Francisco
del Monte, Quezon City; to pay rentals in arrears in the
sum of P10,920.00 as of September 1978 and P260.00
a month from October 1978 until the premises are
vacated with interest at 12% per annum; P1,000.00 as
attomey's fees and the costs. 3
The decision became final and executory, no appeal having been taken
therefrom; and in due course, the records of the case were remanded
to the City Court.
On Ong's application, the City Court directed execution of the
judgment. Accordingly, the sheriff cleared the premises of its

occupants, which included Anacleto Tating (Evangeline's stepfather

and lawyer), Marilyn Tating (Anacleto's wife), and Robert Tating. 4
The sheriff also levied on certain chattels found in the place: a
"Citizen" stereo set; a "Sanyo" television set; a "Frigidaire"
refrigerator; and a "Hitachi" electric desk fan. Marilyn and Robert
Tating sought to retrieve these appliances from the sheriff, alleging
that the articles belonged to them and not to the lessee, Evangeline
Roces. 5To this end, Robert filed with the sheriff a "Third Party Claim"
dated September 13, 1979 as regards the "Citizen" stereo set; and
Marilyn, a similar claim with respect to the other chattels. 6 When
these proved unavailing, they filed with the City Court Identical
applications dated September 17, 1979, entitled "Urgent Motion for
Suspension of Sheriff Sale and for Release of Properties Wrongfully
Levied Upon on Execution," in which they set out their respective
titles to the goods and prayed that the execution sale thereof
scheduled on September 19, 1979 be abated and that, after hearing,
said goods be released to them as the true and lawful owners thereof. 7
To neutralize the Tatings' moves, and so that the execution sale might
proceed as scheduled, Ong posted two (2) surety bonds 8 to indemnify
the sheriff for any liability for damages. 9 But by Order dated
September 19, 1979 the City Court restrained the sale and set the
Tatings' motions for hearing. 10
What Ong did was to present an "Omnibus Opposition, etc. " dated
October 2, 1979, 11 contending that the Tatings' motions should have
been filed with the Court of First Instance since it was the latter's
decision which was being executed; and that, in any event, the Tatings'
remedy was "to file an action for damages against the indemnity
bonds after the auction sale. " He also theorized that
* * Atty. Tating, and the third party claimants having
stayed in the premises and having enjoyed the same
should be required to pay the back rentals, attorney's
fees and sheriff's and legal expenses (and should not)
escape by avoiding paying any amount as stated in the
judgment. * * 12

Ong later filed a "Motion to Inhibit" dated January 9, 1980, which the
City Court denied by Order dated January 23, 1980. The Court also
directed Ong's counsel to explain certain apparently contumacious
statements in the motion. The Order reads as follows:
ORDER
Considering the Motion to Inhibit filed by the plaintiff,
dated January 9, 1980, and the Manifestation filed by
the third party claimants, Marilyn Tating and Robert
Tating, dated January 16, 1980, this Court finds the
motion without merit and hereby resolves to deny it.
Furthermore, Atty. Manuel E. Yuzon, counsel for the
plaintiff, is hereby ordered to explain in writing within
ten (10) days from notice hereof why he should not be
cited for indirect contempt of court for stating in his
Motion to Inhibit that if this Court 'proceeds to hear
and resolve the third-party claims, it is foregone
conclusion that the third-party claimants will surely
win and the plaintiff will lose,' thereby casting
aspersions on the integrity of this Court and degrading
the administration of justice.
In the meantime, let the continuation of the hearing of
the motion for suspension of sheriff's sale etc. be set for
February 11, 1980, at 9:00 o'clock in the morning.
SO ORDERED. 13
Ong promptly initiated proceedings to negate this Order. He filed with
the Court of First Instance on February 7, 1980 a petition for certiorari
and prohibition, with application for preliminary
injunction. 14 Acting thereon, the Court (Branch IX) promulgated an
Order dated April 2, 1980 directing the maintenance of the status
quo and commanding that the City Court refrain "from hearing and
deciding the third party claims and the urgent motion for suspension
of Sheriff's Sale, etc. until the resolution of the injunction * *. 15 It

