Rule 39 - Execution, Satisfaction and Effect of Judgments.pdf
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1997 Rules on Civil Procedure 2001 Edition
Rule 39 – Execution, Satisfaction And Effect of Judgments
Rule 39 EXECUTION, SATISFACTION AND EFFECT OF JUDGMENTS
Rule 39 is on the subject of Execution, Satisfaction and Effect of Judgments. This is the longest rule in the study of Civil Procedure. Take note that there are 48 Sections. Let us first review the fundamentals. Q: When the judgment becomes final and executory, what are the effects? A: The finality of a judgment produces three (3) effects, to wit: 1.) The prevailing party is entitled to have the judgment executed as a matter of right and the issuance of the corresponding writ of execution becomes a ministerial duty of the court (Rule 39); 2.) The court rendering the judgment loses jurisdiction over the case so that it can no longer correct the judgment in substance, except to make corrections of clerical errors and omissions plainly due to inadvertence or negligence. (Locsin vs. Paredes, 63 Phil. 87; Manaois vs. Natividad, L-13927, Feb. 28, 1960; Maramba vs. Lozano, L-21533, June 29, 1967) If after the judgment is rendered, you file a motion for reconsideration or new trial, there is a possibility for the court to change its mind and its judgment. But once the judgment has become final, the court has no more power to change its judgment substantially. The error will also become final, you can no longer change anything substantial. EXCEPTION: There is one type of judgment which can be changed substantially even long after it became final as an exception to this rule. In the study of Persons, Judgment for Support. The judgment for support, which can be modified at any time because the obligation to give support depends not only on the resources of the obligor, but also on the ever-changing needs of the obligee. (Malabana vs. Abeto, 74 Phil. 13) EXAMPLE: The father refuses to support his minor child. After trial, the court orders the father to support the child at P1,000 per month. Four years later, the father is already well-off and the child is already in nursery or kindergarten. So the child tells his lawyer that the amount for support must be increased from P1,000 to P5,000. The father says, “the court said P1,000 and if you change that to P5,000, that would be substantial.” The father is wrong. The amount for support can be Lakas Atenista Ateneo de Davao University College of Law
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changed anytime. In the same manner. The amount can also be lowered, as when the father loses his job. 3.) Res Adjudicata supervenes. (NLU vs. CIR, L-14975, May 15, 1962) The same cause of action between the same parties can never be the subject matter of another litigation in the future. Any subsequent case is barred by prior judgment.
Q: Define execution. A: EXECUTION is the remedy provided by law for the enforcement of a judgment. (21 Am. Jur. 18) It is the fruit and the end of the suit and is very aptly called the life of the law (PAL vs. Court of Appeals, 181 SCRA 557). It would be useless if there is judgment but you cannot enforce the same. Q: Who will enforce the judgment? A: The very same court which rendered the judgment. Execution shall be applied for in the court of origin. If an appeal has been duly perfected and finally resolved, the execution may be applied for also in the court of origin on motion of the judgment obligee. (Sec. 1) In filing a motion for execution of an appealed judgment, there is no need to wait for the records of the case to be remanded to the court of origin. All that is required is for the appeal to have been duly perfected and finally resolved before execution may be applied for (Borgonia vs. Decano 317 SCRA 660). This is because when the judgment obligee files a motion for execution in the court of origin, all he has to do is to attach the certified true copies of (a) the judgment of the appellate court, and (b) the entry of said judgment (Sec. 1) even if the records have not as yet been remanded to the court of origin. This procedure prevents needless delays in the execution of the judgment. If for whatever reason, the execution cannot be had with dispatch in the court of origin, the new rules likewise afford the judgment obligee a remedy. He may file a motion with the appellate court to direct the court of origin, in the interest of justice, to issue the writ of execution (Sec.1). Writ of execujudicial a judicial writ issued to an officer authorizing him to execute the judgment of the court. Q: How is execution generally done? A: It is generally done by filing a motion for execution by the prevailing party and the court will then issue an order of execution, which will be followed with a writ of execution, and the sheriff will enforce the judgment. Lakas Atenista Ateneo de Davao University College of Law
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In Lou vs. Siapno 335 SCRA 181, it was ruled that even in judgments which are immediately executory, “there must be a motion to that effect and a hearing called for the purpose.” Also, “under Supreme Court Circular No. 24-94, a motion for the issuance of a writ of execution must contain a notice to the adverse party” (Pallada vs. RTC of Kalibo, Aklan Br. 1 304 SCRA 440). A motion for the issuance of a writ of execution shall contain a notice to the adverse party. A motion which does not contain a notice of hearing, of the time and place for the hearing of the motion, as required by Secs. 4 and 5 of Rule 15 of the Rules of Court, is a worthless piece of paper which the clerk has no right to receive and which the court has no authority to act upon (Pallada vs. RTC of Kalibo Aklaan, Br. 1, supra). Because of the present phraseology of Sec. 1, rulings like those made in De Mesa vs. CA 231 SCRA 773 to the effect that where execution is a matter of right, the judgment debtor need not be given an advanced notice of the application for execution nor be afforded a prior hearing thereon, must necessarily be deemed abandoned. So, we file a motion in court after the judgment has become final and executory. Q: How can the court issue the order when it has already lost jurisdiction over the case because from what we have learned here is that, one of the effects of the finality of judgment is that the court loses jurisdiction over the case. And when the court loses jurisdiction, it can no longer act on the case. So, how can it still issue orders in that case when actually, once the judgment becomes final and executory, the trial court loses jurisdiction over the case and it can no longer act in that case? A: What is meant by that statement is that, the court can no longer change the judgment. That is why new trial and reconsideration is not anymore available in this stage. The judgment is beyond the power of the court to change or alter. BUT definitely the court can act on that case for the purpose of enforcing its judgment because it is absurd to claim that a trial court has the power to try and hear a case but once the judgment has already become final, it has no more power to enforce it. If you will really describe jurisdiction in its complete aspect, we can say jurisdiction is “the power of the court to act on the case, to try, to decide and to enforce its judgment.” That would be more complete. Because enforcement is part of the court's jurisdiction. Q: Against whom shall the execution issue? A: Generally, execution can issue only against a (losing) party to the case and not against one who is a complete stranger because majority of judgments are in Lakas Atenista Ateneo de Davao University College of Law
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personam. They are only enforceable against the parties themselves or their successors-in-interest – people who derive their rights from him. And a judgement can never be enforced against a complete stranger who never had his day in court. (Cruzcosa vs. Concepcion, 101 Phil. 146; Castañeda vs. De Leon, 55 O.G. 625, Jan. 26, 1959; Bacolod vs. Enriquez, 55 O.G. 10545, Dec. 21, 1959)
Q: What portion in the decision is normally the subject of execution ? A: It is the dispositive portion – the “WHEREFORE…” – that is going to be enforced. (Robles vs. Timario, 58 O.G. 1507, Feb. 19, 1962). Writ of execution must conform with judgment The writ of execution must conform to the dispositive portion of the decision to be executed and the execution is void if it is in excess of and beyond the original judgment or award for it is a settled general principle that a writ of execution must conform strictly to every essential particulars of the judgment promulgated (Ex-Bataan Veterans Security Agency, Inc. vs. N:LRC 250 SCRA 418; Equatorial Realty Development Inc. vs. Mayfair Theatre Inc. 332 SCRA 139; Banquerigo vs. CA GR 164633 August 7, 2006). Thus, if the judgment does not provide for the payment of interest, the writ of execution cannot modify the judgment by requiring the judgment obligor to pay interest. That part of the writ imposing interest is void (Solidbank Corp. vs. CA 379 SCRA 159). Essential requisites of a writ of execution 1. It must conform strictly to the decision or judgment which gives it life; and 2. it cannot vary the intent of the judgment it seeks to enforce.
CLASSES OF EXECUTION Q: What are the classes of execution under the law? A: The following: I. As to their nature: 1.) COMPULSORY execution – known as Execution as a Matter of Right (Section 1) 2.) DISCRETIONARY execution – known as Execution Pending Appeal (Section 2) II. As to how it is enforced (Section 6): 1.) EXECUTION BY MOTION Lakas Atenista Ateneo de Davao University College of Law
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2.) EXECUTION BY INDEPENDENT ACTION COMPULSORY EXECUTION (Execution as a matter of right) EXECUTION AS A MATTER OF RIGHT; FIRST INSTANCE: NO APPEAL, JUDGMENT BECOMES FINAL Section 1. Execution upon judgments or final orders. – Execution shall issue as a matter of right, on motion, upon a judgment or order that disposes of the action or proceeding upon the expiration of the period to appeal therefrom if no appeal has been duly perfected. If the appeal has been duly perfected and finally resolved, the execution may forthwith be applied for in the court of origin, on motion of the judgment obligee, submitting therewith certified true copies of the judgment or judgments or final order or orders sought to be enforced and of the entry thereof, with notice to the adverse party. The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of origin to issue the writ of examination. Q: What are the conditions for compulsory execution? A: The following are the conditions: 1.) FIRST CONDITION: If a judgment has disposed already of the action or proceeding then it can be executed ; 2.) SECOND CONDITION: The period to appeal has expired and no appeal has been filed/taken from the judgment. Under the first condition, if a judgment has disposed already of the action or proceeding then it can be executed because if the judgment or order has not yet disposed of the action or proceeding, that is called an interlocutory judgment or order. One of the effects of finality of a judgment under Rule 36 is that the prevailing party is entitled to have the judgment executed as a matter of right. And it is the ministerial duty of the court to execute its own judgment. So once the judgment has become final, all that the winner or prevailing party has to do is to file an action in court for execution, the court has to issue.
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When the law says it is a matter of right upon a judgment or order that disposes the action or proceeding, it means that after the judgment was rendered, there is nothing more for the court to do because its job is over. Therefore, if there is something more that the court can do, as a rule, you cannot execute. That is why conditional judgments, incomplete judgments cannot be executed. Under the second condition, we must wait for the period to appeal to expire before we can move for execution. So, if the period to appeal has not yet expired, then we cannot execute the judgment. Once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right, and the issuance of a writ of execution becomes the ministerial duty of the court (Buaya vs. Stronghold Insurance Co., Inc. 342 SCRA 576). Once a decision becomes final and executory, it is the ministerial duty of the presiding judge to issue a writ of execution except in certain cases, as when subsequent events would render execution of judgment unjust (Mangahas vs. Paredes GR 157866 February 14, 2007). Judgments and orders become final and executory by operation of law and not by judicial declaration. The trial court need not even pronounce the finality of the order as the same becomes final by operation of law (Testate of Maria Manuel Vda. De Biascan 374 SCRA621). Its finality becomes a fact when the reglementary period for appeal lapses, and no appeal is perfected within such period (Vlason Enterprises vs. CAS 310 SCRA 26). Q: May the court refuse to execute a judgment on the ground that the judgement was wrong or erroneous? A: NO, because it is a matter of and the issuance of the corresponding writ of execution upon a final and executory judgment is a ministerial duty of the court to execute which is compellable by mandamus. (Ebero vs. Cañizares, 79 Phil. 152) The principle is: No matter how erroneous a judgment may be, so long as the lower court had jurisdiction over the parties and the subject matter in litigation, (in short the judgment is valid), the said judgment is enforceable by execution once it becomes final and executory. The error also becomes final. If it is erroneous, the remedy is to appeal, otherwise the error becomes final as well. In execution, if you are not careful, there are lawyers who are very good in thwarting an execution where a series of maneuvers are utilized - we can still be delayed by questioning this and that and sometimes courts are unwitting accomplices. That is why in the 1994 of PELAYO vs. COURT OF APPEALS Lakas Atenista Ateneo de Davao University College of Law
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230 SCRA 606 HELD: “We have time and again ruled that courts should never allow themselves to be a party to maneuvers intended to delay the execution of final decisions. They must nip in the bud any dilatory maneuver calculated to defeat or frustrate the ends of justice, fair play and prompt implementation of final and executory judgment. Litigation must end and terminate sometime and somewhere, and it is essential to an effective administration of justice that once a judgment has become final, the winning party be not, through a mere subterfuge, deprived of the fruits of the verdict. Courts must therefore guard against any scheme calculated to bring about that result. Constituted as they are to put an end to controversies, courts should frown upon any attempt to prolong them.”
GENERAL RULE: Judgment is enforceable by execution once it becomes final and executory. EXCEPTIONS: (WOLFSON vs. DEL ROSARIO, 46 Phil. 41) 1. When there has been a change in the situation of the parties, which makes the execution inequitable; 2. When it appears that the controversy has never been submitted to the judgment of the court; 3. When the judgment was novated by subsequent agreement of the parties; 4. When it appears that the writ of execution has been improvidently issued; 5. When the writ of execution is defective in substance; 6. When the writ of execution is issued against the wrong party; and 7. When the judgment debt has been paid or otherwise satisfied. [1] WHEN THERE HAS BEEN A CHANGE IN THE SITUATION OF THE PARTIES WHICH MAKE THE EXECUTION INEQUITABLE. (Supervening Fact Doctrine) One of the most important exceptions is the first one: When there has been a change in the situation of the parties which make the execution inequitable. Meaning, from the time na nagkaroon ng final judgment up to the present, there has been a change in the situation of the parties so that if we will execute, the judgment becomes inequitable already. So, this is just another way of saying that there has been a SUPERVENING EVENT that happened which makes execution inequitable. Lakas Atenista Ateneo de Davao University College of Law
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EXAMPLE: There was a case where A filed a case to eject B from his property and B lost the case and there was a judgment ordering him to vacate the property of A. But while the case was going on, A mortgaged his property to the bank. In the meantime, he failed to pay his loan and the bank foreclosed the mortgage. So the property was sold at public auction. And at the auction sale, B, the one occupying it, bought the property. The owner now is B. But there is a final judgment ejecting him. Now, shall we insist on the judgment ejecting B? No because B is now the owner. The fact that B became the owner is a supervening event. PHIL. VETERANS BANK (PVB) vs. IAC 178 SCRA 645 NOTE: There was a time before that the PVB was closed for 5 to 6 years because I think they have some problems. So the Central Bank has to take over. The Central Bank has ordered to stop the operation – placed under receivership, the Central Bank will control. Now under the Central Bank Law, once the Central Bank takes over the control of a private bank, all its assets has to be preserved. No assets will be sold or disposed of. FACTS: There was somebody who sued PVB, and PVB lost. So there was a judgment which became final. And the winner asked the court to execute. Practically, you have to levy on the property of the bank. In the meantime, the PVB was placed under receivership, where under the law, it cannot be disposed of because it is under the control of the Central Bank. ISSUE: Can the prevailing party insist on the enforcement of the judgment and get and levy the property of the PVB? HELD: NO. The placement of the bank under receivership is a SUPERVENING EVENT. “Once a decision has become final and executory, it is the ministerial duty of the court to order its execution, admits certain exceptions. The fact that petitioner is placed under receivership is a supervening event that renders a judgment notwithstanding its finality unenforceable by attachment or execution.” SAMPAGUITA GARMENTS CORP. vs. NLRC 233 SCRA 260 FACT: An employee was terminated by his employer on the ground of theft. He stole company property. The management filed also a case of theft against the employee. But in the meantime the employee also Lakas Atenista Ateneo de Davao University College of Law
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filed a labor case against the employer for illegal dismissal and prayed for reinstatement with back wages. After hearing, the NLRC ruled that there was illegal termination and ordered the reinstatement of the employee and payment of backwages. The NLRC decision became final. In the meantime, the accused was convicted in the criminal case for theft and ordered to go to prison. ISSUE: What happens now to the final judgment of the NLRC reinstating the employee? HELD: “An employee’s conviction for theft, which was affirmed by the RTC and the CA, is a SUPERVENING CAUSE that renders unjust and inequitable the NLRC decision mandating the employee’s reinstatement with backwages.” Take note however that for the supervening event to apply, the supervening event must happen after the judgment has become final and executory. Not that the supervening event happened while the case was going on. If the case is going on and something happened which you believe would make the decision against you unfair, your duty is to bring it to the attention of the court so that the court deciding the case would take that into consideration. In the case of VALENZONA vs. COURT OF APPEALS 226 SCRA 36 HELD: “While the rule is that a stay of execution of a final judgment may be authorized if necessary to accomplish the ends of justice, as for instance, where there has been a change in the situation of the parties which makes such execution inequitable, nevertheless the said rule cannot be invoked when the supposed change in the circumstances of the parties took place while the case was pending, for the reason that there was then no excuse for not bringing to the attention of the court the fact or circumstance that affects the outcome of the case.” The ruling in VALENZOLA was reiterated in ABOITIZ vs. TRAJANO 278 SCRA 387 [1997] HELD: “We are of course well aware of the rule authorizing the court to modify or alter a judgment even after the same has become executory, whenever circumstances transpire rendering its execution unjust and inequitable. However, this rule, we must emphasize, applies only to cases where the facts or circumstances authorizing such Lakas Atenista Ateneo de Davao University College of Law
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modification or alteration transpired after the judgment has become final executory.”
[3] WHEN THE JUDGMENT WAS NOVATED BY SUBSEQUENT AGREEMENT. QUESTION: Can the parties enter into a compromise agreement when there is already a decision? ANSWER: YES. Compromise agreement is welcome anytime – before the case is filed, while the case is going on, while the case is on appeal. Q: Now suppose there is a decision in my favor against you and then you approach me and say, “Pwede ba pag-usapan na lang natin ito?” “Sige okay.” Then we arrive at another agreement which we signed, where the agreement is different from the decision in my favor. Can it be done? A: Yes, I can waive my rights under the judgment. There is now a new agreement between us. Q: Can I execute on the original judgment? A: No more, because the new agreement novated the judgment. Take note that in case of novation, the new obligation must be totally incompatible with the first obligation. A related question: Q: Can one court by injunction or restraining order stop the execution of a judgment of another court? A: GENERAL RULE: NO, because that will amount to interference. EXCEPTIONS:(when the enforcement of a final judgment may be stopped by way of injunction) 1.) Rule 38, Section 5: Rule 38, Section 5: Preliminary injunction pending proceedings. – The court in which the petition is filed, may grant such preliminary injunction as may be necessary for the preservation of the rights of the parties, upon the filing by the petitioner of a bond in favor of the adverse party, conditioned that if the petition is dismissed or the petitioner fails on the trial of the case upon the merits, he will pay the adverse party all damages and costs that may be awarded to him by reason of the issuance of such injunction or Lakas Atenista Ateneo de Davao University College of Law
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the other proceedings following the petition; but such injunction shall not operate to discharge or extinguish any lien which the adverse party may have acquired upon the property of the petitioner. In effect, there is a final and executory judgment but the court will issue an injunction to stop this enforcement because of the pendency of a petition for relief from judgment. 2.) When there is an action for annulment of judgment of the RTC filed in the CA. The CA may issue a writ of preliminary injunction – annulment of judgment, certiorari, or prohibition cases where the CA will issue a preliminary injunction to stop the RTC from enforcing its judgment pending the resolution of whether its judgment was rendered in excess or without jurisdiction- annulment of judgement, certiorari, or prohibition cases where the CA will issue a preliminary injunction to stop the RTC from enforcing its judgement pending the resolution of whether its judgement was rendered in excess or without jurisdiction. So, those are the exceptions. EXECUTION AS A MATTER OF RIGHT; SECOND INSTANCE: CA AFFIRMS THE RTC JUDGMENT Q: Is there any other instances where a judgement maybe executed as a matter of right? A: YES, when the losing party appealed the RTC decision to the CA and the CA affirmed the decision of the RTC. Kung may appeal, the judgment is not final, you cannot execute. The case is now in the CA, the CA decided in your favor, the RTC judgment was affirmed and the CA decision has also become final and executory. So you can now execute. Q: How do you execute in that situation? A: That is now covered by the second and third paragraphs of Section 1: If the appeal has been duly perfected and finally resolved, the execution may forthwith be applied for in the court of origin, on motion of the judgment obligee, submitting therewith certified true copies of the judgment or judgments or final order or orders sought to be enforced and of the entry thereof, with notice to the adverse party. Lakas Atenista Ateneo de Davao University College of Law
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The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of origin to issue the writ of execution. Now the usual procedure no, when you win in the RTC and the losing party appeals, the records of the case will be brought to the CA. Later, there will be a CA decision: The judgment of the RTC of Davao City is affirmed in toto. Now you have to wait for the CA judgment to become final because that may be appealed further to the SC. If the judgment becomes final, the clerk of court will make an entry of final judgment of the CA decision. Normally after that, the records from the CA will be returned to Davao. It will be sent back to the court of origin. Once the record is back, the RTC is supposed to tell you, the records are here. That is the time you file a motion for execution. You will file it in the RTC. But sometimes, it takes months for the CA to return the records. That is the trouble with the CA. It takes them several months, when the case is appealed, before they tell you that the record is here. In the PRESENT rules, this is taken from the SC Circular 24-94 which took effect in 1994, hindi na kailangan hintayin ang records na bumalik dito. Just get a certified copy of the CA decision, get a copy of the entry of final judgment of the CA. You just attach a copy of the CA judgment and a certificate from the CA clerk of court that it is already final and executory - meaning, that there is already entry of final judgment. This is much faster than waiting for the records to be returned. The first paragraph in Section 1 normally deals with judgment usually becoming final and executory in the RTC. The rest of the paragraph deals with appeal which affirmed the decision of the RTC. So that is the procedure for execution – both cases, execution is a matter of right because judgment is final and executory. The alternative which is the last paragraph, in the interest of justice, you can file also your motion for execution in the CA and the CA will direct the RTC to issue the writ of execution. EXECUTION AS A MATTER OF RIGHT; THIRD INSTANCE: CASES UNDER SECTION 4 Q: Is there another instance when execution becomes a matter of right? A: This is the third instance found in Section 4: Sec. 4. Judgments not stayed by appeal. Judgments in action for injunction, receivership, Lakas Atenista Ateneo de Davao University College of Law
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accounting and support, and such other judgments as are now or may hereafter be declared to be immediately executory, shall be enforceable after their rendition and shall not be stayed by an appeal taken therefrom, unless otherwise ordered by the trial court. On appeal therefrom, the appellate court in its discretion may make an order suspending, modifying, restoring or granting the injunction, receivership, accounting, or award of support. The stay of execution shall be upon such terms as to bond or otherwise as may be considered proper for the security or protection of the rights of the adverse party. (4a) GENERAL RULE: If there is an appeal, the judgment will be stayed. EXCEPTIONS (Under Section 4): Judgments in actions for injunction, receivership, accounting, support, judgment declared to be immediately executory. So, actions for injunction, receivership, accounting, support. So for example: there’s an injunction from the court: “The defendant is enjoined from trespassing on plaintiff’s land.” Then you appealed. So, the decision is not final. Now, if the judgment is not yet final, what will you do in the meantime. So, you’ll say; “I’ll just continue to trespass because anyway the judgment is not yet final.” Ah hindi yan pwede. Even if the judgment is not yet final, even if it is on appeal, you have to honor the injunction. So, in effect, it is a matter of right. Another Example: An order directing you to render an accounting. Take the case of recovery of possession of land with accounting of the income that you received. After trial, “Okey, Defendant, you turn over the possession of the property to the plaintiff and you render an accounting.” Appeal ka. Pag appeal mo, there must be an accounting in the meantime. So, if there is a judgment for an action for support, you must comply with the judgment even before it becomes final. So, the amendment now includes support and this phrase, “such other judgments as are now or may hereafter be declared to be immediately executory.” Any judgment which is declared by law to be immediately executory has to be enforced even before it becomes final and executory even if there is an appeal. Q: Give an example of a law which declares a judgement to be immediately executory? A: The best example would be the Summary Procedure – where a decision of the MTC in a civil case is appealed to the RTC, the decision of the RTC is Lakas Atenista Ateneo de Davao University College of Law
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immediately executory even if we go to the CA. It has to be executed unless the appellate court will stop the execution in the meantime. EXECUTION AS A MATTER OF RIGHT; FOURTH INSTANCE: FORCIBLE ENTRY AND UNLAWFUL DETAINER CASES Q: Is there another instance when execution becomes a matter of right? A: YES, under Rule 70 – a judgment of the MTC in a forcible entry or unlawful detainer case is immediately executory (i.e. subject to immediate execution) even if it is not yet final and executory. TO SUMMARIZE: Q: When is execution a matter of right? A: In the following: 1.) Section 1, paragraph 1 – no appeal; judgment becomes final; 2.) Section 1, paragraph 2 – there is an appeal; once the CA judgment becomes final; 3.) Section 4 – Judgment in an action for injunction, receivership, accounting, support, judgment declared to be immediately executory; and 4.) Rule 70 – Judgments in Forcible Entry and Unlawful Detainer cases. DISCRETIONARY EXECUTION (Execution pending appeal) Section 2. Discretionary execution. – (a) Execution of a judgment or final order pending appeal. – On motion of the prevailing party with notice to the adverse party filed in the trial court while it has jurisdiction over the case and is in the possession of either the original record or the record on appeal, as the case may be, at the time of the filing of such motion, said court may, in its discretion, order the execution of a judgment or final order even before the expiration of the period to appeal. After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in the appellate court. Discretionary execution may only issue upon good reasons to be stated in a special order after due hearing. (b) Execution of several, separate or partial judgments. A several, separate or partial Lakas Atenista Ateneo de Davao University College of Law
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judgment may be executed under the same terms and conditions as execution of a judgment or final order pending appeal. We’ll now go to the second type of execution - discretionary or execution pending appeal. Discretionary, meaning, the court may or may not order the execution. Here, the prevailing party files a motion for execution within the 15 days period. So in other words, the judgment is not yet final and executory, normally, within the period to appeal. Q: Normally, can you file a motion for execution within the period to appeal? A: As a rule, you cannot because it is not yet final. But by EXCEPTION, Section 2 allows you, provided, according to the last paragraph, discretionary execution may only issue upon ‘good reason’ to be stated in the special order after due hearing. Q: Therefore, what are the requisites for discretionary execution? A: The following are the requisites for discretionary execution: 1.) There must be a motion filed by the prevailing party with notice to the adverse party; 2.) There must be a hearing of the motion; 3.) There must be good reasons to justify the discretionary execution; and 4.) The good reasons to execute must be stated in a special order after due hearing (Mancenido vs. CA 330 SCRA 419; Geolistics Inc. vs. Cateway Electronics, GR 174256-57, March 25, 2009). Why discretionary? Because the court may or may not grant the execution depending on whether there is a good reason or no good reason. Unlike in Section 1, when the judgment has become final and executory, you do not have to cite any good reason. The only reason for the execution is that the judgment becomes final and executory. But in the case of execution pending appeal, you must justify it – the party must convince the court to grant the execution. And remember according to the SC, execution under Section 2 is not the general rule, that is the exception. “The requirement of good reason is important and must not be overlooked, because if the judgment is executed and, on appeal, the same is reversed, although there are provisions for restitution, oftentimes damages may arise which cannot be fully compensated. Accordingly, execution should be granted only when these considerations are clearly outweighed by superior circumstances demanding urgency, and the above provision requires a statement Lakas Atenista Ateneo de Davao University College of Law
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of those circumstances as a security for their existence.” (City of Bacolod vs. Enriquez, 101 Phil. 644) It is even a misnomer – execution pending appeal. For all you know, the losing party may or may not appeal. It is actually called execution pending appeal because you are filing the motion within the period to appeal. Q: What will happen if there are no good reasons? A: The writ of execution is void because it does not state why you are executing a judgment. (AFWU vs. Estipona, L-17934, Dec. 28, 1961) And remember that execution pending appeal is the exception rather than the rule. And there is a possibility that the judgment in your favor will be reversed on appeal. Q: Suppose we will execute the judgment pending appeal and the appeal will proceed then it will be reversed, what will happen then? A: If that happens, then there is Section 5 – eh di, magsaulian tayo if it is reversed totally, partially, or annulled on appeal or otherwise. There will be MUTUAL RESTITUTION. That is the remedy under Section 5. But the trouble is ang hirap man ng saulian, eh. There could not be a 100% perfect restitution. That is the same asking the question, how can you unscramble an unscrambled egg? This is one reason why execution pending appeal is not favored. Section 5. Effect of reversal of executed judgment. - Where the executed judgment is reversed totally or partially, or annulled, on appeal or otherwise, the trial court, may, on motion, issue such orders and justice may warrant under the circumstances (5a)
Q: Give examples of GOOD REASONS which would justify execution pending appeal. A: Following are example of good reasons: 1.) When there is danger of the judgment becoming INEFFECTUAL. (Scottish Union vs. Macadaeg, 91 Phil. 891); In this case of MACADAEG, the plaintiff sued a foreign corporation doing business in the Philippines. So it has assets no? The plaintiff sued the foreign company and he won, there was award, but hindi pa final. In the meantime, plaintiff learned the foreign company is going to stop completely its business in the Philippines and they are going to send back all their assets abroad. Sabi ng na plaintiff: “Aba delikado ako. Suppose after the appeal, I still win and I will start running after the defendant na wala naman 16 Lakas Atenista Ateneo de Davao University College of Law
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dito. It has no more office, no operations, no assets; but in the meantime meron pa”? So the plaintiff filed a motion for execution pending appeal. If we will wait for the judgment to become final, by that time the judgment will become ineffectual. 2.) OLD AGE; There was a case an old woman files a case against somebody to recover her land from the defendant which the latter has deprived her of the property for years. The defendant enjoyed the property and the fruits. After years of litigation she won, she was about 80. And then mag-aappeal pa yong kalaban. The old woman filed a motion in court asking for immediate execution even if the judgment is not yet final on the argument that “I have been deprived for years of the possession and of the property; and there is a probable appeal which may take another couple of years. By the time I win the case on appeal, I may already be dead. I have not enjoyed the property and the fruits.” The SC said, all right that is a good reason. 3.) Where the appeal is for the purpose of DELAY; Q: How about the argument that the intended appeal is dilatory? It is only intended to prolong the supposed execution and therefore the losing party has a chance to win the appeal. Is that a good ground for execution pending appeal ? A: In the old case of PRESBITERO vs. RODAS (73 Phil. 300) and JAVELLANA vs. QUERUBIN (July 30, 1966) the SC said that, that is a good reason – when the appeal is interposed for delay. However, in the case of AQUINO vs. SANTIAGO (161 SCRA 570) the SC said that it is not a ground because it is as if the trial court is already acting like the CA. It is only the CA which has the power to claim that the appeal is without merit. That’s another reasoning. But in the case of HOME INSURANCE CO. vs. CA (184 SCRA 318), the SC ruled that, that would be a good reason again specially that there are many factors to show the inequity of not executing the judgment immediately (if coupled with other reason). That’s why in the case of HOME INSURANCE CO. vs. COURT OF APPEALS 184 SCRA 318 HELD: “A good and sufficient reason upon which to issue execution of the judgment pending appeal is when the appeal is being taken for the purpose of delay. While it is true that it is not for the trial court to say that the appeal may not prosper or that it is frivolous [so, the SC is aware of these pronouncements], there are Lakas Atenista Ateneo de Davao University College of Law
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circumstances which may serve as cogent bases for arriving at such a conclusion.” Dean I: An example where the trial court maybe justified in saying that the appeal is dilatory is in default judgements where there is no evidence for the defendant. And then the defendant appeals. Now what is the chance of reversal when all the evidence is for the plaintiff? The possibility that the judgment will be reversed is almost zero (0). Therefore the court can rule that the appeal is dilatory and then order the execution of the judgment pending appeal upon motion of the plaintiff. The SC continues: “Another vital factor which led trial court to allow execution pending appeal was the pendency of the case for more than 17 years so that the purchasing power of the peso has undeniably declined. Petitioner should be given relief before it is too late.” Where the sole reason given by the trial court in disallowing an appeal is that the appeal is frivolous and dilatory, execution pending appeal cannot be justified because the authority to disapprove an appeal pertains to the appellate court (International School, Inc. Manila vs. Court of Appeals, 309 SCRA 474) Mere allegation that the appeal is dilatory is not a good reason to merit discretionary execution (Intramuros Tennis Club, Inc. vs. CA 341 SCRA 90). In Sangkay vs. NPC GR 141447 May 4, 2006, the Court stressed that the trial court is not justified to order the execution pending appeal, on its assertion that the appeal of the respondent is a dilatory tactic. It is not for the trial judge to determine of a decision he rendered as this is the role of the appellate court. Hence, it is not within the competence of the trial court, in resolving a motion for execution pending appeal, to rule that the appeal is patently dilatory and rely on the same as basis for finding good reasons to grant the motion. Only an appellate court can appreciate the dilatory intent of an appeal as an additional good reason in upholding an order for execution pending appeal. 4. Financial distress is also not in itself a good reason to justify execution pending appeal (Intraamuros Tennis Club, Inc. vs. CA, supra) PB COM. vs. COURT OF APPEALS 279 SCRA 364 [Sept. 23, 1997] HELD: “It is significant to stress that private respondent Falcon is a juridical entity and not a natural person. Even assuming that it was indeed in financial distress and on the verge of facing civil or even criminal suits, the immediate execution of a judgment in its favor pending appeal cannot be justified as Falcon's situation may not be Lakas Atenista Ateneo de Davao University College of Law
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likened to a case of a natural person who may be ill or may be of advanced age.” “Even the danger of extinction of the corporation will not per se justify a discretionary execution unless there are showings of other good reasons, such as for instance, impending insolvency of the adverse party or the appeal being patently dilatory. Hence, it is not within competence of the trial court, in resolving a motion for execution pending appeal, to rule that the appeal is patently dilatory and rely on the same as its basis for finding good reason to grant the motion. Only an appellate court can appreciate the dilatory intent of an appeal as an additional good reason in upholding an order for execution pending appeal which may have been issued by the trial court for other good reasons, or in cases where the motion for execution pending appeal is filed with the appellate court in accordance with Section 2, paragraph (a), Rule 39 of the 1997 Rules of Court.”
5.)When the successful party files a BOND; Q: Here is a controversial question: How about an instance when the winning party offers to put up a bond. He says; “Alright, I am asking for an order pending appeal. I will put up a bond to answer for any damages that the defendant may suffer in the event that he wins the appeal.” A: In the old case of HACIENDA NAVARRA vs. LABRADOR (65 Phil 635), the SC simply implied that there is a good ground. HOWEVER, the SC denied that implication in later cases. Among which were the cases of ROXAS vs. CA (157 SCRA 370) and PNB vs. PUNO, (170 SCRA 229) and PHOTOQUICK INC. vs. LAPENA, JR. (195 SCRA 66). PHILIPPINE NATIONAL BANK vs. PUNO 170 SCRA 229 HELD: “The mere filing of a bond would not entitle the prevailing party to an execution pending appeal. Whatever doubts may have been generated by early decisions involving this matter, starting with Hacienda Navarra, Inc. vs. Labrador, et al., have been clarified in Roxas vs. Court of Appeals, et al.” “To consider the mere posting of a bond a ‘good reason’ would precisely make immediate execution of a judgment pending appeal ROUTINARY, the rule rather than the exception. Judgments would be executed immediately, as a matter of course, once rendered, if all that the prevailing party needed to do was to post a bond to answer Lakas Atenista Ateneo de Davao University College of Law
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for the damages that might result therefrom. This is a situation, to repeat, neither contemplated nor intended by law.” So, we might say that the posting of a bond would be an ADDITIONAL GOOD REASON but it is NOT BY ITSELF a good reason. So, the case of HACIENDA NAVARRA VS. LABRADOR has been misinterpreted.
The second paragraph of Section 2 [a]: After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in the appellate court. Q: Where can you file your motion for execution pending appeal? A: It DEPENDS: 1.) TRIAL COURT - while it has jurisdiction over the case and the court is still in possession of the records of the case. Meaning: (1.) the judgment has not yet become final - it is still within the 15 day period, and (2.) the court still is in possession of the records of the case. 2.) APPELLATE COURT – after the trial court has already lost jurisdiction, the motion for execution pending appeal may already be filed in the appellate court. So, if the RTC has no more jurisdiction, then doon ka na mag-file ng motion sa CA. Q: When will the court lose jurisdiction over the case ? A: With regard to execution pending appeal, you can correlate this with RULE 41, SECTION 9 , to wit: Rule 41, Section 9. Perfection of appeal; effect thereof. - A party’s appeal by notice of appeal is deemed perfected as to him upon the filing of the notice of appeal in due time. A party’s appeal by record on appeal is deemed perfected as to his with respect to the subject matter thereof upon approval of the record of appeal filed in due time. In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the appeals filed in due time and the expiration of the time to appeal of the other parties. In appeals by record on appeal, the court loses jurisdiction only over the subject matter thereof Lakas Atenista Ateneo de Davao University College of Law
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upon the approval of the records on appeal filed in due time and the expiration of the time to appeal of the other parties. In either case, prior to the transmittal of the original record of the record on appeal, the court may issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated by the appeal, approve compromises, permit appeals of indigent litigants, order execution pending appeal in accordance with Section 2 of Rule 39, and allow withdrawal of the appeal. (9a) The phrase “order execution pending appeal in accordance with Section 2 of Rule 39” was not there in the Old Rules. Now, that has been added and it jives with Section 2 paragraph (a). Now, for as long as the motion is filed, before the court loses jurisdiction and provided that the records are still with the trial court , even if the appeal is subsequently perfected, it can still act on the motion for execution pending appeal. Now, let us go back to Section 2, Rule 39 on execution of several, separate or partial judgments – meaning, there are several judgments arising from the same case: Rule 39, Section 2 [b]: b) Execution of several, separate or partial judgments. - A several, separate or partial judgment may be executed under the same terms and conditions as execution of a judgment or final order pending appeal. (2a) Let us correlate this provision with Rule 36, Sections 4 and 5 AND Rule 37, section 8: RULE 36, Sec. 4. Several judgments. - In an action against several defendants, the court may, when a several judgment is proper, render judgment against one or more of them, leaving the action to proceed against the others. (4) RULE 36, Sec. 5. Separate judgments. - When more than one claim for relief is presented in an action, the court, at any stage, upon a determination of the issues material to a particular claim and all counterclaims arising out of the transaction or occurrence which is the Lakas Atenista Ateneo de Davao University College of Law
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subject matter of the claim, may render a separate judgment disposing of such claim. The judgment shall terminate the action with respect to the claim so disposed of and the action shall proceed as to the remaining claims. In case a separate judgment is rendered, the court by order may stay its enforcement until the rendition of a subsequent judgment or judgments and may prescribe such conditions as may be necessary to secure the benefit thereof to the party in whose favor the judgment is rendered. (5a) RULE 37, Sec. 8. Effect of order for partial new trial. - When less than all of the issues are ordered retried, the court may either enter a judgment or final order as to the rest, or stay the enforcement of such judgment or final order until after the new trial. (7a) Q: Can there be two or more judgments arising out of one case? A: YES. (Rule 36, Sections 4 and 5) Q: Can the first judgment be immediately executed while waiting for rendition of the second judgment? A: Generally, the court will decide. If the court agrees, there has to be a good reason. There is one interesting case on execution pending appeal – the case of RCPI vs. LANTIN 134 SCRA 395 FACTS: The case of Lantin was an action for damages. The court awarded the plaintiff said damages. So, the plaintiff moved for discretionary execution. ISSUE: Whether or not execution pending appeal is proper in a judgment for damages. HELD: The execution pending appeal may be proper for enforcing the collection of ACTUAL DAMAGES, but it is not proper to enforce the payment of moral or exemplary damages. So, this is where the SC distinguished. Why is it that execution pending appeal is proper for the collection of actual damages? In actual or compensatory damages, the amount is certain. Normally, there are receipts. The amount is based on evidence. Lakas Atenista Ateneo de Davao University College of Law
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But the award for moral or exemplary damages is uncertain and indefinite. It is based on abstract factors like sleepless nights, besmirched reputation. It is hard to quantify it based on evidence. The SC said, in many cases the trial court awards a huge amount for exemplary damages but on appeal, the CA refused to award or totally eliminate the award. So, if the award of moral or exemplary damages is not certain or fixed, the execution pending appeal may not be proper to enforce its execution. Sec. 3. Stay of discretionary execution. Discretionary execution issued under the preceding section may be stayed upon approval by the proper court of a sufficient supersedeas bond filed by the party against whom it is directed, conditioned upon the performance of the judgment or order allowed to be executed in case it shall be finally sustained in whole or in part. The bond thus given may be proceeded against on motion with notice to the surety. (3a) Q: Now, assuming that there is an execution pending appeal in favor of the plaintiff under Section 2 and I am the defendant, is there a way for me to stop the execution pending appeal? A: Your remedy is to apply Section 3. The defendant will now ask the court to fix a supersedeas bond to stop the execution pending appeal. The bond will answer for any damages that the plaintiff may suffer if the defendant’s appeal is not meritorious. And once the supersedeas bond is filed, the court has to withdraw the execution pending appeal. Supersedeas bond under Section 3 is conditioned upon the performance of the judgment or order allowed to be executed in case it shall be finally sustained in whole or in part. GENERAL RULE: When a defendant puts up a supersedeas bond, the court shall recall the execution pending appeal because discretionary execution is the exception rather than the general rule. EXCEPTION: Notwithstanding the filing of the supersedeas bond by the appellant, execution pending appeal may still be granted by the court IF THERE ARE SPECIAL AND COMPELLING REASONS justifying the same outweighing the security offered by the supersedeas bond. (De Leon vs. Soriano, 95 Phil. 806) EXAMPLE OF EXCEPTION: Judgment for SUPPORT. The same may be executed pending appeal even notwithstanding the filing of a supersedeas bond by the appellant. (De Leon vs. Soriano, 95 Phil. 806) Support is something which Lakas Atenista Ateneo de Davao University College of Law
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should not be delayed. What is the use of the supersedeas bond when the need of the plaintiff is today and not 5 or 6 weeks from now? Alright, let us go to the next important classification of execution. The other classification as to the manner of enforcement could be by MOTION or by INDEPENDENT ACTION. EXECUTION BY MOTION EXECUTION BY INDEPENDENT ACTION Sec. 6. Execution by motion or by independent action. - A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action. The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations. (6a) Q: How do you execute a judgment? A: You file a motion for execution before the same court which rendered the judgment. Q: How is the execution enforced? A: There are two 2 modes under Section 6: 1.) Execution by motion – within five (5) years from the date of its entry; and 2.) Execution by independent action if the five year period to execute by motion has elapsed with no motion having been filed and before it is barred by the statute of limitations.. Execution BY MOTION means that the prevailing party shall ask the court to issue a writ of execution by simply filing a motion in the same case. EXAMPLE: I am the plaintiff and I have a judgment here against the defendant. I do not know of any assets of the defendant because the defendant for the meantime is as poor as a rat. But after a certain period of time he becomes a wealthy man. All I have to do is to file a motion and the court will order the execution, provided the motion is filed within 5 years from the date of the entry of judgment. The date of the entry of judgment and the date of finality are the same (Rule 36, Section 2). Lakas Atenista Ateneo de Davao University College of Law
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Lifetime of a writ of execution The writ shall continue in effect during the period within which the judgment may be enforced by motion (Sec. 14). Hence, the writ is enforceable within the five-year period from entry of judgment as provided for in Sec. 6 because within that period, the writ may be enforced by motion. This is an amendment to the old rule (Sec. 11 R 39) which provided that the lifetime of the writ was 60 days from the receipt of the writ by the officer required to enforce it. Q: Suppose the defendant becomes rich after 5 years, can I still file a motion to execute? A: No more, because execution by motion must be filed within 5 years only from the date of its entry. If the judgment was not executed within the 5-year period, the judgment has become dormant. A writ of execution issued by motion of the prevailing party after five (5) years from the date of entry of the judgment is null and void. There is then a need for the prevailing party to file an independent action for the revival of the judgment before the action is barred by the statute of limitations (Tag Fibers, Inc. vs. NLRC 344 SCRA 29; Terry vs. People 314 SCRA 669). It was held that if the writ of execution was issued and the levy made within five years from the entry of the judgment, the auction sale may be made even after the five-year period. The sale of the property and the application of the proceeds are merely the means to carry out the writ of execution and a levy already validly made. Accordingly, the levy is the essential act by which the property is set apart for the satisfaction of the judgment (Gov’t. vs Echaus 71 Phil. 318; Quiambao vs. Manila Motor Co., 3 SCRA 444). The sale must however, be made within ten years during which the judgment can be enforced (Ansaldo vs. Fidelity & Surety Company, 84 Phil. 547; Jalandoni vs. PNB 108 SCRA 102). Q: What is a dormant judgment? A: A DORMANT judgment is one that was not executed within 5 years. Revival of Judgment Q: So, how can that (dormant) judgment be awaken? A: The procedure is to file another civil action. A civil action for revival of judgment. That is what you call EXECUTION BY INDEPENDENT ACTION which must be filed before it is barred by the statute of limitations. The second sentence states, “after the lapse of such time (which is 5 years) and before it is barred by the statute of limitations, a judgment may be enforced by action.” Q: When will it be barred by the statute of limitations ? Lakas Atenista Ateneo de Davao University College of Law
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A: According to Article 1144 of the New Civil Code, the judgment may be enforced only within ten (10) years. The ten-year period commences to run from the finality of the judgment which is the period within which the judgment can be enforced (Art. 1152 in relation to Art. 1144[3], Civil Code). Because under the Rules, the date of the finality of the judgment or final order shall be deemed to be the date of entry (Sec. 2 R 36) the period shall run also from the date of entry of the judgment. An action for revival of judgment presupposes that the same can no longer be enforced by mere motion. This means that from the date of the finality of the judgment no motion was filed for the execution of said judgment, thus, the need for its enforcement by action. The action for revival of judgment is no more than a procedural means of securing the execution of a previous judgment which has become dormant after the passage of five years without it being executed upon motion of the prevailing party (Saligumba vs. Palanog GR 143365 December 4, 2008). The action to revive a judgment must be filed within ten years from the date the judgment becomes final because an action to enforce a judgment prescribes in ten years from the finality of the judgment (Art. 1144[3] in relation to Art. 1152, Civil Code of the Philippines). Since the date of the finality of the judgment or final order shall be deemed to be the date of the entry (Sec. 2 R 36), the prescriptive period shall run from the date of entry of the judgment. When a judgment is revived under Section 6, such revived judgment may also be enforced by motion within 5 years from the date of its entry and thereafter by action also before it is barred by the statute of limitations (Sec. 6). Revived judgment a new judgment A revived judgment is deemed a new judgment separate and distinct from the original judgment. It is not a continuation of the original judgment. The action to revive the judgment is a new action and results in a new judgment constituting a new cause of action with a new period of limitation. Hence, the ten (10) year period to revive the revived judgment shall commence to run from the date of the finality of the revived judgment and not from the date of finality of the old, original judgment (PNB vs. Bondoc 14 SCRA 770). While this ruling was abandoned in PNB vs. Deloso 23 SCRA 266 and Luzon Surety Co. Inc. vs. IAC GR 72645 June 30, 1987, which held that the ten-year period should run from the finality of the original judgment and not from the finality of the revived judgment, the ruling in Bondoc was resurrected in the Lakas Atenista Ateneo de Davao University College of Law
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present provision of Section 6 which declares in its last sentence that “The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations.” The SC had long ago ruled that after the lapse of five (5) years, the judgment “is reduced to a mere right of action in favor of the person whom it favors which must be enforced, as are all ordinary actions, by the institution of a complaint in the regular form” (Compana General de Tobacos vs. Martinez and Nolan 29 Phil. 515; Aldeguer vs. Gemelo 68 Phil. 421). If the prevailing party fails to have the decision enforced by a motion after the lapse of five years from the date of entry of the judgment, the said judgment is reduced to a right of action which must be enforced by the institution of the complaint in a regular court within ten years from the time the judgment became final (Bausa vs. Heirs of Juan Dino GR 167281 August 28, 2008). Action for Revival not to reopen any issue affecting the merits of the judgment An action for revival of judgment is not intended to reopen any issue affecting the merits of the judgment debtor’s case nor the propriety or the correctness of the first judgment. It is a new and independent action wherein the cause of action is the decision itself and not the merits of the action upon which the judgment sought to be enforced is rendered (Juco vs. Heirs of Tomas Siy Chung Fu GR 150233 February 16, 2005; Saligumba vs. Palanog, supra). It is an “original action, not a mere incident of the primitive suit or a mere auxiliary or supplemental remedy” (Aldeguer vs. Gemelo 68 Phil. 421). The purpose of the new action is not to reexamine and retry issues already decided and the cause of action of this new action is the judgment to be revived and no identity of causes of action can be said to exist between the first and the second actions (Caina vs. CA GR 114393 Dec. 14 1994). GThe consideration of any issue affecting matters that could have been raised in the previous case must be deemed as definitely foreclosed (Phil. Reconstruction Corp. Inc. Vs. Aparente 45 SCRA 217). It is not meant to retry the case all over again (Enriquez vs. CA 372 SCRA 372). Riano’s comment: If the action to revive a judgment (or an action upon a judgment is according to Aldeguer vs. Gemelo a new cause of action and not a continuation of the old, it should not, in this sense, be dependent upon the previous action for its Lakas Atenista Ateneo de Davao University College of Law
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jurisdictional requirements and does not necessarily have to be filed in the same court which rendered the judgment. It is submitted that the new action, i.e.., to revive the judgment would necessarily raise the fundamental issues of whether or not the plaintiff has a right to have the judgment revived and to have a new right of enforcement from its revival, issues that by nature are incapable of pecuniary estimation. Inevitably, a litigant may find himself in a situation where he files the action in the RTC to revive a judgment rendered by a MTC. It is submitted that it is in this light that the 1957 case of Torrefranca et al., vs. Albiso 102 Phil. 732 should be re-examined. The facts had their origins in an action to revive a judgment filed in the same court which, more than five years ago, rendered a judgment in an action for forcible entry against the defendant. The defendant opposed the action but the justice of the court declared the judgment revived. The subsequent appeal to the CFI was dismissed and plaintiff went to the SC on a question of law – whether or not a justice of the peace has the authority to revive its own judgment. The SC ruled that the Judiciary Act of 1948 gave justice of peace courts jurisdiction over actions of forcible entry and unlawful detainer “and also empowers them … to issue all processes necessary to enforce their judgments and orders. Needless to say, the revival of a judgment is a necessary step in its enforcement…” The rationale of Torrefranca in sustaining the power of the court to revive its own judgment is clearly predicated on the jurisdiction of the trial court over the case of forcible entry. The ruling obviously assumes that the revived judgment is a continuation of the old judgment and viewed the revival of the judgment as merely incidental to or ancillary to the execution of the original judgment. This rationale does not fall squarely with the more recent pronouncements of the Court that an action to revive a judgment is a new cause of action and not a mere continuation of the original action. Venue of revival of judgment actionIn Infante vs. Aran Builders Inc. GR 156596, August 24, 2007, the Court xplained thus: “… the proper venue depends on the determination of whether the present action for revival of judgment is a real action or a personal action … if the action for revival of judgment affects title to or possession of real property, or interest Lakas Atenista Ateneo de Davao University College of Law
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therein, then it is a real action that must be filed with the court of the place where the real property is located. If such action does not fall under the category of real actions, it is then a personal action that may be filed with the court of the place where the plaintiff or defendant resides…” When the five-year period to execute by motion may be interrupted In many instances, the delays in the execution of the judgment were through causes clearly attributable to the judgment debtor as when he employs legal maneuvers to block the enforcement of the judgment. Delays attributable to the defendant have the effect of suspending the running of the prescriptive period for the enforcement of the judgment (Potenciano vs. Mariano 93 SCRA 463; Camacho vs. CA 287 SCRA 611; Republic vs. CA 260 SCRA 344). There are instances where the Court allowed execution by motion even after the lapse of five years upon meritorious grounds. These exceptions have one common denominator, and that is, the delay is caused or occasioned by actions of the judgment debtor and/or is incurred for his benefit or advantage. It has been held that in computing the time limit for enforcing a final judgment, the general rule is that the time when the execution is stayed, either by agreement of the parties for a definite time, by injunction, or by the taking of an appeal or writ of error, shall not be included. Thus, the time during which execution is stayed should be excluded, and the said time will be extended by any delay occasioned by the debtor as when the writ of execution cannot be enforced within the fiveyear period because the debtor filed petitions in the CA and in the SC challenging the trial court’s judgment as well as the writ of execution. Such petitions suspended or interrupted the further enforcement of the writ (Yau vs. Silverio GR 158848; Macapagal vs. Gako GR 171994, February 4, 2008). The period may also be interrupted by the agreement of the parties to suspend the enforcement of the judgment (Torralba vs. de los Angeles 96 SCRA 69; Macias vs. Lim 431 SCRA 20). When 5 and 10 year periods do not apply The periods do not apply to (a) special proceedings, such as land registration and cadastral cases, wherein the right to ask for a writ of possession does not prescribe (Rodil vs. Benedicto 95 SCRA 137; (b) judgments for support which do not become dormant and which can always be executed by motion despite lapse of the five-year period because the obligation is a continuing one and the court never loses jurisdiction to enforce the same (Canonizado vs. Benitez 127 SCRA 610).