afterwards rendered a decision, dated December 15,

1981, 16 pertinently reading as follows:
The issue in this petition boils down to this should the
third-party claims be heard and decided by the lower
court.
While it is true that the respondents Marilyn and
Robert Tating were not parties in the ejectment case
because the lease was between the petitioner and
Evangeline Roces, they stayed with her and the
decision of the appellate court covered them as it
ordered "Evangeline Roces and all persons claiming
under her to vacate plaintiff's premises" ... Besides, the
procedure followed by said private respondents in
vindicating their rights over the four (4) levied
appliances is not the one sanctioned by law for they
should have filed a separate and independent action
making parties the deputy sheriff and the petitioner
and making them responsible for the execution (Santos
et al., vs. Hon. Mojica, L-19618, Feb. 28, 1964).
WHEREUPON, premises considered, the petitioner
Hector L. Ong is entitled to relief. The decision of
Branch XVIII of the CFI Quezon City which is final and
executory, stands.
The preliminary injunction issued on April 2, 1980 is
hereby ordered permanent. 17
The Tatings appealed to the Court of Appeals by "a petition for review
filed * * on March 1, 1982. 18 In its decision, promulgated on June 23,
1982, after due proceedings, 19 the Court of Appeals expressed
puzzlement why the matter of the execution and related incidents
were passed upon by the lower court, when the only issue was the
correctness of the City Judge's refusal to inhibit, himself. 20 It
dismissed the petition, and sent the case back to the City Court for
further proceedings." Said the Court:

It is a puzzle to Us why the hearing went out of bounds.

Instead of determining merely the propriety of the
order of denial of the motion to inhibit, the parties and
the Court of First Instance * * went into the merits of
the propriety of the execution of the decision of the City
Court, the auction sale of the appliances claimed by the
Tatings, the levy,the third party claim,the indemnity
bond, and the motion to suspend the sale and the filling
of the sheriffs bond matters which are properly only to
be treated in a separate proceeding.
From the records,We see that if at all the matter of
execution of the decision ** (etc.) were mentioned,it
was merely to give a background to the motion to
inhibit Judge Laquio, Jr. from proceeding to take
further participation in the incident of the execution **
and the incident stemming therefrom.
The propriety of the denial of the motion to inhibit was
lost in the maze of the irrelevant facts and incidents
taken during the hearing of this case in the court below.
A thorough review of the decision of the Court of First
Instance * * Branch IX, in this certiorari case shows
that the Presiding Judge * * erroneously treated the
pleadings before it in Civil Case No. 29245. Thus, We
are constrained to set the same aside and remand the
case to the City Court presided over by Judge Laquio,
Jr. for further proceedings. Principally, We rule the
denial of the motion for Judge Laquio, Jr. to inhibit
himself from the ejectment case No. 28309, Quezon
City Court, was well taken. The petition assailing the
order of denial which is the main issue in Civil Case No.
29245 is without merit. * * 21
Ong is now before this Court, praying for the reversal of the decision
of the Court of Appeals, and the perpetual inhibition of the City Judge
"from further hearing and deciding the (Tatings') third-party
claims." 22