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Therefore, since the judgment will be enforced by motion for five (5) years, then after the fifth year, it will be enforced by independent action. So, I will start the civil action for revival of judgment between or after the 5th year but before the 10th year. So, that is what we have to remember. Q: Do you mean to tell me that I have to file the case all over again, practically repeating what happened 5 years ago? A: NO, because the judgment in the independent action is a judgment reviving the first judgment. For example, more than 5 years ago I sued you to collect on a promissory note and you alleged payment, and you lost and the court said that you are liable to me. On the seventh year when I revived that judgment, my rights are no longer based or derived on the promissory note but on such judgment. But you can still invoke other defenses such as lack of jurisdiction, fraud. But you cannot question the correctness of the original judgment because that is already res adjudicata. You are entitled to put up any defense that you have against me provided that you cannot question the correctness of the original judgment. That is the rule. Q: Discuss briefly the nature of the action for enforcement of a dormant judgment. A: The action for enforcement of a dormant judgment is an ordinary civil action the object of which is two-fold, namely, (a) to revive the dormant judgment, and (b) to execute the judgment reviving it, if it grants the plaintiff any relief. Hence, the rights of the judgment-creditor depend upon the second judgment. Being an ordinary civil action, it is subject to all defenses, objections and counterclaims which the judgment-debtor may have except that no inquiry can be made as to the merits of the first judgment. Therefore, defenses that do not go to the merits of the first judgment, such as lack of jurisdiction, collusion, fraud, or prescription, may be set up by the judgment-debtor. (Cia. Gral. De Tabacos vs. Martinez, 17 Phil. 160; Salvante vs. Ubi Cruz, 88 Phil. 236) [Taken from Remedial Law Reviewer by Nuevas] Q: Give the exception to the rule on dormant judgment. A: The only exception is the judgment for support which does not become dormant, nor does it prescribe. You can execute it anytime even beyond the 5year period and any unpaid installment may be executed by motion. (Florendo vs. Organo, 90 Phil. 483) So, even if the judgment is more than 5 years old, the defendant defaulted on the seventh year, you just file a motion to collect that judgment. Q: Suppose the judgment was executed and the property of the defendant was levied on the 4th year, and the next stage is the auction sale. Lakas Atenista Ateneo de Davao University College of Law
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A: The SC said the auction sale must also be WITHIN 10 years. So, even if the property was levied, the auction sale must be within 10 years. Not only the levy of the property must be done within 10 years but also the including the auction sale, otherwise, any auction sale done beyond 10 years in null and void. Now, look at the last sentence in Section 6: “The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations.” For example, I have here a judgment nine (9) years ago. I want to enforce it by action to revive judgment. You mean to tell me that the revived judgment is good for another ten (10) years? Another 5 years for motion to a right of action and then I can still revive it within 10 years? Alright, in the original case of PNB vs. BONDOC (14 SCRA 770), the SC said that the period applies all over again from the finality of the revived judgment. So, you have another ten (10) years. However, this principle is abandoned in the later case of PNB vs. VELOSO (32 SCRA 266), the SC said that the original period is only computed from the date of the original judgment. And of course, because of those 2 conflicting cases, the court resolved those issues in the case of LUZON SURETY CO. vs. IAC (151 SCRA 652) where the SC said, the later doctrine of VELOSO prevails. So, with that ruling, the 10-year period applies only from the date of the original judgment, but you cannot say that once it is revived, you have another 10 years. But now, you look at the new law: “The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations.” Ano yan? That is a revival of the BONDOC ruling! Binalik yung original ruling which is, the revived judgment is good for another 10 years. So, I repeat, the last sentence has resurrected the ruling in the case of PNB vs. BONDOC and superseded again LUZON vs. IAC. You are entitled to another 10 years from the date of the revived judgment. ILLUSTRATION: Example: First judgment became final in 1990. You can enforce that until 2000 by motion (1990-1995) or by independent action (1995 – 2000). Suppose in 2000, you were able to secure a second judgment reviving the first judgment, under the new rules, there is another ten years. The first judgment by motion. The next 5 years is by independent action. So, to illustrate: Lakas Atenista Ateneo de Davao University College of Law
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1997 Rules on Civil Procedure 2001 Edition 1990
1995
5 years by motion
2000
5 years by independent action
10 years Article 1144, Civil Code
2005
5 years by motion
2010
5 years by independent action
10 years last sentence of Section 6
ARCENAS vs. COURT OF APPEALS 299 SCRA 733 (December 4, 1998) HELD: “The purpose of the action for revival of a judgment is not to modify the original judgment subject of the action but is merely to give a creditor a new right of enforcement from the date of revival.” “The rule seeks to protect judgment creditors from wily and unscrupulous debtors who, in order to evade attachment or execution, cunningly conceal their assets and wait until the statute of limitation sets in.” Sec. 7. Execution in case of death of party. - In case of the death of a party, execution may issue or be enforced in the following manner: (a) In case of the death of the judgment obligee, upon the application of his executor or administrator, or successor in interest; (b) In case of the death of the judgment obligor, against his executor or administrator or successor in interest, if the judgment be for the recovery of real or personal property, or the enforcement of a lien thereon; (c) In case of the death of the judgment obligor, after execution is actually levied upon any of his property, the same may be sold for the satisfaction of the judgment obligation, and the officer making the sale shall account to the corresponding executor or administrator for any surplus in his hands. (7a) Lakas Atenista Ateneo de Davao University College of Law
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This is related to Rule 3, Section 20. Q: What is the effect of a death of a party on the execution of a judgment? A: The following: 1.) If it is the obligee (the creditor) will die after he wins the case, his executor or administrator, his legal representative or his heirs and successors in interest can enforce the judgment. They will be the one to collect. (paragraph [a]) 2.) If it is the defendant (obligor) who dies and there is final judgment which is recovery of real or personal property, the judgment is executed against the administrator or executor because this is an action which survives. (paragraph [b]); 3.) Under par. (c), it is the death of the obligor in a money claim. This is related to Rule 3, Section 20. However, the timing of the death is different. Let us connect these with Rule 3, Sec. 20: Sec. 20. Action on contractual money claims. When the action is for recovery of money arising from contract, express or implied, and the defendant dies before entry of final judgment in the court in which the action was pending at the time of such death, it shall not be dismissed but shall instead be allowed to continue until entry of final judgment. A favorable judgment obtained by the plaintiff therein shall be enforced in the manner especially provided in these Rules for prosecuting claims against the estate of a deceased person. (21a) So, for EXAMPLE: A filed a case against B to collect an unpaid loan. What is the effect to the case if B dies? It will depend on what stage of the case he dies. If he died before final judgment could be rendered by the court (before entry of final judgment), there will be a substitution of party and the case will continue until entry of final judgment. Suppose, there is already entry of final judgment and he dies, it will depend whether there was already a levy on execution. Meaning, there was already entry of final judgment but before the property is levied. This should not apply in Rule 39 because Section 7 [c] states that “after execution is levied.” But my question is no levy. The procedure there is found in the Special Proceedings. The judgment shall be enforced in the manner provided for by the Rules on claims against the estate of the deceased under Rule 86. And that is also Lakas Atenista Ateneo de Davao University College of Law
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mentioned in Rule 3, Section 20. It shall be enforced in the manner provided for against the estate. Q: Suppose the defendant dies when there is already a levy. What will happen? A: The auction sale will proceed as scheduled in connection with Section 7 [c] because the law says “the same may be sold for the satisfaction of the judgment obligation.” Meaning, the auction sale or the execution sale shall proceed as scheduled. No more substitution here. So that question, “What is the effect of the death of a party on a pending civil case” is a question with so many angles – anong klaseng kaso?; is it one which is personal in nature or not?; if it is not, is it one which survives or one which does not?; if it does not survive, who died?; the plaintiff or the defendant? – if it is the defendant, did he die before entry of final judgment?; did he die after entry of final judgment but before there could be levy or execution?; or did he die after levy or execution? – This last question is answered by Section 7 [c]. Sec. 8. Issuance, form and contents of a writ of execution. - The writ of execution shall: (1) issue in the name of the Republic of the Philippines from the court which granted the motion; (2) state the name of the court, the case number and title, the dispositive part of the subject judgment or order; and (3) require the sheriff or other proper officer to whom it is directed to enforce the writ according to its terms, in the manner hereinafter provided: (a) If the execution be against the property of the judgment obligor, to satisfy the judgment, with interest, out of the real or personal property of such judgment obligor; (b) If it be against real or personal property in the hands of personal representatives, heirs, devisees, legatees, tenants, or trustees of the judgment obligor, to satisfy the judgment, with interest, out of such property; (c) If it be for the sale of real or personal property, to sell such property, describing it, and apply the proceeds in conformity with the judgment, the material parts of which shall be recited in the writ of execution. (d) If it be for the delivery of the possession of real or personal property, to deliver the possession of the same, describing it, to the Lakas Atenista Ateneo de Davao University College of Law
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party entitled thereto, and to satisfy any costs, damages, rents, or profits covered by the judgment out of the personal property of the person against whom it was rendered, and if sufficient personal property cannot be found, then out of the real property; and (e) In all cases, the writ of execution shall specifically state the amount of the interest, costs, damages, rents, or profits due as of the date of the issuance of the writ, aside from the principal obligation under the judgment. For this purpose, the motion for execution shall specify the amounts of the foregoing reliefs sought by the movant. (8a) WRIT OF EXECUTION is actually the document which is issued by the court addressed to the sheriff. The writ is actually the instruction to the sheriff on what he should do. It would depend on what kind of decision – is it an action for sum of money or is it for recovery of real property? Mimeographed iyan, addressed to the sheriff. These are standard forms in court. Now, with respect to Section 8, the changes can be found in paragraph [e] which mandates now that the writ of execution must state the exact amount to be collected. That is why according to the last sentence of paragraph [e], “for this purpose, the motion for execution shall specify the amounts of the foregoing reliefs sought by the movant.” Normally, when lawyers file a motion to execute they will just quote the principal, but they do not state the costs or interests. Now, under the new rule, when you file the motion for execution, you must also state how much is the costs or interests. EXECUTION OF MONEY JUDGMENT
How do you execute judgment for money? Contractual debts or damages. Example, the defendant is ordered to pay defendant P1 million with interest, how does the sheriff enforce that? Section 9 provides a detailed explanation on how judgment for money is enforced. Let us go over the first paragraph: Sec. 9. enforced. -
Execution of judgments for money, how
(a) Immediate payment on demand. - The officer shall enforce an execution of a judgment for money Lakas Atenista Ateneo de Davao University College of Law
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by demanding from the judgment obligor the immediate payment of the full amount stated in the writ of execution and all lawful fees. The judgment obligor shall pay in cash, certified bank check payable to the judgment obligee, or any other form of payment acceptable to the latter, the amount of the judgment debt under proper receipt directly to the judgment obligee or his authorized representative if present at the time of payment. The lawful fees shall be handed under proper receipt to the executing sheriff who shall turn over the said amount within the same day to the clerk of court of the court that issued the writ.
STEPS: (under paragraph [a]) 1.) The sheriff must demand payment from the obligor; 2.) The obligor can pay in cash, certified bank check payable to the judgment obligee (creditor) or any other form of payment acceptable to the latter. The payment shall go to the obligee; 3.) The lawful fees shall be paid to the executing sheriff who shall turn over the said amount within the same day to the clerk of court of the court that issued the writ. This assumes that the obligee is present with sheriff. Suppose the creditor is not around? Let us go to the second paragraph: Section 9 [a], 2nd par. – If the judgment obligee or his authorized representative is not present to receive payment, the judgment obligor shall deliver the aforesaid payment to the executing sheriff. The latter shall turn over all the amounts coming into his possession within the same day to the clerk of court of the court that issued the writ, or if the same is not practicable, deposit said amounts to a fiduciary account in the nearest government depository bank of the Regional Trial Court of the locality. If the plaintiff is not there, the payment is made to the sheriff and he is supposed to endorse it to the clerk of court. The clerk of court will look for the obligee to remit the money. In the second sentence, this usually happens if the execution is to be done outside of the locality. For example, the decision in Davao will be enforced in Cotabato. So, the sheriff in Cotabato will be the one to enforce and he will give Lakas Atenista Ateneo de Davao University College of Law
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the payment to the clerk of court there who in turn will transmit the money to the clerk of court in Davao. This is because the decision to be executed is one in Davao. Let us go to the third paragraph: The clerk of said court shall thereafter arrange for the remittance of the deposit to the account of the court that issued the writ whose clerk of court shall then deliver said payment to the judgment obligee in satisfaction of the judgment. The excess, if any, shall be delivered to the judgment obligor while the lawful fees shall be retained by the clerk of court for disposition as provided by law. In no case shall the executing sheriff demand that any payment by check be made payable to him. This assumes that the property of the defendant which was levied in Cotabato but judgment is one which originated in Davao – clerk to clerk. The last sentence says “In no case shall the executing sheriff demand that any payment by check be made payable to him.” It shall be payable to the obligee. I think what the SC would like to avoid here is that which happened in the case of PAL – a labor case where PAL paid check payable to the sheriff. The sheriff ran away with the check. PAL was made to pay all over again. (b) Satisfaction by levy. - If the judgment obligor cannot pay all or part of the obligation in cash, certified bank check or other mode of payment acceptable to the judgment obligee, the officer shall levy upon the properties of the judgment obligor of every kind and nature whatsoever which may be disposed of for value and not otherwise exempt from execution giving the latter the option to immediately choose which property or part thereof may be levied upon, sufficient to satisfy the judgment. If the judgment obligor does not exercise the option, the officer shall first levy on the personal properties, if any, and then on the real properties if the personal properties are insufficient to answer for the judgment.
So, under paragraph [a], the first step is when the judgment debtor has enough money, bayaran niya in cash or check. Lakas Atenista Ateneo de Davao University College of Law
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Q: Suppose walang pera, or the cash is not sufficient. What will the sheriff do? A: He shall levy upon the properties of the judgment obligor not otherwise exempt from execution. In the vernacular term, sasabihing ‘na-sheriff’ ka. Q: Define levy. A: Levy is the act whereby a sheriff sets apart or appropriates, for the purpose of satisfying the command of the writ, a part or the whole of the judgmentdebtor’s property. (Valenzuela vs. De Aguilar, L-18083-84, May 31, 1963) Normally, this is done on personal property. Kung lupa naman, they will annotate on the title. Parang mortgage ba. Q: What is the importance of levy with respect to execution of a money judgment? A: Levy is a pre-requisite to the auction sale. In order that an execution sale may be valid, there must be a previous valid levy. A sale not preceded by a valid levy is void and the purchaser acquires no title. (Valenzuela vs. De Aguilar, L18083-84, May 31, 1963) Q: What kind of property can be levied? A: Any – real, personal, tangible, intangible – except those properties exempt from execution. Q: Does the debtor have the right to tell the sheriff what property he should levy? A: YES. The law gives the debtor or defendant the option to immediately choose which property or part thereof may be levied upon sufficient to satisfy the judgment. Example: I am the debtor and I have many properties. And the sheriff would like to levy on my house and lot, or ‘yung Toyota Altis ko. Under the law, I have the right to choose among them. The phrase “giving the latter the option to immediately choose which property or part thereof may be levied upon, sufficient to satisfy the judgment.” This did not appear under the old law. This is taken from the case of PHILIPPINE MILLS vs. DAYRIT (192 SCRA 177), where the SC said the debtor is given the option of which property shall be levied. And the sequence of levying is to levy the personal properties first. Then real properties if personal properties are not sufficient. Under the second paragraph of [b], when the sheriff levies on the property of the judgment debtor and the judgment debtor has more than sufficient property Lakas Atenista Ateneo de Davao University College of Law
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to cover the judgment debt, the sheriff cannot levy all the properties. Or else, he will be made liable. For example, the debt is only P 30,000, tapos ang i-levy mo kotse (Toyota Altis) at bahay, which worth millions? My golly! That’s too much! You sell only up to the point that the judgment will be satisfied. Q: But if it is real property or intangible personal property like shares of stock, debts, credits (collectibles), can you levy on these? A: YES. And under the last paragraph of [b] They may be levied upon in like manner and with like effect as under a writ of attachment under Rule 57 on attachment.
GARNISHMENT – HOW TO LEVY Paragraph [c] of Section 9 is on how to levy intangibles. When you want to levy or you want to execute on intangible property, the legal term there is garnishment. (c) Garnishment of debts and credits. - The officer may levy on debts due the judgment obligor and other credits, including bank deposits, financial interests, royalties, commissions and other personal property not capable of manual delivery in the possession or control of third parties. Levy shall be made by serving notice upon the person owing such debts or having in his possession or control such credits to which the judgment obligor is entitled. The garnishment shall cover only such amount as will satisfy the judgment and all lawful fees. The garnishee shall make a written report to the court within five (5) days from service of the notice of garnishment stating whether or not the judgment obligor has sufficient funds or credits to satisfy the amount of the judgment. If not, the report shall state how much funds or credits the garnishee holds for the judgment obligor. The garnished amount in cash, or certified bank check issued in the name of the judgment obligee, shall be delivered directly to the judgment obligee within ten (10) working days from service of notice on said garnishee requiring such delivery, except the lawful fees which shall be paid directly to the court. In the event there are two or more garnishees holding deposits or credits sufficient to satisfy the judgment, the judgment obligor, if available, Lakas Atenista Ateneo de Davao University College of Law
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shall have the right to indicate the garnishee or garnishees who shall be required to deliver the amount due; otherwise, the choice shall be made by the judgment obligee. The executing sheriff shall observe the same procedure under paragraph (a) with respect to delivery of payment to the judgment obligee. (8a, 15a) Q: So, what are these properties which may be the subject of garnishment? A: Credits which include bank deposits, financial interests, royalties, commissions and other personal property not capable of manual delivery – intangibles bah! You send a notice upon the person owing such debts or having in his possession or control such credits. And it shall cover only such amount as will satisfy the judgment. Example of garnishment: bank account. I will file a case against you, talo ka. I learned that you have a deposit with Sanikoh Bank. Puwede kong habulin yan ba, because that is credit. In obligations and contracts, the relationship of the depositor and the bank is that of a creditor and debtor. It is not a contract of deposit because actually, the bank is borrowing money from you. Kaya nga, it pays you interest eh. So, under garnishment, the bank is being commanded not to pay you but instead pay the sheriff. Yaan!! Yan ang concept ng garnishment. Garnishee refers to the debtor, like the bank. When the bank deposit is garnished, the second paragraph tell us what the bank will do. And if there are 2 or more banks na magarnish, under the next paragraph, the debtor obligor will determine. If he does not exercise his option, then the judgment creditor will determine. EXECUTION OF JUDGMENT OTHER THAN MONEY Section 10 is the procedure for executing a judgment other than to collect money. Sometimes, money is only incidental. There are court decisions could be something else like specific performance, or accion publiciana. You are more interested in recovering your property. Another is Unlawful Detainer where unpaid rentals may be paid but the plaintiff is more interested in the ejectment – the unpaid rentals can be collected in the same manner as Section 9. Sec. 10. Execution of judgments of specific act. (a) Conveyance, delivery of deeds, or other specific acts; vesting title. - If a judgment directs a party to execute a conveyance of land or Lakas Atenista Ateneo de Davao University College of Law
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personal property, or to deliver deeds or other documents, or to perform any other specific act in connection therewith, 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 other person appointed by the court and the act when so done shall have like effect as if done by the party. If real or personal property is situated within the Philippines, the court in lieu of directing a conveyance thereof may by an order divest the title of any party and vest it in others, which shall have the force and effect of a conveyance executed in due form of law. (10a) x x x x x EXAMPLES of the first sentence: 1.) An action for reconveyance of property where you are asking the defendant, a title owner, to convey to you his property. The property will be held in trust or that the title be in your name instead of his; 2.) Pacto de retro. I sold to you my land and I am repurchasing it, pero ayaw mo. You refuse to execute a deed of sale returning the property to me; 3.) Public Land Law. I am the owner of a property under homestead or free patent and sold it after the prohibition period. Under the public land law, I have the right to repurchase it within 5 years. Ayaw mong ibalik, so idemanda kita. Of course, if I win, you will be directed to return to me the property and execute a deed of sale. 4.) An action for specific performance to compel you to return to me said property. And the court will order: “Alright, execute a deed of sale.” You refuse. The court may order the clerk of court to sign the deed of sale or the Register of Deeds will be ordered to register the same as if done by the obligor. The obligor’s signature is not needed. (b) Sale of real or personal property. - If the judgment be for the sale of real or personal property, to sell such property, describing it, and apply the proceeds in conformity with the judgment. (8 [c] a) The best example for [b] is an action for termination of co-ownership where there are 50 co-owners of one (1) hectare – the property will be ordered sold and the proceeds will be distributed among the co-owners.
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(c) Delivery or restitution of real property. - The officer shall demand of the person against whom the judgment for the delivery or restitution of real property is rendered and all persons claiming rights under him to peaceably vacate the property within three (3) working days, and restore possession thereof to the judgment obligee; otherwise, the officer shall oust all such persons therefrom with the assistance, if necessary, or appropriate peace officers, and employing such means as may be reasonably necessary to retake possession, and place the judgment obligee in possession of such property. Any costs, damages, rents or profits awarded by the judgment shall be satisfied in the same manner as a judgment for money. (13a) Now, with respect to Section 10, particularly paragraph [c] – delivery or restitution of real property. – this is applicable to actions for forcible entry, unlawful detainer, accion publiciana. Q: So, what is the procedure? A: The sheriff will give the defendant the chance to vacate the property, “I am giving you the chance to vacate within three (3) working days and restore possession thereof.” And then ayaw mo pa rin, I will use force to oust you with the assistance of the appropriate peace officers and place the judgment obligee in possession of such property. And if there are damages or unpaid rentals, I will also levy the property under Section 9. Because sometimes, aside from ousting the defendant, meron pang money judgment like unpaid rentals. So, the property of the defendant may be levied. That is the procedure. In the 1995 case of SAN MANUEL vs. TUPAS 249 SCRA 466 HELD: “The immediate enforcement of a writ of ejectment execution is carried out by giving the defendant a notice of such writ and making a demand that defendant comply therewith within a reasonable period, normally from three (3) to five (5) days, and it is only after such period that the sheriff enforces the writ by the bodily removal of the defendant and his personal belongings.”
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(d) Removal of improvements on property subject of execution. - When the property subject of the execution contains improvements constructed or planted by the judgment obligor or his agent, the officer shall not destroy, demolish or remove said improvements except upon special order of the court, issued upon motion of the judgment obligee after due hearing and after the former has failed to remove the same within a reasonable time fixed by the court. (14a) Q: When you oust the defendant in regard of a possession case, is a writ of execution a sufficient basis for the removal of improvements of the property? A: NO. Under paragraph [d], the plaintiff or judgment obligee still have to get a special order from the court by filing a petition to authorize the destruction or removal of the improvements of the property after the defendant is given a reasonable time to remove his shanty or house voluntarily. In other words, there must be a special order. The writ of execution only authorizes you to oust the defendant physically, but not to destroy any property. Just like in squatters, you need a special order for demolition. (e) Delivery of personal property. In judgments for the delivery of personal property, the officer shall take possession of the same and forthwith deliver it to the party entitled thereto and satisfy any judgment for money as therein provided. (8a) Paragraph [e] is related to REPLEVIN – action to recover personal property – where the plaintiff is trying to repossess a personal property from the defendant. For example, bili ka ng appliance tapos hindi mo nabayaran, babawiin yan ng appliance center. Or, the finance company or the car dealer will resort to replevin to recover the unit by filing an action for replevin against the buyer. Take note that the procedure for enforcing a money judgment is different from enforcing a judgment for ejectment, or recovery of possession. Enforcement of money judgment is in Section 9 – you get the money. Kung walang money, you levy on the property of the defendant. If it is ejectment or recovery of possession of property, you follow Section 10, paragraph [c]. Now, here is an interesting case involving these two sections (Sections 9 & 10) –the 1995 case of ABINUJAR vs. COURT OF APPEALS Lakas Atenista Ateneo de Davao University College of Law
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243 SCRA 531 FACTS: The case of Abinujar started when the plaintiff filed a case for unlawful detainer against the Abinujar spouses for the latter to vacate their house in Manila. When the case was going on, the parties executed a compromise agreement which became the basis of the judgment by the court, so a compromise judgment. The agreement stated that the Abinujar spouses shall pay the plaintiffs the amount specifically agreed upon: P50,000 on January 31; P10,000 on Febrauary 28; P10,000 on March 31, etc. until September 30. It further states that failure on the part of the Abinujar spouses to pay three (3) consecutive payments, the plaintiffs shall be entitled to a writ of execution. After three (3) months, the plaintiffs filed a motion for execution on the ground that the Abinujars failed to pay the three installments. The trial court granted the motion and the notice to the defendant to voluntarily vacate the premises was served on the Abinujars. The Abinujars attacked the validity of the sheriff’s notice to vacate by way of enforcing the compromise judgment. They maintained that their obligation is monetary and therefore you should apply Section 9 – you collect but do not eject us. The plaintiffs argued that what is applicable is Section 10 on ejectment because this is an unlawful detainer case. ISSUE: Which section shall be applied – Section 9? or Section 10? HELD: The contention of the Abinujars is meritorious – meaning, you cannot eject the Abinujars. “When the parties entered into a compromise agreement, the original action for ejectment was set aside and the action was changed to a monetary obligation. “A perusal of the compromise agreement signed by the parties and approved by the inferior court merely provided that in case the Abinujars failed to pay three monthly installments, the plaintiffs would be entitled to a writ of execution, without specifying what the subject of execution would be. Said agreement did not state that Abinujars would be evicted from the premises subject of the suit in case of any default in complying with their obligation thereunder. This was the result of the careless drafting thereof for which only plaintiffs were to be blamed. “As Abinujar’s obligation under the compromise agreement as approved by the court was monetary in nature, plaintiffs can avail only of the writ of execution provided in Section 9, and not that provided in Section 10.”
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ORDINARY AND SPECIAL JUDGMENT Sec. 11. Execution of special judgments. - When a judgment requires the performance of any act other than those mentioned in the two preceding sections, a certified copy of the judgment shall be attached to the writ of execution and shall be served by the officer upon the party against whom the same is rendered, or upon any other person required thereby, or by law, to obey the same, and such party or person may be punished for contempt if he disobeys such judgment. (9a) There are two (2) types of judgment under the law: (1) SPECIAL and (2) ORDINARY. ORDINARY JUDGMENT - if the judgment orders the defendant to pay money, like a collection case (Section 9) or to deliver real or personal property (Section 10). SPECIAL JUDGMENT – is a judgment which requires the defendant to perform an act other than payment of money or delivery of property. It refers to a specific act which a party or person must personally do because his personal qualifications and circumstances have been taken into consideration. EXAMPLE of a special judgment: Usurpation of government office. You are the city treasurer and somebody else is appointed city treasurer and you refuse to vacate. So there will be a quo warranto proceeding. Then the judgment will order you to vacate your position, such judgment is a special judgment because you are not ordered to pay anything nor deliver property. Q: What is the difference between the Ordinary and Special judgments? A: A special judgment may be enforced by contempt if the defendant refuses to comply with the judgment. But if it is an ordinary judgment and the defendant refuses to comply, it is not a ground for contempt. Under Section 9, if the judgment-debtor refuses to pay his debt, you cannot cite him in contempt because under the Constitution, no person shall be imprisoned for debt. The correct procedure under Section 9 is you look for properties of the defendant and then ipa-levy mo. You do not send the debtor to jail. Under Section 10 if the squatter refuses to vacate, you cannot cite him in contempt and send him to jail. Kung ayaw, you get police for back up. That is the procedure. Lakas Atenista Ateneo de Davao University College of Law
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But under Section 11, if defendant is ordered to vacate his office because he is no longer the city treasurer, the plaintiff can have him arrested and brought to jail because that is a special judgment which can be enforced by contempt. Q: Give an specific rule on special judgment. A: Section 9 of Rule 65 – Special Civil Action for Certiorari, Prohibition and Mandamus, to wit: Rule 65, Sec 9. Service and enforcement of order or judgment.- A certified copy of the judgment rendered in accordance with the last preceding section shall be served upon the court, quasi-judicial agency, tribunal, corporation, board, officer or person concerned in such manner as the court may direct, and disobedience thereto shall be punished as contempt. An execution may issue for any damages or costs awarded in accordance with section 1 of Rule 39. (9a) Therefore, a judgement in a certiorari, prohibition or mandamus case, if not complied with, is punishable by contempt. Sec. 12. Effect of levy on execution as to third persons. - The levy on execution shall create a lien in favor of the judgment obligee over the right, title and interest of the judgment obligor in such property at the time of the levy, subject to liens and encumbrances then existing. (16a) This is related to Property Registration Decree. EXAMPLE: I own a piece of land which I mortgaged with the bank. The bank annotated the mortgage on my title. My land is now subject to a lien or an encumbrance. I also owe money to A. He sued me. He won and my land is levied. Q: What happens to the mortgage lien of the bank? Will it be affected by the levy of A? A: NO. Even if the property is sold at public auction and we will assume that it will go to A, that property is still under mortgage. A has to respect the lien – nauna yung sa bank eh! Wherever the property goes, it is subject to the mortgage lien of the bank because the bank’s lien is superior. Therefore, an execution is always subject to the liens and encumbrances of the property then existing. 46 Lakas Atenista Ateneo de Davao University College of Law
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PROPERTIES EXEMPT FROM EXECUTION We already discussed the rule that to satisfy a money judgment, the sheriff can levy on the properties of the judgment obligor. All properties are subject, except those exempt from execution. What are the properties of a defendantdebtor which cannot be subject to a levy or execution? Sec. 13. Property exempt from execution. - Except as otherwise expressly provided by law, the following property, and no other, shall be exempt from execution: (a) The judgment obligor's family home as provided by law, or the homestead in which he resides, and land necessarily used in connection therewith; You have a house where your family resides. You call it “FAMILY HOME” – it is the house where the members of the family reside, including the lot. Q: For instance, you lost in a case where you are liable for P200T. You have no other property left except that house where you live. Can the sheriff levy the house to answer such obligations? A: NO. The judgment obligor’s family home and the land necessarily used in connection therewith is exempt. That is a guarantee that no matter how many obligations you have, there is no way for you to be thrown to the street – to be a homeless person. Your house cannot be levied; but in the Family Code, there’s a limit, if your house is a mansion worth millions, that is not exempt. Please review your Family Code on this matter. (b) Ordinary tools and implements personally used by him in his trade, employment, or livelihood; This is self-explanatory. If you are a carpenter, you earn your living by being a carpenter. What are the ordinary tools that you must have? Saw, hammer, etc. By public policy and by legal provision, the tools and implements used by a carpenter in his trade, employment, or livelihood cannot be levied by the sheriff. Under the prior law, there was no word “ordinary” and “personally”. The old law says, “tools and implements used by him”. In the new rules, the words “ordinary” and “personally” are added. What is the reason behind this? This provision is in accordance with what the SC ruled in the 1990 case of
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PENTAGON SECURITY vs. JIMENEZ 192 SCRA 492 FACTS: The Pentagon Security and Investigation Agency (PSIA) is a security agency owned by somebody who is engaged in security services. Because of a money judgment against the agency in a labor case, the sheriff levied all the firearms of the agency. PSIA claimed that the firearms are exempt from execution under paragraph [b] since they are tools and implements used by the agency in its trade, employment or livelihood because how can a security agency operate without firearms. ISSUE: Is the argument of PSIA correct? HELD: NO. The firearms owned by PSIA are not covered by the exemption. “The term ‘tools and implements’ refers to instruments of husbandry or manual labor needed by an artisan craftsman or laborer to obtain his living. Here, PSIA is a business enterprise. It does not use the firearms personally, but they are used by its employees. Not being a natural person, petitioner cannot claim that the firearms are necessary for its livelihood.” “It would appear that the exemption contemplated by the provision involved is personal, available only to a natural person, such as a dentist’s dental chair and electric fan. If properties used in business are exempt from execution, there can hardly be an instance when a judgment claim can be enforced against the business entity.” Meaning, if the exemption is extended to a juridical person like a corporation, then practically all the properties needed by the business could be considered as tools and implements. For EXAMPLE, you will sue a carrier like Bachelor Bus and you won. Then you will levy on the bus. Bachelor will claims exemption because that is a tool or implement. Or, you file a case against PAL. They lost. You levy on the airbus. PAL alleged exemption because it is a tool or implement. My golly! Lahat ng properties, “tools or implements!”? Di pwede yan! That is not what the law contemplates. Now, what is interesting in the PENTAGON case is that the SC says that firearms can be levied, they can be sold at public auction. SC: “However, for security reasons, and to prevent the possibility that the firearms to be sold at the execution sale may fall into the hands of lawless and subversive elements, the sale at public auction should be with the prior clearance and under supervision of the PNP.” Otherwise, the persons who might bid are kidnappers, NPA, Abu Lakas Atenista Ateneo de Davao University College of Law
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Sayyaff, (Kuratong Baleleng, MILF, MNLF, Lost Command, Kulto Pinish, Polgas, PAOCTF, Osama bin Laden et al, etc.) So, there must be a prior clearance on the sale of the firearms during the auction sale. (c) Three horses, or three cows, or three carabaos, or other beasts of burden, such as the judgment obligor may select necessarily used by him in his ordinary occupation; For example, you are a farmer. You plow your land by a carabao. You cannot levy the carabao. OR, if you are a cochero, you have a horse for your caretela. You cannot levy the horse. [ang horse shit, pwede! Pero yung horse mismo, di pwede!] And under the prior rules, only 2 horses, 2 cows or carabaos are exempt. The new rules make it three (3). (d) His necessary clothing and articles ordinary personal use, excluding jewelry;
for
You cannot levy on the debtor’s wardrobe. These are articles for ordinary personal use. This article excludes jewelry. Alahas, pwede i-levy. All other things for basic needs are exempt, like personal comb, toothbrush, etc. (e) Household furniture and utensils necessary for housekeeping, and used for that purpose by the judgment obligor and his family, such as the judgment obligor may select, of a value not exceeding one hundred thousand pesos; Household furniture like dining table, dining chair, sala set, utensils necessary for housekeeping and used for the purpose by the obligor and his family like plates, forks, spoons. How can you eat without those utensils. BUT there’s a limit that the value does not exceed P100,000. If the value exceeds, it can be levied. There was a sheriff who asked me (Dean I). According to him, he was enforcing a money judgment. The sheriff went to the house of the debtor. He took the stereo, TV set, refrigerator. Defendant said, “Hindi pwede dahil hindi pa umabot ng P100,000.” Sabi ko, you look at the law: You cannot levy those furnitures if not exceeding P100,000. In my (Dean’s) view, covered yan. But utensils not necessarily for living are not covered by the exemption. They are luxury, not necessary. These TV, sala set, refrigerator can be levied because they are not necessary for living as contrasted to kutsara, plato, etc. (Dean however refused to answer the sheriff whether the properties in question can be levied. Tanungin mo ang abogado mo!) Lakas Atenista Ateneo de Davao University College of Law
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(f) Provisions for individual sufficient for four months;
Rule 39 – Execution, Satisfaction And Effect of Judgments
or
family
use
For example, one sack of rice for daily consumption, canned goods – provisions for consumption good for 4 months are exempt. If you have one bodega of rice, ibang storya yan. (g) The professional libraries and equipment of judges, lawyers, physicians, pharmacists, dentists, engineers, surveyors, clergymen, teachers, and other professional, not exceeding three hundred thousand (P300,000.00) pesos in value; Your books, books of judges and professionals and equipment – maybe the computer, typewriter, dentist’s chair, equipment of engineers are exempt provided the value does not exceed P300,000. (h) One exceeding the (P100,000.00) lawful use of
fishing boat and accessories not total value of one hundred thousand pesos owned by a fisherman and by the which he earns his livelihood;
Example: Fishing boat of a fisherman, the accessories – net, provided these do not exceed P100,000. (i) So much of the salaries, wages, or earnings of the judgment obligor for his personal services within the four months preceding the levy as are necessary for the support of his family; The salary of a person within 4 months is exempt. For example, you have backwages of 6 months. Only 2 months salary can be levied. Exempt ang 4 months. Technically, wages and salaries are exempt as long as they are necessary for support of living. If you earn a minimum wage, everything may be exempted. But if you earn P50,000 a month and you support only two people, the court may levy on the excess. (j)
Lettered gravestones;
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Lapida sa sementeryo, hindi pwede i-levy. Why will you levy on lettered gravestones? My golly! (k) Monies, benefits, privileges, or annuities accruing or in any manner growing out of any life insurance; The proceeds of life insurance. The amount received by the beneficiaries cannot be levied, not a single centavo. (l) The right to receive legal support, or money or property obtained as such support, or any pension or gratuity from the Government; The right to receive legal support. The right ba! For instance, ako na lang ang mag receive ng support mo. Hindi pwede yan. Also the money given monthly to you if you are receiving support cannot be levied. Any pension or gratuity from the government – GSIS pension, for example. (m)
Properties specially exempted by law.
This is very broad – any other property exempt by special law. Q: Give an example where a property is exempt from execution under the special law? A: The following: 1.) Property obtained pursuant to a free patent application, HOMESTEAD. That is not subject to any claim within 5 years. You cannot even sell that within 5 years, how much more kung embargohin sa iyo? That is under CA 141 – Public Land Law; 2.) Under Social Legislation, SSS benefits are also exempt from execution, just like GSIS benefits; 3.) Under CARP law, the property acquired by a tenant under that law cannot be levied also.
Section 13, last paragraph: But no article or species of property in this section shall be exempt from issued upon a judgment recovered for its upon a judgment of foreclosure of a thereon. (12a) Lakas Atenista Ateneo de Davao University College of Law
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The last paragraph of Section 13 says that if for example, you ordered books and you failed to pay, you cannot claim the exemption because the obligation arose from the same item. For example: BAR PROBLEM: A lawyer went to Alemars professional books supply. He bought books worth half a million. That was utang – P500,000. The store decided to sue the lawyer for such amount not paid. The bookstore got a judgment. There was a levy on the lawyer’s property. The sheriff levied on the same books which became the source of the case. The lawyer claimed exemption under Section 13 up to P300,000 because it forms part of his professional library. Is the lawyer correct?? A: the lawyer is WRONG because of the last paragraph of Section 13 that no article or species of properties mentioned in this section shall be exempt from execution issued upon a judgment recovered for the price or upon a judgment of foreclosure of a mortgage thereon. What the law says, is the properties mentioned here (in Section 13) are exempt, EXCEPT when that debt arose out of that property. For example, here, why are you indebted to Alemars? Because of unpaid books. So the very books which gave rise to an obligation are not exempt from execution. But if another creditor will file a case against the lawyer, and that other creditor will win, that creditor cannot levy on the books because they are exempt. But the creditor from whom the books were bought can levy on the same books which gave rise to an obligation. The same thing with FAMILY HOME. For example, you will build a family home and then, hindi mo binayaran ang materials, labor and there was judgment against you. The creditor and the owner can levy on the house. He cannot claim exemption because the debt arose out of that same family home. Another example: You borrowed money from the bank. You mortgaged your house. Later on, you cannot pay the loan. The bank foreclosed the mortgage. You cannot argue that your house cannot be levied. Kaya nga may utang ka because of your house. Since you mortgaged it, that is not covered by the exemption. Q: What is the REASON behind this exemption? A: The reason for this exemption is PUBLIC POLICY. And common sense no? – the debtor should pay but this should not deprive him of a means to earn his living. You can levy on his property but not to the extent of depriving him of his provisions for support, means of livelihood by throwing him on to the street, homeless, penniless, despondent, dejected, mournful, melancholy, forlorn… Lakas Atenista Ateneo de Davao University College of Law
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LIFETIME OF WRIT OF EXECUTION – FIVE (5) YEARS Sec. 14. Return of writ of execution. - The writ of execution shall be returnable to the court issuing it immediately after the judgment has been satisfied in part or in full. If the judgment cannot be satisfied in full within thirty (30) days after his receipt of the writ, the officer shall report to the court and state the reason therefor. Such writ shall continue in effect during the period within which the judgment may be enforced by motion. The officer shall make a report to the court every thirty (30) days on the proceedings taken thereon until the judgment is satisfied in full, or its effectivity expires. The returns or periodic reports shall set forth the whole of the proceedings taken, and shall be filed with the court and copies thereof promptly furnished the parties. (11a) Under the OLD RULE, the lifetime of a writ of execution is only 60 days. After that, expired na yung writ. The sheriff has to use the writ to levy on the property of the defendant within 60 days. If the defendant has no property at present, and the writ has already expired, and assuming that there will be some properties found in the future, the procedure under the old rules is, the plaintiff has to file a motion for an ALIAS WRIT of execution, because once it is issued, it is again good for another 60 days. Under the PRESENT RULE, the 60-day period is already obsolete. The effectivity now of a writ of execution is, for as long as the judgment may be enforced by motion. And under Section 6, a judgment may be enforced by motion within five (5) years. So in effect, the writ of execution is valid for FIVE (5) years. The lifetime now has been extended from 60 days to 5 years. Of course, as much as possible, the writ must be enforced within 30 days and after that, the sheriff will tell the court about what happened after 30 days. So, the sheriff says based on the RETURN, “Wala pang property ang defendant.” Now, he just keeps on holding the writ. And maybe after one or two years, meron na’ng property ang defendant, he can now enforce the writ. But definitely, there is no need for the defendant to go back to the court to ask for another alias writ of execution because the writ can still be enforced – for as long as the judgment may be enforced by motion.
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Although every 30 days, the sheriff has to make a periodic report with the court. I do not know if the sheriffs here follow this procedure. But definitely, a writ is good for 5 years and in every 30 days, the sheriff has to make a report. NOTICE OF SALE Sec. 15. Notice of sale of property on execution. - Before the sale of property on execution, notice thereof must be given as follows: (a) In case of perishable property, by posting written notice of the time and place of the sale in three (3) public places, preferably in conspicuous areas of the municipal or city hall, post office and public market in the municipality or city where the sale is to take place, for such time as may be reasonable, considering the character and condition of the property; (b) In case of other personal property, by posting a similar notice in the three (3) public places above-mentioned for not less that five (5) days; (c) In case of real property, by posting for twenty (20) days in the three (3) public places above-mentioned a similar notice particularly describing the property and stating where the property is to be sold, and if the assessed value of the property exceeds fifty thousand (P50,000.00) pesos, by publishing a copy of the notice once a week for two (2) consecutive weeks in one newspaper selected by raffle, whether in English, Filipino, or any major regional language published, edited and circulated or, in the absence thereof, having general circulation in the province or city; (d) In all case, written notice of the sale shall be given to the judgment obligor, at least three (3) days before the sale, except as provided in paragraph (a) hereof where notice shall be given at any time before the sale, in the same manner as personal service of pleadings and other papers as provided by section 6 of Rule 13. The notice shall specify the place, date and exact time of the sale which should not be earlier than nine o'clock in the morning and not later than two o'clock in the afternoon. The place of the sale may be agreed upon by the parties. In the absence of such agreement, the sale of real property or personal property not capable of manual delivery shall be held in the office of the clerk of court Lakas Atenista Ateneo de Davao University College of Law
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of the Regional Trial Court or the Municipal Trial Court which issued the writ or which was designated by the appellate court. In the case of personal property capable of manual delivery, the sale shall be held in the place where the property is located. (18a) Auction sale follows levy. There must be notices because auction sale is open to the public. Notices must be posted in 3 public places preferably in the municipal hall, post office and public market. In paragraph [c], if the property to be sold is REAL property, the notices must describe the property, its location, assessed value if exceeding P50,000. Aside from notices, the law requires PUBLICATION in a newspaper so that many people can read it. You try to go there in the Hall of Justice, may bulletin board diyan sa labas. Notices are posted there. If you are interested in buying something, para mura, tingnan mo diyan. The law is very detailed now. The notice must specify the date of the sale, time, place etc. And the SC ruled that these requirements are to be strictly complied with. For example: You do not comply with the posting in 3 conspicuous places. Dalawa lang sa iyo, that is VOID. The SC said the requirements of the law for the holding of the public auction should be strictly followed. Why? Because in a public auction, you are depriving somebody of his property – the judgment debtor. So, all the requirements of the law intended to deprive the owner of his ownership over his property should be followed.