It will not do to dismiss the petition as the IAC did by declaring that
the only issue involved is the propriety of the City Judge's denial of the
motion for his inhibition, and pronouncing the denial to be correct.
Not only is such a limitation of the issues disputed by Ong, but the
resolution of the single point would leave unanswered several other
nagging questions. The opportunity to resolve those questions having
been presented, the Court will do precisely that, to the end that the
controversy may be expeditiously laid to rest,
Three theories are advocated by Ong, namely:
1. From the decision of the Court of First Instance (Branch IX) on his
petition for certiorari and prohibition, the Tatings' remedy was appeal
(by writ of error), not a petition for review, to the Court of Appeals.
2. The City Court lost jurisdiction to hear and determine the Tatings'
third-party claims upon the filing by him (Ong) of the bonds
prescribed by Section 17, Rule 39, the purpose of which is precisely to
hold the sheriff free from liability for damages for proceeding with the
execution sale despite said third- party claims.
3. Corollarily, the Tatings' remedy was to file a separate suit to recover
against said bonds posted by Ong, whatever damages might be
suffered by them by reason of the effectuation of the execution sale. 23
Ong is correct in arguing that the mode of appeal to the Court of
Appeals available to the Tatings from the adverse judgment of the CFI
in the action of certiorari and prohibition instituted by him, was not
by "petition for review" under Section 22 of B.P. Blg., 129 24 but an
ordinary appeal (by writ of error) under Rule 41, Rules of Court and
Section 39, of B.P. Blg. 129 (also, Section 20 of the Interim Rules) A
"petition for review" is the correct mode of appeal from a judgment
rendered by a CFI (RTC) in the exercise of appellate jurisdiction i.e.,
when it decides a case appealed to it from the inferior court. In such a
case, the appeal is not a matter of right, its acceptance being
discretionary on the Court of Appeals, which "may give it due course
only when the petition shows prima facie that the lower court has
committed an error of fact or law that will warrant a reversal or
modification of the decision or judgment sought to be reviewed." On

the other hand, when a CFI (RTC) adjudicates a case in the exercise of
its original jurisdiction, the correct mode of elevating the judgment to
the Court of Appeals is by ordinary appeal, or appeal by writ of error,
involving merely the filing of a notice of appeal except only if the
appeal is taken in special proceedings and other cases wherein
multiple appeals are allowed under the law, in which event the filing of
a record on appeal is additionally required. 25 Of course, when the
appeal would involve purely questions of law or any of the other cases
(except criminal cases as stated hereunder) specified in Section 5(2),
Article X of the Constitution, 26 it should be taken to the Supreme
Court by petition for review on certiorari in accordance with Rules 42
and 45 of the Rules of Court. 27 However, in criminal cases in which
the penalty imposed is death or life imprisonment, the appeal to the
Supreme Court is by ordinary appeal on both questions of fact and
law. In cases where the death penalty is imposed, there is an
automatic review by the Supreme Court. (Sec. 3 of the 1985 Rules on
Criminal Procedure)
The mode by which the Tatings thus brought up to the Court of
Appeals the adverse judgment of the CFI i.e., by petition for review
was erroneous. This aspect of the case apparently escaped the
Appellate Court's attention; it did not treat of it at all. This is however
of no moment. The need of finally resolve this case makes this defect
inconsequential. In any event, the defect has been waived, no issue
concerning it having been raised in the proceedings before the Court
of Appeals. 28
Ong's second contention that the posting by him of a bond to
indemnify the sheriff for damages for proceeding with an execution
sale despite the existence of third-party claims on the property levied
on (pursuant to Section 17, Rule 39) caused the Trial Court to lose
jurisdiction to deal with the third-party claimants' plea for relief
against what they deemed to be an act of trespass by the sheriff is
incorrect.
Certain it is that the Trial Court has plenary jurisdiction over the
proceedings for the enforcement of its judgments. It has undeniable
competence to act on motions for execution (whether execution be a
matter of right or discretionary upon the Court), issue and quash

writs, determine if property is exempt from execution, or fix the value

of property claimed by third persons so that a bond equal to such
value may be posted by a judgment creditor to indemnify the sheriff
against liability for damages, resolve questions involving redemption,
examine the judgment debtor and his debtors, and otherwise perform
such other acts as may be necessary or incidental to the carrying out of
its decisions. It may and should exercise control and supervision over
the sheriff and other court officers and employees taking part in the
execution proceedings, and correct them in the event that they should
err in the discharge of their functions.
Now, it is axiomatic that money judgments are enforceable only
against property unquestionably belonging to the judgment debtor.
One man's goods shall not be sold for another man's debts, as the
saying goes. 29 Therefore, the sheriff acts properly only when he
subjects to execution property undeniably belonging to the judgment
debtor. But to the extent that he levies on assets of a third person, in
which the judgment debtor has no interest, to that extent he acts as a
trespasser, and to that extent he is amenable to control and correction
by the Court. 30
When the sheriff thus seizes property of a third person in which the
judgment debtor holds no right or interest, and so incurs in error, the
supervisory power of the Court which has authorized execution may
be invoked by the third person. Upon due application by the third
person, and after summary hearing, the Court may command that the
property be released from the mistaken levy and restored to the
rightful owner or possessor. What the Court can do in these instances
however is limited to a determination of whether the sheriff has acted
rightly or wrongly in the performance of his duties in the execution of
the judgment, more specifically, if he has indeed taken hold of
property not belonging to the judgment debtor. The Court does not
and cannot pass upon the question of title to the property, with any
character of finality. It can treat of that matter only in so far as may be
necessary to decide if the Sheriff has acted correctly or not. 31 The
Court can require the sheriff to restore the property to the claimant's
possession if warranted by the evidence. If the claimant's proofs do
not however persuade the Court of his title or right of possession
thereof, the claim will of course be denied.