Illustration based on Dean’s experience:
TERCERIA (THIRD-PARTY CLAIM) SECTION 16. Proceedings where property claimed by third person. – If the property levied on is claimed by any person other than the judgment obligor or his agent, and such person makes an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title, and serves the same upon the officer making the levy and a copy thereof upon the judgment obligee, the officer shall not be bound to keep the property, unless such judgment obligee, on demand of the officer, files a bond approved by the Lakas Atenista Ateneo de Davao University College of Law
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court to indemnify the third-party claimant in a \sum not less 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. No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action therefor is filed within one hundred twenty days from the date of the filing of the bond. The officer shall not be liable for damages for the taking or keeping of the property, to any third-party claimant if such bond is filed. Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property in a separate action, or prevent the judgment obligee from claiming damages in the same or a separate action against a third-party claimant who filed a frivolous or plainly spurious claim. When the writ of execution is issued in favor of the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall not be required, and in case the sheriff or levying officer is sued for damages as a result of the levy, he shall be represented by the Solicitor General and if held liable therefore, the actual damages adjudged by the court shall be paid by the National Treasurer out of such funds as may be appropriated for the purpose. (17a)
Section 16 is a third-party claim procedure in execution. In Spanish, it is called the remedy of TERCERIA. ILLUSTRATION: Lolo decided to go on a prolong vacation and he entrusted to Karen (ang paborito ni Lolo) all his personal property like appliances – TV, refrigerator, car, etc. Karen used the property owned by Lolo while he was not around. Unknown to Lolo, Karen has a pending civil case filed by Gina. Gina obtained a judgment against Karen. There was levy on execution. The sheriff went to the premises of Karen, he found all these properties and he enforced the levy. Lolo came home and went to get the property from Karen. Karen said, they were all levied by the sheriff. Lolo is a person who is not the defendant but his properties were erroneously levied because the sheriff thought they belong to Karen who was in possession of them. Q: What is the remedy of Lolo who is not a defendant? A: The remedy is to apply Section 16, Rule 39 – You file with the sheriff, copy furnish Gina, what is known as the third-party claim or TERCERIA. Terceria is 56 Lakas Atenista Ateneo de Davao University College of Law
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an affidavit asserting that he is the owner of the property levied. So with that the sheriff is now placed on guard because the sheriff may be held liable if he continues to sell the property of the defendant. So, he is not bound to the proceedings regarding the sale unless the judgment obligee, on demand of the sheriff, files a bond approved by the court to indemnify a third party claimant in the sum not less than the value of the property levied on. Suppose sabi ni Gina: “Huwag kang maniwala diyan. Kalokohan iyan. Drama lang yan ni Karen at Lolo. Proceed with the auction sale!” Gina has to file a bond if he insists that the auction sale must proceed. Gina must put up a bond approved by the court to indemnify the third-party claimant, a sum not less than the value of the property. If the property is worth half a million, the bond must also be half a million. Then auction sale may proceed because there’s already a bond to answer for the damages. The sale may go on despite the third party claim. THIRD-PARTY CLAIM vs. THIRD PARTY COMPLAINT Now, do not confuse a third-party claim under Rule 39 with a third-party complaint under Rule 6. Q: What is a third-party complaint under Rule 6? A: A third-party complaint under Rule 6 is a PLEADING filed by a defendant against the third person not a party to the action for contribution, indemnity, subrogation, or any other relief in respect of the plaintiff’s complaint. Q: What is a third-party claim under Rule 39? A: A third-party claim (terceria) under RULE 39 is an AFFIDAVIT made by a third person who claims to be entitled to the property in the custody of a sheriff by virtue of a writ of execution. The one who files a third party claim is technically called third-party CLAIMANT. The one who files a third party complaint is called third-party PLAINTIFF. I notice that even in SC decisions, the SC commits that lapse: “The defendant filed a third party complaint” or sometimes “third party claimant.” But actually, the correct term is third-party plaintiff. Q: Now, under the law, where will you file your third-party claim? A: You file it with the sheriff although legally, it is considered as it is filed in the court because the sheriff is only an agent of the court. The sheriff does not have the power to rule on the legal issues. Only the judge can. And it is the court which decides on the validity of a third party claim. Q: If I am the third person and I want to vindicate my claim to that property, is a third party claim procedure the only remedy I have under the law? Even if Lakas Atenista Ateneo de Davao University College of Law
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there’s a third party claim, auction sale may proceed as long as there’s a bond. But I want the auction sale not to proceed and I want the property to be returned in my favor, do I have any other remedy? A: YES. Second paragraph: “Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property in a SEPARATE ACTION.” So, the remedy of third-party claim is NOT exclusive. There is nothing in Section 16 which says that a third person is deprived of a right to file a separate action. As the lawyer of Lolo, I have another option: instead of filing a third party claim, I would file a case in court – the separate case would name Gina as the defendant. The cause of action is that the sheriff mistakenly or erroneously levied the properties not owned by Karen because I am the real owner. Since there was a mistaken levy, I am also asking the court to declare the levy as null and void, the auction sale should not proceed. The court might rule in my favor, so a separate action is allowed. Thus, a third-party claim is not the only remedy available under the law for the third party claimant. The second part also contains a new provision, “…or prevent the judgment obligee from claiming damages in the same or a separate action against a third party claimant who files a frivolous or plainly spurious claim.” Remember that it is possible for a third-party claimant to be a dummy when it is a frivolous claim, without basis or spurious, para tulungan lang niya ang defendant. There are people like that. Now, under the new law, the prevailing party has the right to claim damages against the third-party claimant for filing frivolous claims. He can claim the damages in the same action or in a separate action. Now, many people do not really understand what is a third-party claim, even some lawyers: Q: Suppose I am the lawyer of Lolo, bakit pa ako mag-file ng another case? Can I not just complain to the court which rendered the decision? Can I not just file a motion asking the judge to order the release of the property? Is a separate action not a violation of the rule against multiplicity of suits? A: NO! You cannot bring out the issue to determine the ownership of the property. INTERVENTION here is not proper. [Is this not a ground for intervention? GROUNDS FOR INTERVENTION: (1) the intervenor has legal interest in the subject matter; (2) the intervenor has an interest in the success of either parties; (3) the intervenor has an interest against both parties; and (4) The Lakas Atenista Ateneo de Davao University College of Law
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intervenor is adversely affected by a distribution of a property in the custody of a court or an officer thereof.] The SC said YOU CANNOT INTERVENE because under Rule 19, an intervention can only be done at any time before judgment. But here in Rule 39, we are now on the stage of execution – meron ng judgment! Tapos na ang kaso…. [Gago!!] Intervention comes to late. The judge has already decided the case. Now, bakit bigyan mo naman siya ng bagong trabaho? That’s another issue different from a case already tried. So, a separate action is the proper remedy. On the other hand, such doctrine should be reconciled with what the SC said in the case of SY vs. DISCAYA 181 SCRA 378 HELD: If your property was erroneously levied under Rule 39, you can seek relief from the very same court which rendered the judgment by simply filing a motion to question the actuation of the sheriff, because execution is part of the process in that case and the sheriff is an officer of the court and the court has the complete control over the actuation of the sheriff. Therefore, why require the 3rd-party to file another action when he can seek relief in the same case? Meaning, the third party can seek relief in the same case but only to determine whether the sheriff acted rightly or wrongly, BUT not for the purpose of determining the issue of ownership. Questions of ownership cannot be decided here. There must be a separate action for the issue of ownership. “A third person whose property was seized by a sheriff to answer for the obligation of the judgment debtor may invoke the supervisory power of the court which authorized such execution. 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 said 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 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 the matter only insofar as may be necessary to decide if the sheriff has acted correctly or not.” So, the court that renders the judgment cannot decide on the issue of ownership to a third person. So your remedy is to file another case. But in the case of DISCAYA, the court which renders the judgment can determine whether Lakas Atenista Ateneo de Davao University College of Law
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the sheriff has acted wrongly or correctly. And if it is wrong it can order the property erroneously levied to be released without need of filing a separate action. Q: So how do you reconcile the two doctrines? A: If it is obvious that the sheriff committed a mistake – 100% mistake, i.e. he levied property belonging to a third person who is not a defendant – to require a third person to go to court and file another case will be tedious. Why can he not seek relief from the same court? Anyway if it is very obvious that the sheriff acted wrongly, that is only incidental. But when the issue is whether the property is owned by the defendant or the third person, and the issue is controversial – who is the rightful owner – that cannot be decided summarily by the court which rendered decision. It should be threshed out in an independent separate civil action. So that will be the consideration. The SC summarized all these remedies in the 1995 case of: EVANGELISTA vs. PENSERGA 242 SCRA 702 HELD: The remedies of a third person whose property was seized by the sheriff to answer for the obligation of a judgment obligor are the following: 1. Invoke the supervisory power of the court which authorized such execution (Sy vs. Discaya); 2. Terceria - third party claim (Rule 39, Section 16); and 3. Any proper action to vindicate his claim to the property, meaning a separate civil action. (second paragraph, Section 16, Rule 39) So these are the three remedies of a third person whose property was seized by a sheriff to answer for the obligation of another person. Sec. 17. Penalty for selling without notice, or removing or defacing notice. - An officer selling without the notice prescribed by section 15 of this Rule shall be liable to pay punitive damages in the amount of five thousand (P5,000.00) pesos to any person injured thereby, in addition to his actual damages, both to be recovered by motion in the same action; and a person willfully removing or defacing the notice posted, if done before the sale, or Lakas Atenista Ateneo de Davao University College of Law
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before the satisfaction of the judgment if it be satisfied before the sale, shall be liable to pay five thousand (P5,000.00) pesos to any person injured by reason thereof, in addition to his actual damages, to be recovered by motion in the same action. (19a) Notices in the auction sale should be posted in three public places. For example, you go to the hall of justice. You can see there a bulletin board, maraming nakalagay, half man niyan mga notice of public aution ba. Now, do not go there and kunin ang mga papel doon. Baka multahan ka. You are not supposed to remove or deface them. Sec. 18. No sale if judgment and costs paid. At any time before the sale of property on execution, the judgment obligor may prevent the sale by paying the amount required by the execution and the costs that have been incurred therein. (20a) Q: Can the debtor stop the auction sale? Is there a way for the debtor to prevent the sale of his property? A: YES, if the obligor pay the amount required by the execution and the costs – bayaran mo lahat ang utang mo, ‘di wala na. That’s what the law says. For example, the bank is foreclosing your mortgage and sell the property at public auction. To stop the bank from proceeding with the sale, you go to the bank and pay all your obligations. So, wala ng auction sale. But you have to pay all. “Kalahati lang ang bayaran ko.” Ah, hindi puydi yan. Sec. 19. How property sold on execution; who may direct manner and order of sale. All sales of property under execution must be made at public auction, to the highest bidder, to start at the exact time fixed in the notice. After sufficient property has been sold to satisfy the execution, no more shall be sold and any excess property or proceeds of the sale shall be promptly delivered to the judgment obligor or his authorized representative, unless otherwise directed by the judgment or order of the court. When the sale is of real property, consisting of several known lots, they must be sold separately; or, when a portion of such real property is claimed by a third person, he may require it to be sold separately. When the sale is of personal property capable of manual delivery, it must be sold within view of those attending the Lakas Atenista Ateneo de Davao University College of Law
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same and in such parcels as are likely to bring the highest price. The judgment obligor, if present at the sale, may direct the order in which property, real or personal, shall be sold, when such property consists of several known lots or parcels which can be sold to advantage separately. Neither the officer conducting the execution sale, nor his deputies, can become a purchaser, nor be interested directly or indirectly in any purchase at such sale. (21a) Execution sale shall be done at public auction. The public is invited to bid kaya may public notice. There are even publication for real property “TO THE HIGHEST BIDDER.” How does it happen? Normally, ang unang magbi-bid diyan is iyong creditor. And normally, his bid will be equal to the judgment in his favor. For example, the judgment against B is P1 million which includes principal and interest. Ang bid ko P1 million din. Okay lang, bahala ka kung sinong mas mataas diyan. That is how it normally happens. Q: Now, suppose there are many properties levied. What is the process? A: You sell them one by one. Hindi pwede sabay-sabay. [Maysa-maysa laeng balong!] After sufficient property has been sold and that is enough to satisfy the debt, then do not sell anymore. Do not sell more than what is necessary to satisfy the judgment. “When the sale is of real property, consisting of several known lots, they must be sold separately.” Years ago, I witnessed an auction sale of subdivision here. Obviously, the owner of the subdivision could not pay his account. So there was a public auction. Of course, the subdivision consists of more than 100 lots — iba-iba ang location, may mapa eh. Now, you cannot say, “Alright, 150 lots. Pila man?” Hindi puydi iyan. Isa-isa dapat – Lot #1, lot #2, lot #3… “kaya pa ba iyan? I may be interested to buy only one lot.” So, lot #1, highest bidder, lot #2…until the proceeds are enough to satisfy the account. So hindi pwedeng one time, garapalan iyan, kapal ng sheriff niyan. “Mga 170 lots…” ah hindi pwede iyan—isa-isa dapat. That is how tedious it is. The law says, the debtor, if he is present, he can intervene. He says, “Alright, unahin mo muna ito…” because he may know of somebody who is willing to buy his property. So he can tell the sheriff, “If you want to sell unahin mo muna ito because merong malaking bayad yan eh…” in order for his other properties to be saved from the execution.
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Now, the last paragraph, the last sentence says, “neither the officer conducting the execution sale, nor his deputies, can become a purchaser, nor be interested directly or indirectly in any purchase at such sale”. So the sheriff and his deputy cannot participate in the auction, these are prohibited interest. I think there is also a prohibition in the Civil Code on this — on prohibited sales. The judge cannot be interested in the sale of a property which is the subject matter of the litigation. The lawyer here cannot purchase a property involving a case which he handled, to prevent conflict of interest. Sec. 20. Refusal of purchaser to pay. If a purchaser refuses to pay the amount bid by him for property struck off to him at a sale under execution, the officer may again sell the property to the highest bidder and shall not be responsible for any loss occasioned thereby; but the court may order the refusing purchaser to pay into the court the amount of such loss, with costs, and may punish him for contempt if he disobeys the order. The amount of such payment shall be for the benefit of the person entitled to the proceeds of the execution, unless the execution has been fully satisfied, in which event such proceeds shall be for the benefit of the judgment obligor. The officer may thereafter reject any subsequent bid of such purchaser who refuses to pay. (22a) Auction sale: “We are now going to sell this piece of property. Alright, highest bidder—P10,000, next P11,000, P12,000, P13,000.” Sabi noong isa, “Alright, P40,000!” Sheriff: “Any other bid?—wala na? Ok wala na! then, it’s sold to you. Saan ang pera mo?” Bidder: “Wala akong pera, biro lang iyon.” My golly! Pwede kang i-contempt niyan ba! [nagpapatawa, hindi naman kalbo!] You can be declared in contempt of court. Hindi ito biruan. This is a proceeding. So we will repeat the procedure kasi wala man. Kalokohan pala ito. Bwiset! Q: May he bid again? A: No more. The officer may thereafter reject any subsequent bid of such purchaser who refused to pay. So do not fool around there when you make a bid. You must be serious and you must be ready to pay for you bid. Sec. 21. Judgment obligee as purchaser. When the purchaser is the judgment obligee, and no thirdparty claim has been filed, he need not pay the amount of the bid if it does not exceed the amount Lakas Atenista Ateneo de Davao University College of Law
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of his judgment. If it does, he shall pay only the excess. (23a) Q: Can the judgment obligee – the creditor-plaintiff – participate in the auction sale? A: YES, under Section 21. The sale is open to the public. As a matter of fact, in normal auction sale, the first bidder is the plaintiff himself. A: Suppose, he is the highest bidder. So the property is declared sold to him. Is he obliged to pay his bid? A: GENERAL RULE: NO. Why? You simply apply the law on compensation – I owe you money on the purchase price for your property but you also owe me money based on the judgment. So quits na tayo. Wala ng bayaran! Iyang property na ang pinaka-bayad mo. EXCEPTION: Two (2) instances when obligee may be required to pay for his bid: 1.) When his bid is higher than the judgment. So he has to pay the cash for the excess or EXAMPLE: The judgment in my favor is P1 million, my bid is P1.2 million and I’m the highest bidder. So I have to pay you the balance, the P200,000 because that is more than the judgment in my favor. 2.) when the property which is to be sold is a subject of a third party claim because it is really controversial whether the property is really owned by the judgment debtor. So, if there is a 3rd party claim, he has to pay because it is controversial - as to who really is the owner of the property. Of course, iyong pera naka-deposit iyan. Your money will be returned to you if it turns out the claim is frivolous. If the third party claim turns out to be valid, it will be given to the real owner because the property that you bought turned out to be owned by somebody who is not your debtor. Sec. 22. Adjournment of sale. By written consent of the judgment obligor and obligee, or their duly authorized representatives, the officer may adjourn the sale to any date and time agreed upon by them. Without such agreement, he may adjourn the sale from day to day if it becomes necessary to do so for lack of time to complete the sale on the day Lakas Atenista Ateneo de Davao University College of Law
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fixed in the notice or the day to which it was adjourned. (24a) Suppose the auction sale was scheduled today. Hindi natapos because there are many properties to be sold like 200 lots. Then we can continue tomorrow. Suppose we will continue next week. Then both parties must agree by written consent of the judgment obligor and obligee if we will postpone it to another date na mas malayo. Q: Do you know why these things are very important? A: Because you already advertised that it will be held on this day. So any change on the date has to be strictly complied with. That’s the reason behind these. Q: Now, what properties can be sold at public auction? A: It’s either personal property or real property. We are sure about that. TWO TYPES OF PERSONAL PROPERTY: 1.) one capable of manual delivery; and 2.) one not capable of manual delivery – iyong mga intangibles ba! Q: What is the procedure for the sale of personal property capable of manual delivery and one not capable of manual delivery? A: You have Section 23 and Section 24. Q: When it comes to real property, what is the procedure? A: The procedure is Section 25. So let’s go over there, conveyance to purchaser of personal property capable of manual delivery. Like a car and appliance or any other tangible object. Sec. 23. Conveyance to purchaser of personal property capable of manual delivery. When the purchaser of any personal property, capable of manual delivery, pays the purchase price, the officer making the sale must deliver the property to the purchaser and, if desired, execute and deliver to him a certificate of sale. The sale conveys to the purchaser all the rights which the judgment obligor had in such property as of the date of the levy on execution or preliminary attachment. (25a) Sec. 24. Conveyance to purchaser of personal property not capable of manual delivery. When the Lakas Atenista Ateneo de Davao University College of Law
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purchaser of any personal property, not capable of manual delivery, pays the purchase price, the officer making the sale must execute and deliver to the purchaser a certificate of sale. Such certificate conveys to the purchaser all the rights which the judgment obligor had in such property as of the date of the levy on execution or preliminary attachment. (26a) Q: What is the procedure for the sale of property capable of manual delivery? A: When the property is CAPABLE OF MANUAL DELIVERY, and you are the highest bidder, I will deliver the car to you, and execute and deliver to you a certificate of sale. The certificate of sale should be signed by the sheriff to prove that you are the highest bidder. And with that certificate of sale, you can register that with the LTO. Automatically, the LTO will transfer the ownership and the registration of the car in your name. Q: What is the procedure for the sale of property NOT CAPABLE OF MANUAL DELIVERY? Mga intangible assets? A: There is nothing to physically give you. But according to Section 24, the officer making the same must execute and deliver to the purchaser a certificate and that is actually tantamount to delivery already. Q: When you buy a personal property at an auction sale and the sheriff executes a certificate of sale in your favor, do you become the owner of the property? A: Both sections say, “the sale conveys to the purchaser all the rights which the judgment obligor have in such property as of the date of the levy on execution.” At the sale, you acquire all the rights which the obligor had in such property. You become the owner because you acquire the judgment obligor’s right of ownership over such property. BUT suppose the obligor holding the property is not the owner of the property although he has some right over the property and his rights where sold, then you only acquire whatever rights he has over the property. You do not acquire ownership. A spring cannot rise higher than its source. EXAMPLE: You are the defendant but you enjoy rights over the property as usufructuary – you are the beneficial owner of the property but not the naked owner. And your rights as usufructuary were levied. I am the purchaser. Can I acquire naked ownership? Of course NOT. I only acquire beneficial ownership. I only acquire whatever right the debtor has over the property. The SC made a commentary on that issue on the nature of the sheriff’s sale and one of which is the case of Lakas Atenista Ateneo de Davao University College of Law
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LEYSON vs. TAÑADA 109 SCRA 66 [1981] HELD: “At a sheriff’s sale they do not sell the land advertised to sell, although that is a common acceptation, but they simply sell what interest in that land the judgment debtor has; and if you buy his interest, and it afterwards develops that he has none, you are still liable on your bid, because you have offered so much for his interest in open market, and it is for you to determine before you bid what is his interest in the property.” So, it is for you to determine what his interest is before you bid. That is why you look at the sheriff’s notice of sale, meron mang warning ba: “Notice to prospective bidders. You are advised to find out whatever interest the debtor has.” For EXAMPLE: You buy the land and it turns out na hindi pala may-ari iyong taong iyon, iba ang rights niya. Then you are to uphold his rights, “Ah, I will hold the sheriff liable!” No you cannot. There is no warranty here on ownership. So, do not confuse this with private sale of property—warranty against eviction—wala iyan sa sheriff’s sale. The sheriff does not warrant the ownership of the property. The law only warrants the guarantee that you will acquire whatever interest he has. And if his interest is less than what you expect, pasensha ka. This is a case of CAVEAT EMPTOR – let the buyer beware. That is the thing you have to remember about action sale. Sec. 25. Conveyance of real property; certificate thereof given to purchaser and filed with registry of deeds. Upon a sale of real property, the officer must give to the purchaser a certificate of sale containing: (a) A particular description of the real property sold; (b) The price paid for each distinct lot or parcel; (c) The whole price paid by him; (d) A statement that the right of redemption expires one (1) year from the date of the registration of the certificate of sale. Such certificate must be registered in the registry of deeds of the place where the property is situated. (27a) If the property sold at public auction is a piece of land (real property), the sheriff will execute in your favor what is known as the sheriff’s CERTIFICATE 67 Lakas Atenista Ateneo de Davao University College of Law
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OF SALE. Ano’ng nakalagay diyan? It is practically what a normal deed of sale provides – the description of the land, the property sold, the whole price paid, the lot if there are different parcels, how much per parcel. The important paragraph is [d]: “A statement that the right of redemption expires one (1) year from the date of the registration of the certificate of sale”. Q: What is the main difference between a sale of personal property under Section 23 and sale of real property under Section 25? A: When the property sold at public auction is real property, the debtor has one (1) year to redeem the property. That’s what you call the RIGHT OF REDEMPTION from the purchaser. But if the property sold at public auction is personal property, like cars or appliances, there is no right of redemption. There is no right of redemption in personal property. That is only recognized in real property. So if your (personal) property is sold at public auction, and then there is a highest bidder, you cannot say, “Anyway, pwede ko namang bawiin iyon.” NO, wala iyang bawi, kanya na yan. But if the property sold at public auction is real property, that is not kissing your land goodbye. You have one year to redeem it. That is your last chance. Q: Summary: If you are the highest bidder, when do you acquire ownership of the property sold in a auction sale? A: It DEPENDS whether the property sold is personal or real: a.) If it is PERSONAL PROPERTY, the title is transferred after payment of the purchase price and delivery upon the purchaser. Delivery is either physical or symbolic; (Sections 23 & 24) b.) If it is REAL PROPERTY, the title is transferred, not after the auction sale, but after expiration of the right to redeem. (Section 25) There is no right of redemption under personal property. It can only be exercised in real property. Now, take note that the period to redeem is ONE YEAR FROM THE DATE OF THE REGISTRATION of the certificate of sale in the office of the registrar of deeds. It is NOT from the date of the auction sale. Under the old law, malabo eh: “from the date of sale.” Anong sale? Date of the auction sale or date of the issuance of certificate of sale? According to the SC, the date of the registration. That is the start of the counting. Kaya nga if there is a sale in your favor, pag i-delay mo ang registration, ikaw ang kawawa because the longer you delay it, the redemption period is being stretched. Instead of cutting after one year, period of redemption has not been cut off kaya there must be a registration. Lakas Atenista Ateneo de Davao University College of Law
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Under the present rule, the right of redemption expires after one (1) year from the date of the registration of the certificate of sale. Under the old law, it expires after twelve (12) months. Q: Is the ‘one year’ under the present rule and the ‘12 months’ under the old rules the same? A: NO, and we know that 12 months is 360 days. One month is 30 days times 12 is 360 days. But one year is 365 days. So they are not the same. That’s why before, the redemption period for extrajudicial foreclosure of mortgage is one year. And the redemption in execution under Rule 39 is 12 months. So there is a difference. But NOW, pareho na. That’s why the old case of STATE INVESTMENT HOUSE when the SC made the distinction between the one year period for mortgage and the 12 months period under Rule 39 is already MEANINGLESS because the one year period. NOW is uniform. Q: Can you attack the validity of an auction sale? A: GENERAL RULE: NO, you cannot attack the auction sale on the presumption that every fair sale is final. There is a presumption of regular performance of duty by the sheriff. EXCEPTION: When an execution sale may be set aside: 1.) When it is shown from the nature of the irregularity or from intrinsic facts injury resulted therefrom. (Navarro vs. Navarro, 76 Phil. 122) Meaning, there were serious irregularities committed by the officer in conducting the sale like no publication, no notice, no prior levy, etc.; 2.) When the price obtained at the execution sale is shockingly inadequate and it is shown that a better price can be obtained at a resale. (Barrozo vs. Macadaeg, 83 Phil. 378) Meaning, the highest bid is shockingly inadequate. EXAMPLE: I owed you for P100,000 – P100,000 ang judgment! And what is levied is a brand new Mercedes Benz. So sobra na yon na pambayad sa utang. But the highest bid is P30,000. Just imagine the highest bid is 30,000, tapos meron pang deficiency judgment for P70,000 – of course, there is something wrong here. So, that is an exception, no! That is, when the price obtained at the execution sale is SHOCKINGLY INADEQUATE to the senses and it is shown that a better price can be obtained. Lakas Atenista Ateneo de Davao University College of Law
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‘Shocking to the senses’ means hindi naman yung the difference is very slight. EXCEPTION TO THE EXCEPTION: The rule that you can question the validity of the auction sale if the price obtained is shockingly inadequate applies ONLY when the property sold is PERSONAL property. The exception does not apply when the property sold is real property because if the property sold is a personal property, there is no right of redemption. But if the property sold is real property, you cannot complain because, anyway, you have one year to pay and the redemption price is lower. So, you are not really prejudiced. So why are you complaining? That’s what the SC said in the case of RAMOS vs. PABLO 146 SCRA 5 [1986] HELD: “A reading of plaintiffs' (petitioners') complaint shows that inadequacy of price was raised as one of the issues. Assuming that the price was shockingly low, the same cannot vitiate the auction sale for redemption would be comparatively easier.” That is because the property sold in RAMOS is real property. Pero kung personal property, I think it is really unfair. You lose the property forever with a very small amount. Sec. 26. Certificate of sale where property claimed by third person. When a property sold by virtue of a writ of execution has been claimed by a third person, the certificate of sale to be issued by the sheriff pursuant to sections 23, 24 and 25 of this Rule shall make express mention of the existence of such third-party claim. (28a)
If the property sold at public auction is a subject of a third party claim under Section 16, the certificate of sale to the property is issued subject to the outcome of the third party claim by a stranger. Sec. 27. Who may redeem real property so sold. Real property sold as provided in the last preceding section, or any part thereof sold separately, may be redeemed in the manner hereinafter provided, by the following persons: (a) The judgment obligor, or his successor in interest in the whole or any part of the property; Lakas Atenista Ateneo de Davao University College of Law
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(b) A creditor having a lien by virtue of an attachment, judgment or mortgage on the property sold, or on some part thereof, subsequent to the lien under which the property was sold. Such redeeming creditor is termed a redemptioner. (29a) That is an important section. Q: Who are entitled to redeem real property? A: There are two (2): 1.) The judgment obligor or his successor-in-interest; and 2.) A creditor having a lien by virtue of an attachment, judgment or mortgage on the property sold, subsequent to the lien under which the property was sold. He is know as the REDEMPTIONER. JUDGMENT OBLIGOR OR HIS SUCCESSORS-IN-INTEREST Judgment obligor is clear – the defendant who lost the case – the defendant whose property was levied. Or, his successor-in-interest. For EXAMPLE: During the one year period to redeem, the judgment debtor died. So it could be his heirs, his children, his spouse who could exercise the right to redeem because they step into his shoes. Also, successor-in-interest would also refer to a person to whom the obligor assigned or transferred his right to redeem. Q: Can the defendant sell, aside from transferring, his right to another person? A: YES, because the right to redeem is property by itself. My right to redeem is also property such as an interest to the real property which can be the subject matter of a sale. EXAMPLE: “Alright, may property ako worth P5 million. Na-sheriff for P2 million. Wala na, hindi ko na kaya. Ibenta ko sa iyo for P3 million. Give me P1 million cash at ikaw na ang mag redeem sa purchaser.” Ginansiya ka pa rin di ba? P5 million gud iyon. So I can sell, and once I sell the right to redeem to you, you are classified as successor-in-interest for the judgment obligor. REDEMPTIONER Q: Define redemptioner. A: A redemptioner is a creditor having a lien by virtue of an attachment, judgment or mortgage on the property sold, or on some part thereof, subsequent to the lien under which the property was sold.
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ILLUSTRATION: Suppose there is a title owned by X and he has four (4) creditors. Let’s say the property is worth P10 million and he owes A for P2 million. So A levied the property. Now there’s another judgment in favor of B and there is no other property, ito na lang. So ang ginawa ni B, tinatakan niya – another P2 million. Under the Law on Land Titles and Deeds, B has inferior rights. In other words, the right of A is superior to the right of B. A has no obligation to respect the right of B but B is obliged to respect the right of A. And Assuming that there is a third creditor – C – for another P2 million. Thus, subsequent holder din si C. If D is also a creditor, apat na sila. Of course, the right of A is superior. He levies the property, may one year to redeem. Sabi ni X, “Wala na akong property, so ano pang pakialam ko kay B?” Suppose X will not redeem, so A becomes the owner after one year. What happens to B, C and D? Bura lahat kayo because you are underneath. A has no obligation to respect your liens. In other words, A acquires the entire property for only P2M because hindi na interesado si X. Shempre si B interesado. So B will pay A within the redemption period para matanggal si A. Yung utang ni X na P2M binayaran niya kay A. So P4 million na ang hawak ni B. And B will now be the number one. B will now acquire the property. Pero sabi ni C, “Hindi pwede iyan, lugi ako!” Kasi pagnaacquire na ni B ang property, patay na naman si C and D. Sabi ni C, “Bababuyin, ah este… Babayaran kita (B)! O ayan ang P4 million. Saksak mo sa baga mo!” D can do the same thing to C. Iyan ang tinatawag na redemptioners – people who have lien subsequent because that is your only way to protect your lien over the property. Anyway, even if D will pay everybody, hindi pa rin lugi because the property is worth P10 million. But he spent P8 million because he had to buy or redeem it from people who are ahead of him. That is the illustration of redemptioners, they have a personality or a right to redeem the property from whoever is ahead of him in order to protect his lien over the property because if he will not redeem, the quickest one will acquire the property free from any lien or encumbrance. Eh, kung wala na yung property? Patay na ako. What property will I get to satisfy the account wala na akong property, isa nalang. That is the rule on redemption. That is what Section 27 is all about. Take note that redemptioners cannot redeem if the judgment debtor redeems. (For Review Class) Now, let us discuss the case of PALICTE vs. REMOLITE, infa. This case is instructive on the issue of right of redemption under Rule 39 in Lakas Atenista Ateneo de Davao University College of Law
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relation to special proceedings – the estate of deceased person. This is what happened: PALICTE vs. REMOLETE 154 SCRA 132 [1987] FACTS: A man lost a case and his properties were levied. So let’s say his properties were levied for P1 million. But during the 1-year period of redemption, he died. And he is survived by 5 children. And there is an administrator appointed by the court to administer the properties of the deceased. During the one period to redeem, one of five children, siguro mayaman, redeemed the properties of their father. Take note that only one of the heirs redeemed the entire property from the judgment creditor- obligee. And one of the issues raised is whether one heir alone has the personality to redeem from the creditor the property of the estate when there is an administrator. Remember, ha – the legal representative under the law, is the administrator. ISSUE #1: So, who has the right to redeem? The heir or the administrator? HELD: The HEIR has the right to redeem. “At the moment of the decedent’s death, the heirs start to own the property, subject to the decedent’s liabilities. In fact, they may dispose of the same even while the property is under administration. If the heirs may dispose of their shares in the decedent’s property even while it is under administration with more reason should the heirs be allowed to redeem redeemable properties despite the presence of an administrator.” ISSUE #2: Must the one redeeming prove that the other co-heirs, the administrator and the court expressly agreed to the redemption? Is it necessary for him to get their consent? HELD: “There is NO NEED for such prior approval. While it may have been desirable, it is not indispensable. There is likewise nothing in the records to indicate that the redemption was not beneficial to the estate.” Anyway, the estate was benefited. The property was returned to the estate rather than acquired by the creditors. ISSUE #3: How can one specific heir redeem alone when his interest in the estate is not fixed and determinate pending the order of distribution by the court? He is just a 1/5 owner and then he is redeeming everything, how can that be done? HELD: “It may be true that the interest of a specific heir is not yet fixed and determinate pending the order of distribution BUT, Lakas Atenista Ateneo de Davao University College of Law
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nonetheless, the heir’s interest in the preservation of the estate and the recovery of its properties is greater than anybody else’s, definitely more than the administrator’s who merely holds it for the creditors, the heirs, and the legatees.” ISSUE #4: Can we not consider the administrator as the judgmentdebtor himself and the only one successor-in-interest? HELD: NO. “The estate of the deceased is the judgment-debtor and the heirs who will eventually acquire that estate should not be prohibited from doing their share in its preservation.” ISSUE #5: So, sabi ng redeeming heir, “Okey, so now let the property be registered in my name because pera ko man ang ginamit. I spent my money in paying the property including the shares of my brothers and sisters who have no money.” Is the redeeming heir correct? HELD: NO. “The motion to transfer the titles of the properties to the name of the redeeming heir cannot prosper at this time. Otherwise, to allow such transfer of title would amount to a distribution of the estate.” That is tantamount to premature distribution of the estate. You cannot distribute the estate in favor of one heir immediately. So, what is the solution? “The other heirs are, therefore, given a sixmonth period to join as co-redemptioners in the redemption made by the petitioner before the motion to transfer titles to the latter’s name may be granted.” So meaning, if the other heirs are given 6 months, hindi nyo mabayaran, pwede na yan, kasi pera man niya ang ginamit.
Sec. 28. Time and manner of, and amounts payable on, successive redemptions; notice to be given and filed. The judgment obligor, or redemptioner, may redeem the property from the purchaser, at any time within one (1) year from the date of the registration of the certificate of sale, by paying the purchaser the amount of his purchase, with one per centum per month interest thereon in addition, up to the time of redemption, together with the amount of any assessments or taxes which the purchaser may have paid thereon after purchase, and interest on such last named amount at the same rate; and if the purchaser be also a creditor having a prior lien to that of the redemptioner, other than the judgment under which such purchase Lakas Atenista Ateneo de Davao University College of Law
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was made, the amount of such other lien, with interest. Property so redeemed may again be redeemed within sixty (60) days after the last redemption upon payment of the sum paid on the last redemption, with two per centum thereon in addition, and the amount of any assessments or taxes which the last redemptioner may have paid thereon after redemption by him, with interest on such last-named amount, and in addition, the amount of any liens held by said last redemptioner prior to his own, with interest. The property may be again, and as often as a redemptioner is so disposed, redeemed from any previous redemptioner within sixty (60) days after the last redemption, on paying the sum paid on the last previous redemption, with two per centum thereon in addition, and the amounts of any assessments or taxes which the last previous redemptioner paid after the redemption thereon, with interest thereon, and the amount of any liens held by the last redemptioner prior to his own, with interest. Written notice of any redemption must be given to the officer who made the sale and a duplicate filed with the registry of deeds of the place, and if any assessments or taxes are paid by the redemptioner or if he has or acquires any lien other than that upon which the redemption was made, notice thereof must in like manner be given to the officer and filed with the registry of deeds; if such notice be not filed, the property may be redeemed without paying such assessments, taxes, or liens. (30a) ILLUSTRATION: Brown Sugar is a judgment obligor. She has four creditors (A, B, C, and D) and all of them obtained judgment against her and all of them levied on the same property. Brown Sugar is given one year from the registration of the sale to redeem it from A. Now, suppose SUGAR cannot redeem, B will be the one to redeem because the first redemptioner and the judgment obligor have one year to redeem from the date of registration. That is what Section 28 says “the judgment obligor, or redemptioner.” Now, C is given 60 days to redeem. After that, wala ng right. Suppose C was able to redeem, D has another 60 days to redeem from C. Q: So what is the period of redemption? A: There are two periods of redemption: The judgment obligor and first redemptioner are given ONE YEAR from the date of registration of the certificate of sale to redeem and after that all subsequent redemptioners are given 60 days. Lakas Atenista Ateneo de Davao University College of Law
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So the second redemptioner can redeem it within 60 days. So, within 60 days, the 3rd redemptioner can redeem it. Pasa yan, in order that the redemptioner can protect their lien over the property. So, the redemption period is ONE YEAR and 60 DAYS respectively. Q: Now, suppose Brown Sugar or B would like to redeem the property from A. How much will the property be redeemed? A: Under Section 28, the purchase or the bid price for the property PLUS one percent per month interest, and reimbursement for taxes of the property with interest also. But definitely, the redemption price = the bid price + 1% interest month. So, if you will redeem after one year, the bid price and 12% of the bid price. ILLUSTRATION: So kung P1 million ang bid price plus + P120,000 (1%/month) = P1.12 million Now there are two interesting cases here which I want you to remember. The conflicting ruling in PNB vs. CA (140 SCRA 360) and the case of SY vs. CA (172 SCRA 125). The two cases involved a foreclosure of mortgage not execution but the Rules of Court applies. Under the extra-judicial foreclosure of mortgage Act 3135, the provision of the Rules of Court are also applicable to redemption in a foreclosure sale. So the provision in Section 28 also applies to the redemption during an extrajudicial foreclosure of property. PNB vs. COURT OFAPPEALS 140 SCRA 360 [1985] FACTS: Suppose I will borrow money from the bank and stipulate an interest at 24% per annum. During the auction sale, it was sold to the bank. Within one year, you approach me, gusto mo na i-redeem. Magkano ang bid price—P2M plus interest of 2% per month for the next seven or eight months. Sabihin ng debtor, “No, 1% lang. Di ba nakalagay sa law 1% lang.” Pero ang usapan natin is 3% monthly. ISSUE: So which prevails - the 1% per month under the Rules of Court or the 2% per month as stipulated in the promissory note? HELD: The 1% of the Rules of Court prevails. Why? The rights of the debtor or creditor, the bank for example, under the promissory note, or even under the mortgage law, is only good up to the auction sale. From the moment the auction sale is finished and there was already a bid, we are now talking of the one year period to redeem. So the rate in the promissory note is no longer applicable. Lakas Atenista Ateneo de Davao University College of Law
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The case of PNB was somehow modified by the SC in the subsequent case of Sy vs. CA (172 SCRA 125) where the facts are identical. SY vs. COURT OF APPEALS 172 SCRA 125 [1989] FACTS: They borrowed money from the bank at 2% a month and they failed to pay the loan. Thus, there was a foreclosure of mortgage then there was an execution of sale. ISSUE: Within the one year period of redemption, pila man ang interest? The debtor will say 1% but according to the bank, it is 2% as stipulated. Which will prevail? HELD: The 3% a month stipulated under the mortgage contract prevails. Why? Because of a special law – Section 78 of the General Banking Act R.A. 337. Between Section 28 of Rule 39 and Section 78 of the General Banking Act, the latter prevails because it is a special law. It applies to banks. “The General Banking Act partakes of the nature of an amendment to the mortgage law in so far as the redemption price is concerned. When the mortgagee or the creditor is a bank or banking credit institution, Section 6 of the mortgage law in relation to Section 28 of Rule 39 of the Rules of Court is inconsistent with Section 78 of the General Banking Act.” So the bank rate prevails. Paano nangyari ito? I have only one single explanation. Hindi nakita ng mga abogado ng PNB ang provision na iyon. They did not research very well. They failed to cite the provision of the General Banking Act which authorizes the bank to continue charging the higher rate even during the redemption period. Ginamit ng SC ang general rule eh. So mas magaling ang lawyer nung bank in the second case because they were able to detect an exception under the general rule. You know, if you are a lawyer of a bank, you must know all the laws regarding banks. Just the same, if you are a labor lawyer, you master all the labor laws. But if you are a bar candidate, you master all laws! Yaaaann! Sec. 29. Effect of redemption by judgment obligor, and a certificate to be delivered and recorded thereupon; to whom payments on redemption made. If the judgment obligor redeems, he must make the same payments as are required to effect a redemption by a redemptioner, whereupon, no further redemption shall be allowed and he is restored to Lakas Atenista Ateneo de Davao University College of Law
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his estate. The person to whom the redemption payment is made must execute and deliver to him a certificate of redemption acknowledged before a notary public or other officer authorized to take acknowledgments of conveyances of real property. Such certificate must be filed and recorded in the registry of deeds of the place in which the property is situated, and the registrar of deeds must note the record thereof on the margin of the record of the certificate of sale. The payments mentioned in this and the last preceding sections may be made to the purchaser or redemptioner, or for him to the officer who made the sale. (31a) Q: Suppose Tikla redeems the property from Joshua. If the sheriff will execute in favor of Tikla a certificate of redemption, to whom should Tikla pay? A: The law says she can pay directly to the purchaser, the redemptioner or the person who made the sale. Sec. 30. Proof required of redemptioner. A redemptioner must produce to the officer, or person from whom he seeks to redeem, and serve with his notice to the officer a copy of the judgment or final order under which he claims the right to redeem, certified by the clerk of the court wherein the judgment or final order is entered; or, if he redeems upon a mortgage or other lien, a memorandum of the record thereof, certified by the registrar of deeds; or an original or certified copy of any assignment necessary to establish his claim; and an affidavit executed by him or his agent, showing the amount then actually due on the lien. (32a) When the ORIGINAL OWNER wants to redeem the property from B, there is NO NEED for him to prove his right as a judgment debtor. The judgment debtor has the automatic right to redeem. But when it is B, C or D (REDEMPTIONERS) who wants to redeem, they MUST PROVE to the sheriff that they are qualified to redeem. They must prove their status because not every person in the world has the right to redeem. The right to redeem is only given to the debtor, the successor-in-interest or the redemptioner. Thus, you must prove your personality to effect redemption. Sec. 31. Manner of using premises pending redemption; waste restrained. Until the expiration of the time allowed for redemption, the court may, Lakas Atenista Ateneo de Davao University College of Law
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as in other proper cases, restrain the commission of waste on the property by injunction, on the application of the purchaser or the judgment obligee, with or without notice; but it is not waste for a person in possession of the property at the time of the sale, or entitled to possession afterwards, during the period allowed for redemption, to continue to use it in the same manner in which it was previously used; or to use it in the ordinary course of husbandry; or to make the necessary repairs to buildings thereon while he occupies the property. (33a) PROBLEM: Suppose X is the debtor, A is the purchaser because the highest bidder could be any person. During the 1-year period to redeem, who is in possessor of the property? The purchaser or the debtor? A: The DEBTOR. During the one-year period, iyo pa rin yan. The buyer or the purchaser cannot take over during the institution. He has to wait for the one-year period to expire before he can take over. Therefore, X continues to occupy the property. He continues to use it the same manner it was previously used. Use it in the ordinary course of husbandry, to make the necessary repairs to buildings thereon while he occupies the property. Q: Suppose 8 months has passed. Sabi ni X, “Mukhang wala na akong pag-asa. Hindi ko na ito mababayaran. Sige, wasakin ko na lang ang property. Sirain ko na lang. I will make a waste of the land. I will cut all the coconut trees. I will destroy all the improvements. Para pag-take-over mo, wala na. Bwahahaha!” What is the remedy of A? A: He can ask the court to issue a writ of injunction according to Section 31 – an injunction to restrain the commission of waste on the property. So, you can also stop him by injunction. Sec. 32. Rents, earnings and income of property pending redemption. The purchaser or a redemptioner shall not be entitled to receive the rents, earnings and income of the property sold on execution, or the value of the use and occupation thereof when such property is in the possession of a tenant. All rents, earnings and income derived from the property pending redemption shall belong to the judgment obligor until the expiration of his period of redemption. (34a) Section 32 is the continuation of Section 31. Lakas Atenista Ateneo de Davao University College of Law
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Q: My property was sold on execution in your favor. But my property earns income. May mga tenants diyan na nagbabayad ng renta. During the one-year period, who will get the rentals? The purchaser or the debtor? A: The DEBTOR. He continues to receive all the earnings. For defensive purposes, he is still the owner. Do not say that, “Ako ang highest bidder, akin ang income!” (Gunggong!) You wait for the one-year redemption period to expire to get the income. Under the OLD rules, the 1964 Rules, during the one-year period to redeem, the debtor/defendant continues to get the income of the property but when the creditor may opt: “Your Honor, akin ang income ha?” That’s allowed by the old law. But everything is deductible also form the redemption price. NGAYON wala na yan. 100% the debtor is the one enjoying the income over the property. That is a major amendment introduced by the 1997 Rules. Q: Now, what happens if after the lapse of one year there is no redemption? What is the next step? A: That is Section 33: Sec. 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; or, if so redeemed whenever sixty (60) days have elapsed and no other redemption has been made, and notice thereof given, and the time for redemption has expired, the last redemptioner is entitled to the conveyance and possession; but in all cases the judgment obligor shall have the entire period of one (1) year from the date of the registration of the sale to redeem the property. The deed shall be executed by the officer making the sale or by his successor in office, and in the latter case shall have the same validity as though the officer making the sale had continued in office and executed it. Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor. (35a) Lakas Atenista Ateneo de Davao University College of Law
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If the period to redeem expires, no more right of redemption. What will happen? The sheriff now will now execute in favor of the highest bidder or purchaser what is known as the final deed of sale or DEED OF CONVEYANCE. Remember that there are two documents here which the sheriff executes in case of real property. Q: What are they (two documents which the sheriff executes in case of real property)? A: The following: 1.) CERTIFICATE OF SALE. After the auction sale, he will execute in your favor the certificate of sale under Section 25, by the time you register that, you start counting the one year. 2.) DEED OF CONVEYANCE. If after one year there is no redemption, a deed of conveyance is executed. (Section 33) Q: Which of the two documents transfers the ownership to the purchaser? A: Only the DEED OF CONVEYANCE transfers title to the property. The certificate of sale one year ago does not transfer the ownership of the land to the purchaser. It is only a memorial that you are the highest bidder, that you paid so much and that you are the purchaser but there is no transfer of ownership. Only the final deed of sale in Section 33 conveys title to property. So do not confuse the sheriff’s certificate of sale under Section 25 with the final deed of sale under Section 33. Although in an extra-judicial foreclosure, there is no need of deed of sale. Only affidavit of consolidation is needed under the mortgage law. Q: How can the sheriff give it to you? Suppose the debtor refuse to vacate, is there a need to file another action of unlawful detainer or forcible entry? A: There is no more need of filing another action to eject the former owner. The procedure is, the purchaser can ask the court to issue a WRIT OF POSSESSION under the Property Registration Decree to take over the property. Now, another interesting case about this stage in relation to property exempted from execution, is the case of GOMEZ vs. GEALONE 203 SCRA 474 [1991] FACTS: The property of the defendant was levied and sold in a public auction to the highest bidder. One year after, there was no redemption. Then after the period has expired, here comes the defendant questioning the auction sale because the property was Lakas Atenista Ateneo de Davao University College of Law
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exempt from execution and the property really turned out to be exempt from execution. ISSUE: Is there a deadline for a judgment debtor to claim exemption from execution of his property? Can the debtor still raise the issue that the property is exempt from execution after the expiration of the redemption period. HELD: The rules do not expressly mention up to what point “although the rules of court does not prescribe the period within which to claim the exemption, the rule is, nevertheless, well-settled that the right of exemption must be claimed by the debtor himself at the time of the levy or within a reasonable time thereafter.” What is “reasonable time”? “’REASONABLE TIME,’ for purposes of the law on exemption, does not mean a time after the expiration of the one-year period for judgment debtors to redeem the property sold on execution, otherwise it would render nugatory final bills of sale on execution and defeat the very purpose of execution - to put an end to litigation.” “We now rule that claims for exemption from execution of properties under Section 13 must be presented before its sale on execution by the sheriff.” Meaning, you raise the issue of exemption at the time of the levy but not later that the auction sale. There is a deadline because if you claim exemption after that, masyadong ng atrasado—too late na ba. Thus, the claim for exemption must be raised. That’s the ruling in the case of GOMEZ vs. GEALONE. Sec. 34. Recovery of price if sale not effective; revival of judgment. If the purchaser of real property sold on execution, or his successor in interest, fails to recover the possession thereof, or is evicted therefrom, in consequence of irregularities in the proceedings concerning the sale, or because the judgment has been reversed or set aside, or because the property sold was exempt from execution, or because a third person has vindicated his claim to the property, he may on motion in the same action or in a separate action recover from the judgment obligee the price paid, with interest, or so much thereof as has not been delivered to the judgment obligor; or he may, on motion, have the original judgment revived in his name for the whole price with interest, or so much thereof as has been delivered to the judgment Lakas Atenista Ateneo de Davao University College of Law
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obligor. The judgment so revived shall have the same force and effect as an original judgment would have as of the date of the revival and no more. (36a) Q: Suppose A is the highest bidder. There is a third-party claim which turned out to be valid. So the property is removed from A. So, paano naman si A? Nakabayad gud siya diyan. Paano niya babawiin ang kuwarta niya? A: A’s options under Section 34: 1.) Recover the money from obligee (A here is not the judgment obligee); or 2.) Have the judgment revived in your name and you look for other properties of the obligor to execute because: a.) He lost possession of the property; b.) He was evicted; c.) There was irregularity of the proceedings; d.) The judgment has been reversed or set aside on appeal; e.) The property sold was exempt from execution; or, f.) A third person has validity of his claim of the property. That’s one way of property being removed from the purchaser. Your remedy is to recover the money from the obligee ASSUMING that the obligee is different from the purchase. Or have the judgment revived in your name – hahabol ka na lang sa ibang properties ng debtor. That’s the procedure alright. Sec. 35. Right to contribution or reimbursement. When property liable to an execution against several persons is sold thereon, and more than a due proportion of the judgment is satisfied out of the proceeds of the sale of the property of one of them, or one of them pays, without a sale, more than his proportion, he may compel a contribution from the others; and when a judgment is upon an obligation of one of them, as security for another, and the surety pays the amount, or any part thereof, either by sale of his property or before sale, he may compel repayment from the principal. (37a) Q: The judgment is against A, B, and C, solidary debtors. A paid everything. What is the right of A? A: A has the right to seek reimbursement from B and C. Or if the surety was made to pay the loan, he can claim reimbursement from the principal debtor. That’s under the Law on Obligations and Contracts—right to reimbursement. 83 Lakas Atenista Ateneo de Davao University College of Law