This remedy is not that of intervention, which is dealt with in Rule 12

of the Rules of Court, and may be availed of only before or during trial,
not thereafter, and certainly not when judgment is executory. It is
rather simply an invocation of the Court's power of supervision and
control over the actuations of its officers and employees to the end
that it be assured that these conform to the law. 32
Independently of the recourse just indicated, and even before or
without availment thereof, the person who claims that his property
has been wrongfully seized by resort to the remedy known as terceria
set out in Section 17, Rule 39 of the Rules of Court, viz:
SEC. 17. Proceedings where property claimed by third
person. If property levied on be claimed by any other
person than the judgment debtor or his agent, and such
person make an affidavit of his title thereto or right to
the possession thereof, stating the grounds of such
right or title, and serve the same upon the officer
making the levy, and a copy thereof upon the judgment
creditor, the officer shag not be bound to keep the
property, unless such judgment creditor or his agent,
on demand of the officer, indemnify the officer against
such claim by a bond in a sum not greater than the
value of the property levied on. In case of disagreement
as to such value, the same shall be determined by the
court issuing the writ of execution.
The officer is not liable for damages, for the taking or
keeping of the property, to any third-party claimant
unless a claim is made by the latter and unless an
action for damages is brought by him against the officer
within one hundred twenty (120) days from the date of
the filing of the bond. But nothing herein contained
shall prevent such claimant or any third person from
vindicating his claim to the property by any proper
action.
xxx xxx xxx

The remedies just mentioned are without prejudice to "any proper

action" that a third-party claimant may deem suitable, to vindicate
"his claim to the property." Such a "proper action," in the context of
Section 17 of Rule 39, has been held to refer to an action distinct and
separate from that in which the judgment is being enforced.

judgment debtor, and should a third party appear to

claim the property levied upon by the sheriff, the
procedure laid down by the Rules is that such claim
should be the subject of a separate and independent
action.

Such a "proper action" is, quite obviously, entirely distinct from the
explicitly described in Section 17 of Rule 39, i.e., "an action for
damages ** brought (by a third-party claimant) against the officer
within one hundred twenty (120) days from the date of the filing of the
bond ** for the taking or keeping of the property" subject of
the terceria. Quite obviously, too, this "proper action" would have for
its object the recovery of the possession of the property seized by the
sheriff, as well as damages resulting from the allegedly wrongful
seizure and detention thereof despite the third-party claim; and it may
be brought against the sheriff, of course, and such other parties as may
be alleged to have wrongful with the sheriff in the supposedly
wrongful execution proceedings, such as the judgment creditor
himself. And such a "proper action," as above pointed out, is and
should be an entirety separate and distinct action from that in which
execution has issued, if instituted by a stranger to the latter suit. 33

As we explained in the Quebral case (Quebral v.

Garduno, 67 Phil., 316), since the third-party claimant
is not one of the parties to the action, she could not
strictly speaking, appeal from the order denying her
claim, but should file a separate reivindicatory action
against the execution creditor or the purchaser of her
property after the sale at public auction, or a complaint
for damages against the bond filed by the judgment
creditor in favor of the sheriff.