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REMEDIES IN AID OF EXECUTION Another important portion of the rule to remember are the so-called provisions of the rules in aid of execution – remedies “in aid of execution” – because execution is a difficult process. The purpose of the remedies in aid of execution is to help the obligee realize the fruits of the judgment. It is sometimes very hard to grasp out properties of the obligor especially if he knows how to hide them by conveying remedies to assist him in locating the properties of the defendant and these remedies in aid of execution are found in Section 36 to Section 43. And the most famous are those found in Sections 36 and 37: Sec. 36. Examination of judgment obligor when judgment unsatisfied. When the return of a writ of execution issued against property of a judgment obligor, or any one of several obligors in the same judgment, shows that the judgment remains unsatisfied, in whole or in part, the judgment obligee, at any time after such return is made, shall be entitled to an order from the court which rendered the said judgment, requiring such judgment obligor to appear and be examined concerning his property and income before such court or before a commissioner appointed by it, at a specified time and place; and proceedings may thereupon be had for the application of the property and income of the judgment obligor towards the satisfaction of the judgment. But no judgment obligor shall be so required to appear before a court or commissioner outside the province or city in which such obligor resides or is found. (38a) Sec. 37. Examination of obligor of judgment obligor. When the return of a writ of execution against the property of a judgment obligor shows that the judgment remains unsatisfied, in whole or in part, and upon proof to the satisfaction of the court which issued the writ, that a person, corporation, or other juridical entity has property of such judgment obligor or is indebted to him, the court may, by an order, require such person, corporation, or other juridical entity, or any officer or member thereof, to appear before the court or a commissioner appointed by it, at a time and place within the province or city where such Lakas Atenista Ateneo de Davao University College of Law
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debtor resides or is found, and be examined concerning the same. The service of the order shall bind all credits due the judgment obligor and all money and property of the judgment obligor in the possession or in the control of such person, corporation, or juridical entity from the time of service; and the court may also require notice of such proceedings to be given to any party to the action in such manner as it may deem proper. (39a) So under Section 36, you can ask the court to render judgment to allow you to subpoena the obligor and take the witness stand subject to questioning so that you can discover where his properties are. So in effect, Section 36 is related to modes of discovery. This is actually a mode of discovery. This is a type of deposition taking. It is related to the subject of deposition taking where the discovery of the witness stand to effect execution. EXAMPLE: The sheriff did not find any property of the obligor. So the obligee can file a motion under Section 36 for examination of the obligor under oath hoping that in the course of asking questions, he might make some admissions. And the procedure is the same as in deposition but this is only done right inside the courtroom. On the other hand under Section 37, you can also examine people whom you believe owe the obligor such as his debtors, or those holding his property, so that you can discover all his collectibles and ask that the same be garnished. So this time, it is the “obligor” of the judgment obligor who will be examined. EXAMPLE: Kenneth, Thadd, and Francis owe the judgment obligor a sum of money. The obligee can file a motion under Section 37 to subpoena Kenneth, Thadd and Francis to find out if it is true that they are indebted to the judgment obligor. In this case, the obligee can as the court to garnish the money. So, those are the objects of Sections 36 and 37. Of course there are others, just go over them. Sec. 38. Enforcement of attendance and conduct of examination. A party or other person may be compelled, by an order or subpoena, to attend before the court or commissioner to testify as provided in the two preceding sections, and upon failure to obey such order or subpoena or to be sworn, or to answer as a witness or to subscribe his deposition, may be punished for contempt as in other cases. Examinations shall not be unduly prolonged, but the proceedings may be adjourned Lakas Atenista Ateneo de Davao University College of Law
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from time to time, until they are completed. If the examination is before a commissioner, he must take it in writing and certify it to the court. All examinations and answers before a court or commissioner must be under oath, and when a corporation or other juridical entity answers, it must be on the oath of an authorized officer or agent thereof. (40a) Section 38 is the continuation of Section 37. If the judgment obligor, or Kenneth, Thad and Francis refuse to comply with the subpoena, they can be punished for contempt. Sec. 39. Obligor may pay execution against obligee. After a writ of execution against property has been issued, a person indebted to the judgment obligor may pay to the sheriff holding the writ of execution the amount of his debt or so much thereof as may be necessary to satisfy the judgment, in the manner prescribed in section 9 of this Rule, and the sheriff's receipt shall be a sufficient discharge for the amount so paid or directed to be credited by the judgment obligee on the execution. (41a) Here, there is a change of the party creditor. The best example is garnishment from a bank. B is the debtor of the judgment obligor. If B, instead of paying the judgment obligor, will pay the judgment creditor, B is no longer indebted to the judgment obligor. Sec. 40. Order for application of property and income to satisfaction of judgment. The court may order any property of the judgment obligor, or money due him, not exempt from execution, in the hands of either himself or another person, or of a corporation or other juridical entity, to be applied to the satisfaction of the judgment, subject to any prior rights over such property. If, upon investigation of his current income and expenses, it appears that the earnings of the judgment obligor for his personal services are more than necessary for the support of his family, the court may order that he pay the judgment in fixed monthly installments, and upon his failure to pay any such installment when due without good excuse, may punish him for indirect contempt. (42a) Lakas Atenista Ateneo de Davao University College of Law
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If upon investigation of his current income and expenses, it appears that the earnings of the judgment obligor for his personal services are more than necessary for the support of his family, the court may order that he pay the judgment obligee in fixed monthly installments, and upon his failure to pay any such installment when due without good excuse, may punish him for indirect contempt. Q: Can the salary of an employee be garnished? A: Yes IF there is excess for support of his family. (Section 40) Section 40 related to Section 13, paragraph [i] properties exempt from execution: (i) So much of the salaries, wages, or earnings of the judgment obligor for his personal services within the four months preceding the levy as are necessary for the support of his family; Normally, you cannot levy on the earnings of a person which he needs for support of his family. But actually, it is not the entire earnings because if you’re earning a lot, it is more than sufficient for your family. So the excess of your income can be garnished under Section 40. Sec. 41. Appointment of receiver. The court may appoint a receiver of the property of the judgment obligor; and it may also forbid a transfer or other disposition of, or any interference with, the property of the judgment obligor not exempt from execution. (43a) The court may appoint a receiver who is an officer of the court who will manage the property of the litigants pending litigation. This remedy is found under Rule 59 on Receivership. The purpose of receivership is to preserve the property by placing it in the hands of the court to remove it from the control of a party because a party may dispose of the property. Sec. 42. Sale of ascertainable interest of judgment obligor in real estate. If it appears that the judgment obligor has an interest in real estate in the place in which proceedings are had, as mortgagor or mortgagee or otherwise, and his interest therein can be ascertained without controversy, the receiver may be ordered to sell and convey such real estate or the interest of the Lakas Atenista Ateneo de Davao University College of Law
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obligor therein; and such sale shall be conducted in all respects in the same manner as is provided for the sale of real estate upon execution, and the proceedings thereon shall be approved by the court before the execution of the deed. (44a) EXAMPLE: The obligor turns out to have an interest in real property as a mortgagee, or he has a right to redeem, or right to foreclose, or right to repurchase. The obligee can levy on these rights because these rights are property rights by themselves. This time, it is not the property which is sold but your interest. Sec. 43. Proceedings when indebtedness denied or another person claims the property. If it appears that a person or corporation, alleged to have property of the judgment obligor or to be indebted to him, claims an interest in the property adverse to him or denies the debt, the court may authorize, by an order made to that effect, the judgment obligee to institute an action against such person or corporation for the recovery of such interest or debt, forbid a transfer or other disposition of such interest or debt within one hundred twenty (120) days from notice of the order, and may punish disobedience of such order as for contempt. Such order may be modified or vacated at any time by the court which issued it, or by the court in which the action is brought, upon such terms as may be just. (45a) EXAMPLE: The obligee cannot find any property of the obligor. But there is a rumor that Pong owes the obligor a sum of money. Upon examination, Pong denies indebtedness. But the obligee believes that he has evidence that Pong owes the obligor money. In this case, the obligee can ask the court that he be allowed to file a collection case against Pong on behalf of the obligor. Q: Can the obligee considered as a real party in interest in this case? A: YES. The obligee is now considered as a representative party. Section 43 is an example of the phrase, “or a party authorized by law or these Rules…” under Rule 3, Section 3: Sec. 3. Representatives as parties. x x x x x A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. x x x x x x Lakas Atenista Ateneo de Davao University College of Law
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SATISFACTION OF JUDGMENT Sec. 44. Entry of satisfaction of judgment by clerk of court. Satisfaction of a judgment shall be entered by the clerk of court in the court docket, and in the execution book, upon the return of a writ of execution showing the full satisfaction of the judgment, or upon the filing of an admission to the satisfaction of the judgment executed and acknowledged in the same manner as a conveyance of real property by the judgment obligee or by his counsel unless a revocation of his authority is filed, or upon the endorsement of such admission by the judgment obligee or his counsel on the face of the record of the judgment. (46a) Sec. 45. Entry of satisfaction with or without admission. Whenever a judgment is satisfied in fact, or otherwise than upon an execution, on demand of the judgment obligor, the judgment obligee or his counsel must execute and acknowledge, or indorse, an admission of the satisfaction as provided in the last preceding section, and after notice and upon motion the court may order either the judgment obligee or his counsel to do so, or may order the entry of satisfaction to be made without such admission. (47a) Q: What does satisfaction of judgement mean? A: SATISFACTION OF JUDGMENT is the compliance with or fulfillment of the mandate thereof (31 Am. Jur. 354). Execution is not the same as satisfaction. Execution is the method of enforcement of a judgment. Satisfaction refers to compliance with or fulfillment of the mandate of judgment. Normally, execution precedes satisfaction. But you can satisfy a judgment without execution by simply paying voluntarily. And when the judgment is satisfied, it has to be recorded the manner of which is found in Sections 44 and 45 – either the sheriff himself will record “fully satisfied,” or, the creditor will file an admission that the judgment is fully satisfied, or, the debtor on motion will ask that it be recorded that he has already paid. Q: Who may compel satisfaction of judgment?
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A: Satisfaction of judgment may be compelled by the judgment-creditor by means of execution, or by the judgment-debtor by means of voluntary payment. (Salvante vs. Ubi Cruz, 88 Phil. 236) Now, here is an interesting question which has not yet been asked in the Bar. They were expecting it as early as 2 years ago. Q: Can a plaintiff appeal from the judgment and at the same time move for execution of the same? Can you do both without being self-contradictory? Can you demand satisfaction of judgment and at the same time appeal said judgment? A: PRIOR CASES say, you cannot do it because it is inconsistent. When you comply with the satisfaction of judgment, you are already accepting the correctness of judgment. But when you are appealing it, you do not accept the same. That was the old ruling which was MODIFIED in the case of VITAL-GOSON vs. COURT OF APPEALS 212 SCRA 235 [1992] (en banc) ISSUE: Whether or not a judgment creditor is estopped from appealing or seeking modification of a judgment which has been executed at his instance. HELD: It depends upon the nature of the judgment as being indivisible or not. This is the doctrine laid down by this Court in a case decided as early as 1925, Verches v. Rios, where the judgment is INDIVISIBLE, acceptance of full satisfaction of the judgment annihilates the right to further prosecute the appeal; and that even partial execution by compulsory legal process at the instance of the prevailing party, places said party in estoppel to ask that the judgment be amended.” Indivisible means either you accept it as correct or you appeal. But you can not have your cake and eat it too. “Where the judgment is DIVISIBLE, estoppel should not operate against the judgment creditor who causes implementation of a part of the decision by writ of execution. This is the clear import of Verches .and the precedents therein invoked. The principle is fully consistent not only with the opinion that acceptance of payment of only the uncontroverted part of the claim should not preclude the plaintiff from prosecuting his appeal, to determine whether he should not have been allowed more, but also with logic and common sense.” In other words, if a judgment is divisible, there is no prohibition. EXAMPLE of DIVISIBLE JUDGMENT: A judgment adjudicating 2 or more causes of action – I am satisfied with one cause but I am not with the other. So, Lakas Atenista Ateneo de Davao University College of Law
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my appeal is only on the 2nd cause of action where the award should be higher. I am not appealing in the first cause of action and the defendant did not also appeal. So I can move to execute that portion of judgment, as far as the first cause of action is concerned and continue with my appeal on the second. This is a divisible judgment. This is allowed. PROBLEM: Plaintiff sues for P1 million damages. The court gave an award of P500,000 only (one-half the damages sued for). Defendant did not appeal because he is satisfied with the judgement. Meaning, he accepts the liability of up to P500,000, “Judgment is good.” Plaintiff, however, is not satisfied, “It should be P1 million, so I will appeal.” He believes that even if he loses the appeal, he is insured as to the P500,000. Q: Can plaintiff move for the satisfaction of P500,000 and let the other half continue on appeal? A: YES, I think so. Anyway, there is no quarrel with respect to the first half. To my mind, this is a DIVISIBLE judgment since defendant accepts it and even if plaintiff loses appeal, the former is still liable up to P500,000. So the plaintiff might as well claim it now for it is final insofar as the defendant is concerned while plaintiff’s appeal is with respect to the balance. This is a possibility under the ruling in VITAL-GOSON. Sec. 46. When principal bound by judgment against surety. When a judgment is rendered against a party who stands as surety for another, the latter is also bound from the time that he has notice of the action or proceeding, and an opportunity at the surety's request to join in the defense. (48a) When there is a judgment against the surety, the principal debtor is also bound by the judgment from the time he has notice of the action or proceeding and an opportunity at the surety’s request to join in the defense. The surety is only liable legally but the real party liable is the debtor. RES ADJUDICATA And finally, the most important section in Rule 39 is Section 47 – effect of judgment or final order. This is what we call the principle of res adjudicata. Sec. 47. Effect of judgments or final orders. The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows: Lakas Atenista Ateneo de Davao University College of Law
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(a) In case of a judgment or final order against a specific thing, or in respect to the probate of a will, or the administration of the estate of a deceased person, or in respect to the personal, political, or legal condition or status of a particular person or his relationship to another, the judgment or final order is conclusive upon the title to the thing, the will or administration, or the condition, status or relationship of the person; however, the probate of a will or granting of letters of administration shall only be prima facie evidence of the death of the testator or intestate; (b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and (c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto. (49a)
We know what this is all about – when the matter is already decided or finish already, you cannot re-open that easily. The direct provision of law which enunciates that principle is Section 47, which is composed of 3 portions: paragraphs [a], [b] and [c]. Now, paragraph [a] is the principle of res adjudicata as applied in judgment in rem (binding on the whole world) or at least quasi in rem. Paragraphs [b] and [c] are the application of the same doctrine with respect to judgment in personam (binding only on the parties). RES ADJUDICATA and RES JUDICATA are the same. In the Philippines, that is influenced by Roman Law and Spanish Law (Pua vs. Lapitan, 57 O.G. 4914) But the principle is known worldwide, although maybe known by another name. In Anglo-American law, it is known as the doctrine of Estoppel By Judgment (Fajardo vs. Bayona, 98 Phil. 659). But it is the same. The concept is similar. That is why in the 1994 case of 92 Lakas Atenista Ateneo de Davao University College of Law
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SALUD vs. COURT OF APPEALS 236 SCRA 384 [1994] HELD: “The rules of res judicata are of common law origin and they initially evolved from court decisions. It is now considered a principle of universal jurisprudence forming a part of the legal system of all civilized nations.” Q: What is the FOUNDATION PRINCIPLE upon which the doctrine of res judicata rests? A: It rests from the principle that parties ought not to be permitted to litigate the same issue more than once; that when a right or fact has been judicially tried and determined by a court of competent jurisdiction, or where an opportunity for such trial had been given, the judgment of the court shall be conclusive upon the parties and those in privity with them. Otherwise, without this doctrine, litigation would become interminable, rights of parties would be involved in endless confusion, courts would be stripped of their most efficient powers, and the most important function of government, that of ascertaining and enforcing rights, would go unfulfilled. (Zambales Academy vs. Villanueva, L-19884, May 8, 1969; People vs. Macadaeg, 91 Phil. 410; Oberiano vs. Sobremesana, L-4622, May 30, 1952; Peñalosa vs. Tuazon, 22 Phil. 303) I think we agree with that. Imagine, if two persons litigated for years over the ownership of a parcel of land. Then after years of litigation, all the way to the SC, defendant won. Final. After one generation, both plaintiff and defendant are dead but their children would continue. Here comes the children of the plaintiff raising the same issue of ownership. So, there is no end if there is no res judicata. REQUISITES OF RES ADJUDICATA What are the requisites of res adjudicata? How do we know, since there are 2 cases here? Does it mean that simply because there is a case between us, there will be no more case between us in the future? NO. Q: So what are the requisites of res adjudicata? A: There is res judicata if the following REQUISITES are present: 1.) The judgment or order invoked as res adjudicata must be final; 2.) The court rendering the same must have jurisdiction over the subject matter and of the parties; 3.) The judgment or order must be upon the merits; and 4.) There must be, between the two cases, identity of parties, identity of subject matter, and identity of cause of action. Lakas Atenista Ateneo de Davao University College of Law
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So the elements are similar with litis pendentia. Actually, they are based on the same rule – splitting of the cause of action. The only difference is, in litis pendentia, the first action is still pending. In res adjudicata, the first action has already been decided and the decision has already become final. First Requisite: JUDGMENT OF ORDER INVOKED MUST BE FINAL When it says ‘final’, the previous judgment has been final and executory (Hubahib vs. Insular Drug, 64 Phil. 119) Meaning, it can no longer be changed. This is because there is such a thing as final and appealable. A final and executory judgment is already beyond the power of the court to alter while a final and appealable judgment is still subject to modification by the appellate court. (Macapinlac vs. CA, 86 Phil. 359) So where there is a judgment now that you received, and before it becomes executory, you filed another case, it is not res judicata. It is litis pendentia because the first case is still pending. EXAMPLE: Jessa files a case against Charles. Charles lost and then appealed. While his appeal is pending, Jessa filed the same case against Charles. Charles filed a motion to dismiss the second case. The ground for the motion to dismiss should be Litis Pendentia because while there is already a decision, the same is not yet final and executory. It is still on appeal. In such case, it is improper to invoke the principle of res adjudicata because the first element is missing. Q: Now, when did the first judgment become final? Is it before the second case is filed? Or is it after the second case filed? A: Either one. It could have been final before the filing of the second action or after, provided when the defendant invoked it, the first judgment is already final. (Galiancia vs. CA, 173 SCRA 42) Second Requisite: THE COURT RENDERING THE SAME MUST HAVE JURISDICTION OVER THE SUBJECT MATTER AND OF THE PARTIES Meaning, the first judgment is valid because if the court never acquired jurisdiction over the subject matter and the parties and rendered judgment, the judgment is void and cannot be invoked as res judicata. (Banco Español-Filipino vs. Palanca, 37 Phil. 921) Q: May a voidable judgment be invoked as res adjudicata? A: YES because such kind of judgment is binding upon the parties until annulled. (Reyes vs. Barretto-Datu, 94 Phil. 446) Lakas Atenista Ateneo de Davao University College of Law
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Now, the classic example of the second element is the case which I mentioned to you when we were in Rule 17 – the case of REPUBLIC PLANTERS BANK (RBP) vs. MOLINA 166 SCRA 39 [1988] FACTS: The RPB filed a case against the defendant for a sum of money. Defendant cannot be summoned because his whereabouts is now unknown. Several attempts made by the plaintiff to look for him failed. After a while the court dismissed the complaint for RBP’s failure to prosecute. And the order of dismissal was silent. So, following Section 3 of Rule 17, the dismissal is with prejudice – “it shall have the effect of an adjudication upon the merits, unless the order provides otherwise.” Then later on, the plaintiff (RPB) discovered the whereabouts of the defendant. The RPB re-filed the compliant. Defendant moved to dismiss because when the first complaint was dismissed and the order of dismissal was silent then the dismissal has the effect of an adjudication on the merits. HELD: Since We are talking of res adjudicata, let us correlate it with the elements of res adjudicata under Rule 39. One of the elements of res adjudicata is: When the case is terminated, the court has jurisdiction over the case both as to the person and the subject matter; In the case of RPB, the court never acquired jurisdiction over the person of the defendant because he was never served with summons. Therefore, such dismissal did not have the effect of res adjudicata. The second element of res judicata is missing. Third Requisite: THE JUDGMENT OR ORDER MUST BE UPON THE MERITS What do we mean by this? A judgment on the merits for the purpose of res judicata is one finally settling the issues raised in the pleadings (Manila Electric Co. vs. Artiaga, 50 Phil. 144). Normally, it is after trial when there is presentation of evidence. Therefore, when a complaint is dismissed for lack of jurisdiction or improper venue, even if said dismissal becomes final, the plaintiff can re-file the case because the dismissal upon improper venue or lack of jurisdiction is not upon the merits. It never dealt with the correctness or validity of the cause of action. There should be trial, generally.
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So, GENERALLY, a dismissal without a trial is not an adjudication upon the merits EXCEPT in Rule 17, Section 3 where the case was dismissed for failure of the plaintiff to appear during the presentation of his evidence in chief, or to prosecute his action for an unreasonable, period of time, or failed to comply with the rules or order of the court. There is no trial there but according to Rule 17, Section 3, the dismissal shall have the effect of an adjudication upon the merits. This is the exception even if there was no trial in the first case. Fourth Requisite: THERE MUST BE, BETWEEN THE TWO CASES, IDENTITY OF PARTIES, IDENTITY OF SUBJECT MATTER, AND IDENTITY OF CAUSE OF ACTION I. IDENTITY OF PARTIES Q: When there is identity of parties for the purpose of res judicata? A: There is identity of parties for the purpose of res judicata: 1.) When the parties in the second action are the same as the parties in the first action; or 2.) When the parties in the second action are successors-in-interest of the parties in the first action, such as heirs or purchasers who acquired title after the commencement of the first action. EXAMPLE: The example I gave you, the quarrel between parents, then the children did the same. That is the same parties. The children are the successors-in-interest of the original parties, although literally they are not the same parties. One good illustration of res adjudicata on identity of parties as applied in a labor case was the case of DELFIN vs. INCIONG 192 SCRA 151 [1990] NOTE: The doctrine of res adjudicata applies not only to the decisions of regular courts but can be invoked even in administrative cases. It also applies to decisions of administrative bodies. FACTS: In the case of DELFIN, a union filed a case of unfair labor practice (ULP) against the employer. Then later on, the case was dismissed by the NLRC. When the case was dismissed, the employees filed another case based on the same ULP. The employer invoked res adjudicata and the complainants said, “No, it is not the same parties. In the first case, it was the union. Now it is us (employees).” Lakas Atenista Ateneo de Davao University College of Law
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HELD: NO! When the union filed the first case, it was filing in behalf of the employees. This is what you call representative party. In effect, it is the same party. “While it is true that the complainants in the first charge was the union, in reality it had no material interest in the outcome of the case. The real party who stands to be benefited or defeated by a case brought in the name of the union are the union members themselves. Since the judgment therein had become final and executory, the subsequent filing of another ULP charge against the employer for the same violations committed during its existence, is barred by res judicata.” “The bringing of the same action in the name of the individual members of the union will not take out the case from the ambit of the principle of res judicata.” So, it is still the same parties.
II. IDENTITY OF SUBJECT MATTER Q: When is there identity of subject matter? A: There is identity of subject matter if in the second case, the same thing is involved or included in the first case. (Agregado vs. Muñoz, 26 Phil. 546) EXAMPLE: A judgment in an action for the recovery of a large tract of land shall be a bar for a subsequent action for the recovery of a smaller parcel included in the large tract. (Rubiso vs. Rivera, 41 Phil. 39) EXAMPLE: A judgment in an action for accounting of a certain funds would be a bar for a subsequent action for the partition of the same funds. (Chua Tan vs. Del Rosario, 57 Phil. 411) EXAMPLE: A case for recovery of property was dismissed. The losing party file a second case for recovery of the value of the property. In this case, there is res adjudicata. So, you can not deviate ‘no? Kahit konting retoke lang, it is the same.
III. IDENTITY OF CAUSES OF ACTION Q: When is there identity of causes of action for the purpose of res judicata? A: There is identity of causes of action for the purpose of res judicata when the two actions are based on the same delict or wrong committed by the defendant, even if the remedies be different (Qiogue vs. Bautista, L-13159, Feb. 2, 1962). You cannot change the remedy in order to escape from the principle of res adjudicata. Lakas Atenista Ateneo de Davao University College of Law
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Sometimes, it is one of the hardest – same cause of action – because sometimes there are 2 causes of action which are interrelated, even between the same parties. Now, if there are 2 interrelated causes of action, there is no res adjudicata. Interrelated only, because the law says similar causes of action. That is hard to determine. That is why the SC had to give some tests to determine whether the causes of action are the same or not. Among these tests given by the Court: TESTS TO DETERMINE WHETHER OR NOT THE CAUSES OF ACTION ARE THE SAME: 1) SAME EVIDENCE Test as laid down in the case of AQUILA ESTATE vs. BACOLOD-MURCIA MILLING CO. 144 SCRA 482 HELD: Res adjudicata can not be applied even though in the 2 cases there is identity of parties, subject matter, and relief prayed for, the evidence adduced to sustain the cause of action in the first case is not sufficient to sustain the second case. So, the evidence was sufficient to prove the first case while the same evidence is not sufficient to prove the second case. Therefore, it must be different cause of action for how come the same evidence will not suffice anymore. So, it must be a different one.
2. INCONSISTENCY Test given in the case of VALENCIA vs. RTC 184 SCRA 80 HELD: One test of the identity of cause of action is whether or not the judgment sought in the subsequent case will be inconsistent with the prior judgment. Meaning, you are asking for a decision which is in conflict with the original decision. Q: Suppose there is an inconsistency, is this a sign of res adjudicata or no res judicata? A: Well, I think if there is an inconsistency, that is a sign of res adjudicata because you are trying to change what has already been rendered. To my mind, that is how it should be interpreted because if the judgment I am seeking is inconsistent with what has been decided, then I think that is violating the rule of res adjudicata – I am re-opening something which was already decided. Lakas Atenista Ateneo de Davao University College of Law
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3.) And the test in the 1995 case of GUEVARRA vs. BENITO 247 SCRA 570 HELD: The causes of action can not be the same if the cause of action in one case only arose after the judgment in the other. The principle of res judicata extends only to the facts and conditions as they existed at the time the judgment was rendered. Those are the important principles to remember (read the cases in short).
RARE INSTANCES WHERE SC REFUSES TO ALLOW RES JUDICATA DESPITE ITS EXISTENCE Another point, res adjudicata is a rule of law, rule of convenience, of practicality and when the evidence are present, the courts shall not allow second litigation. We know that but I have to admit that there are some rare cases where despite the elements of res adjudicata, the courts refused to allow it. This is what we call EQUITY CASES. But this is very rare. When there is a higher principle to be observed rather than the rule of res adjudicata – there are higher values of society which would be subverted if we will stick to res adjudicata. A good example is the case of SUAREZ vs. COURT OF APPEALS 193 SCRA 183 [1991] FACTS: This involves a custody case. A certain Rosemarie Manese filed a petition for habeas corpus for the recovery of her minor child from her former live-in partner or common-law husband, Renato Suarez. Later, Manese filed a motion to dismiss the habeas corpus case for she intended to pursue another remedy – custody of minor under Rule 99 of the Rules of Court in Special Proceedings. Actually, as observed by the SC, her move was wrong because you can obtain custody of your child through habeas corpus. She though she had the wrong remedy, so she changed it. Actually she was correct. The trouble is, she withdrew it. In the trial for the dismissal of the habeas corpus, it was with prejudice so actually, it is on the merits ‘no? Thereafter, she filed the custody case against Suarez. The latter moved to dismiss on the ground of res adjudicata. All the evidence are admitted there. There was a decision on the merits. Lakas Atenista Ateneo de Davao University College of Law
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HELD: “The principle of res judicata should be disregarded if its application would involve the sacrifice of justice to technicality.” In other words, this is what we call EQUITY. The application of the res adjudicata should be taken on a case to case basis; you cannot say you apply res adjudicata through and through. It must be taken under the particular facts obtained. Meaning, there are certain facts in that case which will warrant a deviation from the usual rule, to do “otherwise would amount to denial of justice and/or bar to a vindication of a legitimate grievance.” “It is worth stating here that the controversy in the instant case is not just an ordinary suit between parties over a trivial matter but a litigation initiated by the natural mother over the welfare and custody of her child, in which the State has a paramount interest.” This is not a simple collection case. “The fundamental policy of the State as embodied in the Constitution in promoting and protecting the welfare of children shall not be disregarded by the courts by mere technicality in resolving disputes which involve the family and the youth.” So there is a collision here between the family view found in the Constitution and the technical principle of res adjudicata. If we sustain the principle of res adjudicata then the mother can no longer recover her child. But if we disregard res judicata, the mother will be given a chance to get back her child, which is higher in value than res judicata. This principle observed in SUAREZ was actually repeated in the 1994 case of SALUD vs. COURT OF APPEALS 233 SCRA 284 [1994] HELD: “There should not be a mechanical and uncaring reliance on res judicata where more important societal values deserve protection. The doctrine of res adjudicata is a rule of justice which cannot be rigidly applied when it results to injustice.” This is another pronouncement which leans on the equitable side of the situation rather than on the observance of the technical rules of res adjudicata. You can disagree with the decision but the same can not be wrong. This is what you call infallible. Infallible means no room for error. That is why Justice Jackson said commenting on the US SC: “We are not final because we are infallible. But we are infallible because we are final.”
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BAR BY A FORMER JUDGMENT vs. CONCLUSIVENESS OF JUDGMENT If you have read the questionnaire in Remedial Law last September (1997), one of the questions asked by the examiner is: Distinguish the concept of BAR BY A FORMER JUDGMENT and the concept of CONCLUSIVENESS OF JUDGMENT. The two concepts are found in Section 47. The concept of bar by a former judgment is in paragraph [b] and conclusiveness of judgment is in paragraph [c]. These are two parts of the res adjudicata rule. The two concepts were discussed by the SC in the case of SALUD: The concept of Bar By A Former Judgment is known in traditional terminology as merger or bar; and in modern terminology, it is called CLAIM PRECLUSION; while Conclusiveness Of Judgment is traditionally known as collateral estoppel and in modern terminology it is called ISSUE PRECLUSION. Q: Distinguish BAR BY A FORMER JUDGMENT and CONCLUSIVENESS OF JUDGMENT. A: The following are the distinctions: 1.) As to Effect: If you analyze paragraph [b], there are two judgments – in BAR BY A FORMER JUDGMENT, the first judgment constitute an absolute bar to all matters directly adjudged as well as matters that might have been adjudged; whereas In CONCLUSIVENESS OF JUDGMENT, the first judgment is conclusive only on matters actually litigated and adjudged in the first action under paragraph [c]. 2.) As to the Requisites: In BAR BY A FORMER JUDGMENT, there must be identity of parties, subject matter, and cause of action; but In CONCLUSIVENESS OF JUDGMENT, even if there is identity of parties or subject matter, it is not necessary that there is identity of causes of action.
Of course, for purposes of the bar exams, that kind of answer will suffice but mas maganda if there is illustration: Kung bar by prior judgment – the first judgment is res adjudicata to the second or matters that have been adjudged and matters that could have been adjudged in relation thereto. EXAMPLE of Bar by a Former Judgment: Compulsory counterclaim. I filed a case against you for recovery of land. Meron ka pa lang claim sa akin for reimbursement for necessary expenses. It must be set-up in the main action Lakas Atenista Ateneo de Davao University College of Law
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otherwise it is barred forever. But you did not set it up and then afterwards, you file a case against me for reimbursement for necessary expenses, I will move to dismiss. Your claim is already barred because you should have raised it as a compulsory counterclaim in the first action. The barring of the counterclaim is considered as the application of res adjudicata by applying the concept of bar by a former judgment. EXAMPLE of Conclusiveness of Judgment: The debtor borrows from the creditor P3 million payable in 3 installments without any acceleration clause. When the first installment fell due the creditor sue the debtor and the debtor raised the defense of forgery, “That the promissory note is forged and as an alternative defense assuming that the promissory note is valid, the first installment was already extinguished by payment.” After trial, the court decided against the defendant. Tapos na. Now, the second installment fell due. It is another cause of action. Now, here comes the plaintiff filing the case to collect the second installment. Q: Can the debtor raise again, in the second case, the defense of FORGERY of the promissory note? A: NO. Tapos na yan. We have already decided that the promissory note was genuine and that there was no forgery. This is the same promissory note that we are talking about. So, in other words, the issue of forgery is already adjudged in the first case and therefore res adjudicata in the second installment. Q: Can the debtor raise the defense of PAYMENT, that the second installment is already paid or is it also barred? A: YES, because in the first case what was resolved was whether the first installment is paid. The judgment is already conclusive on matters directly adjudged but not to matters which have not been adjudged. The issue on whether the second or third installment have already been paid was never adjudged in the first case. That is the application. Take note that there is no identity of cause of action. Another example of Conclusiveness of Judgment was the ruling in the case CARANDANG vs. VENTURANZA 133 SCRA 344 [1984] FACTS: This involves a conflict between two brothers, B1 and B2. There is already bad blood between them because according to B1, B2 appropriated all the properties of their parents. So there was this threat from B1 to sue B2 to recover his share. So B2 consulted his friend X. X suggested that B2 enters into a simulated sale with X. B2 sold his property to X. As expected, B1 filed a Lakas Atenista Ateneo de Davao University College of Law
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case against both of them to annul or rescind the action. Unfortunately, B1 has never proved that the sale was simulated. The case was dismissed. Then later B1 died. After that, B2 said to X, “Isauli mo na sa akin ang mga properties ko.” X said, “What are you talking about? I already bought it from you, akin na ito!” B2 filed a case against X. The defense of X is res adjudicata. HELD: There is NO res adjudicata. In the first place, one of the elements of res adjudicata is identity of parties. Of course, both of them are also parties of the first case but they were not adverse to each other. They were co-defendants in the first case. Res adjudicata is only applicable between adverse parties in the former suit and not between parties. Co-parties for the judgment therein ordinarily settle claims as to their relative rights and liabilities as co-plaintiffs or co-defendants per se. But the second reason is, the cause of action is completely different and therefore the judgment in the first case is conclusive only insofar as the right of B1 is concerned. It cannot be conclusive as to the rights of B2 and X because it is a separate cause of action. Another was the 1993 case of VDA FISH BROKER vs. NLRC 228 SCRA 681 [1993] FACTS: A complaint filed by an employee for non-payment of service incentive leave, COLA, 13th month pay, holiday pay, is dismissed based on the finding that no employer-employee relationship existed between the complainant and the respondent. The ruling became final. Subsequently, the same complainants filed another case against the same respondent for reinstatement due to illegal dismissal. (How can you file for reinstatement na wala man kayong ER-EE relationship in the first case???) ISSUE: Is the finding of no ER-EE relationship in the first case res adjudicata to the second case for illegal termination? HELD: YES. “The issue of employer-employee relationship is crucial in the determination of the rights of the parties in both cases. Res adjudicata applies even when the cause of action is not similar under the concept of conclusiveness of judgment. The ruling in the first case that there is no Employer-Employee relationship between the parties is Lakas Atenista Ateneo de Davao University College of Law
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conclusive in subsequent cases although the cause of action is not the same.” “If were we to ignore the principle of res judicata, an absurd situation would arise where the same administrative agency would have diametrically opposed conclusions based on apparently similar circumstances.” This is what will happen - for the second case, there is ER-EE relationship. It is the same agency which said there is none in the first case. Conflict!
OTHER PRINCIPLES IN LAW WHICH MAY BE CONFUSED WITH RES JUDICATA: A.) LAW OF THE CASE B.) STARE DECISIS Another question that can be asked here is, how to explain and distinguish 3 concepts which appear to be similar. These 3 concepts are all anchored on the same thing: there is a final judgement. The concept of res adjudicata, law of the case and stare decisis. That was also asked in the bar. We already know RES ADJUDICATA – finality of judgment, or the issues decided in a case, once the decision has become final and executory and cannot be litigated again by the same parties in a subsequent action involving the same subject matter. (Peñalosa vs. Tuazon, supra.)
Q: What about the LAW OF THE CASE? A: LAW OF THE CASE means that legal conclusions announced on a first appeal, whether on the general law of the law as applied to the concrete facts, not only prescribe the duty and limit the power of the trial court to strict obedience and conformity thereto, but they become and remain the law of the case in all after steps, whether in the lower court or in the appellate court on a subsequent appeal. (Zarate vs. Dir. of Lands, 39 Phil. 747) EXAMPLE of law of the case: There is a case between us and then an issue is raised before the CA and there is a ruling, right or wrong. That ruling will subsequently bind the parties in the same litigation. Once the case comes back, the future now of the case will be governed by that ruling. Right or wrong, that principle will now be the controlling principle affecting the parties. The principle will continue until the case is terminated. TABACO vs. COURT OF APPEALS 239 SCRA 485 [1994] Lakas Atenista Ateneo de Davao University College of Law
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ISSUE: Can a case be re-opened if the law of the case has been changed? HELD: NO, because when the case was decided, it was the governing law at the time, even if it turns out to be wrong. “Under the law of the case concept, whatever is once irrevocably established as the controlling legal principle or decision continues to be the law of the case between the same parties in the same case, whether correct or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. Such stability and conclusiveness given to final judgments of courts of competent jurisdiction are said to be grounded on reasons of public policy, judicial orderliness and economy as well as protection of the time and interests of the litigants.”
A good EXAMPLE: File ako ng kaso – collection of an unpaid loan based on the provision of the Civil Code but the debtor said, “There is no cause of action because the provision of the civil code is unconstitutional.” After trial the court said, “Yes, article so-so of the Civil Code is unconstitutional. The debtor is not obliged to pay.” Tapos na. Final na ang decision because there was no appeal. What will happen? We are bound. As far as this case is concerned, the Civil Code is unconstitutional. That is the law of the case. KILOSBAYAN vs. MORATO 246 SCRA 540 [1995] HELD: The doctrine of the law of the case applies whenever the case before the court came for the second time after a ruling of the appellate court (???).
Q: What you mean by STARE DECISIS? A: Stare Decisis means that the decision of a court should stand as precedents for future guidance (Ballentine’s Law Dict., 2nd Ed., 1228) Example is the decisions of the SC which stands as precedents for future cases. The purpose of this is to attain stability and judicial order. That is why we are citing precedents. ROSALES vs. COURT OF FIRST INSTANCE 154 SCRA 153 [1987] HELD: “Precedents are helpful in deciding cases when they are substantially identical with previous litigations. Argumentum a simili valet in lege. Earlier decisions are guideposts that can lead us in the right direction as we tread the 'highways and byways of the law in the search Lakas Atenista Ateneo de Davao University College of Law
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for truth and justice. These pronouncements represent the wisdom of the past. They are the voice of vanished judges talking to the future. Except where there is a need to reverse them because of an emergent viewpoint or an altered situation, they urge us strongly that, indeed, the trodden path is best.” ‘Trodden Path’ – example is when you go on hiking like in Mt. Apo. If there is already a path or trail, you will not have a hard time looking for your way up to the peak of Mt. Apo. There is already a way which will guide you to reach your destination. But the doctrine of stare decisis admittedly does not mean that courts should be slave forever to precedents. A doctrine long standing has also been reversed. The SC explained also why once in a while it abandons the doctrine of stare decisis: PEOPLE vs. MUÑOZ 170 SCRA 107 [1989] HELD: “If we have seen fit to take a second look at the doctrine on which we were all agreed before, it is not because of a change in the composition of this body. It is virtually the same Court that is changing its mind after reflecting on the question again in the light of new perspectives. The decisions of this Court are not petrified rules grown rigid once pronounced but vital, growing things subject to change as all life is. While we are told that the trodden path is best, this should not prevent us from opening a fresh trial or exploring the other side or testing a new idea in a spirit of continuing inquiry.”
Q: Distinguish Res Adjudicata and Stare Decisis. A: RES ADJUDICATA operates between two actions involving the same parties and the same cause(of action); while STARE DECISIS refers to cases with different parties. STARE DECISIS refers only to decisions of the SC (decisions of the CA are not a basis of stare decisis); while the doctrine of RES ADJUDICATA refers to all courts: SC, CA, RTC and MTC. Q: Distinguish Law Of The Case and Stare Decisis. A: LAW OF THE CASE refers only to one case which may or may not be invoked in subsequent cases, while STARE DECISIS may refer to various cases which are usually invoked in subsequent cases. Lakas Atenista Ateneo de Davao University College of Law
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Sec. 48. Effect of foreign judgments or final orders. - The effect of a judgment or final order of a tribunal or a foreign country, having jurisdiction to render the judgment or final order is as follows: (a) In case of a judgment or final order upon a specific thing, the judgment or final order is conclusive upon the title to the thing; and (b) In case of a judgment or final order against a person, the judgment or final order is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title. In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. (50a) Sec. 48 is actually a law on conflict of laws - effect of foreign judgment. If a judgment is rendered in U.S. and is being invoked in the Philippines, should we honor it? Yes. So, is it conclusive? Yes. The law says, in case of judgment upon a specific thing, the judgment or final order is conclusive effectively. PROBLEM: Mortverine and Mistiqla were both in the U.S. and they quarreled about the ownership of a ring. They went to an American court. After trial, the court ruled that Mortverine is the legitimate owner of the ring. The judgment became final. Subsequently both of them came to the Philippines and Mistiqla filed a case against Mortverine to recover the same ring. Sabi ni Mortverine, “Res adjudicata na ito eh, tapos na yan. Here is the decision in America. Therefore it is settled.” Q: Is A correct? A: YES. Under paragraph [a]. In case of a foreign judgment upon a SPECIFIC THING, the judgment is conclusive upon the parties. Hindi puwedeng buksan. That’s already litigated abroad, merong nang decision. We will respect it. Suppose the judgment is against a person. The law says it is presumptive evidence of a right as between the parties. EXAMPLE: A and B were both Americans. They were married in the U.S. and obtained a divorce in the states. They came to the Philippines. The issue is whether the marriage was validly terminated. According to one party, “Yes, meron man tayong divorce ba.” Is the decree of divorce abroad involving these American couple allowed in the Philippines considering we have no divorce here? That is their law. It is presumptive evidence of a right of the parties. 107 Lakas Atenista Ateneo de Davao University College of Law
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EXAMPLE: H and W are Philippine citizens. They went abroad and somehow able to get a divorce in an American court which became final. They came back here. Will the Philippine court honor the divorce? Here, the judgment may be repelled by want of jurisdiction of the American court, etc. The judgment is presumed to be valid unless you can attack by showing lack of jurisdiction. What is the principle in private international law? A judgment of divorce rendered by an American court between 2 Filipinos is null and void. Why? The American court never acquired jurisdiction over the status of the parties (because they are not U.S. citizens). But judgment in personam is honored here except when there is want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. Q: How do you enforce a foreign judgment? A: The usual procedure, you file a case against the same defendant here and the cause of action is enforcement of a foreign judgment. And then the Philippine court will render a judgment enforcing it and then you can execute. The SC commented on the enforcement of a foreign judgment in the Philippines in the case of PHILSEC vs. COURT OF APPEALS June 19, 1997 HELD: “While this court has given the effect of res judicata to foreign judgments in several cases, it was after the parties opposed to the judgment had been given ample opportunity to repel them on grounds allowed under the law. It is not necessary for this purpose to initiate a separate action or proceeding for enforcement of the foreign judgment. What is essential is that there is opportunity to challenge the foreign judgment, in order for the court to properly determine its efficacy. This is because in this jurisdiction, with respect to actions in personam, as distinguished from actions in rem, a foreign judgment merely constitutes prima facie evidence of the justness of the claim of a party and, as such, is subject to proof to the contrary.”
-oOo-
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