** (C)onstruing Section 17 of Rule 39 of the Revised

Rules of Court, the rights of third-party claimant over
certain properties levied upon by the sheriff to satisfy
the judgment should not be decided in the action where
the third- party claims have been presented, but in the
separate action instituted by the claimants.
This is evident from the very nature of the proceedings.
In Herald Publishing, supra. We intimated that the
levy by the sheriff of a property by virtue of a writ of
attachment may be considered as made under
authority of the court only when the property levied
upon unquestionably belongs to the defendant. If he
attaches properties other than those of the defendant,
he acts beyond the acts of his authority. Otherwise
stated, the court issuing a writ of execution is supposed
to enforce its authority only over properties of the

We reiterated this in Potenciano v. Dineros, et al. (97

Phil. 196; Agricultural Credit Administration v. Lasam
28 SCRA 1098) when We ruled that "such
reivindicatory action is reserved to the third-party
claimant by Section 15 of Rule 39 despite disapproval of
his claim by the court itself (Planas v. Madriga 94 Phil.
754, Lara v. Bayona, G.R. No. L-7920, decided May 10,
1955)." This rule is dictated by reasons -of convenience,
as "intervention is more likely to inject confusion into
the issues between the parties in the case *** with
which the third-party claimant has nothing to do and
thereby retard instead of facilitate the prompt dispatch
of the controversy which is the underlying objective of
the rules of pleading and practice" ( Herald Publishing,
supra, p. 101). Besides, intervention may not be
permitted after trial has been concluded and a final
judgment rendered in the case. 34
In such separate action, the court may issue a writ of preliminary
injunction against the sheriff enjoining him from proceeding with the
execution sale. 34-A

Upon the other hand, if the claim of impropriety on the part of the
sheriff in the execution proceedings is made by a party to the action,
not a stranger thereto, any relief therefrom may be applied for with,
and obtained from, only the executing court; and this is true even if a
new party has been impleaded in the Suit. 35
In any case, Ong's claim that the filing of the judgment creditor's bond
operated to divest the Court of jurisdiction to control and supervise
the conduct of the execution sale must be rejected. That bond had
absolutely no effect on the Court's jurisdiction. It was merely
"equivalent to the personal interference of the indemnitor and his
bondsmen in the course of the proceeding by directing or requesting
the sheriff to hold and sell the goods as if they were the property of the
defendants in attachment. In doing this they (the indemnitor and his
bondsmen) assume the direction and control of the sheriff's future
action so far as it constitutes a trespass; and they become to that
extent the principals and he their agent in the transaction. This makes
them responsible for the continuance of the wrongful possession and
for the sale and conversion of the goods; in other words, for all the real
damages which plaintiff sustains (Love Joy vs. Murray, 70 U.S. 129). 36
Ong's third theory that the Tatings' remedy in the event of the
denial of their application for relief by the Trial Court is a separate
action for recovery of possession of the goods by them claimed plus
damages for wrongful detention is correct and should be sustained,
in line with the doctrine in Bayer, supra, 37 and the other cases which
followed it. 38

As regards the matter of the inhibition of the City Court Judge, the
incident has been correctly determined by the Court of Appeals. No
proper ground exists to disqualify His Honor from continuing to act in
Civil Case No. 28309.
One last issue remains, and that is, whether the Tatings, who were
living with Evangeline Roces in the premises lease by the latter from
Ong, are hable for the payment of rentals in arrears jointly or
solidarily with said Evangeline Roces. They are not. They were never
impleaded as parties and never served with summons in the suit for
ejectment initiated by Ong against Evangeline Roces. The Court
therefore never acquired jurisdiction over them. And while the
judgment against Evangeline Roces, in so far as it decrees her ouster
from the leased premises, may be enforced not only against her but
also against "any person or persons claiming under" her 39 that
judgment, in so far as it directs payment of money by way of
arrearages in rents, is not binding on the Tatings and definitely not
enforceable against them.
WHEREFORE, the petition is dismissed for lack of merit. The case
shall be remanded to the Metropolitan Trial Court at Quezon City
which shall forthwith resolve the Tatings' pending motions in Civil
Case No. 28309, consistently with the principles herein set forth.
Costs against petitioner.
SO ORDERED.