G.R. No. 83693 December 4, 1989
LEANDRO ALAZAS, petitioner, vs. HON. BERNARDO LL. SALAS, Presiding Judge of Branch 8 of the Regional Trial Court of Cebu and ROSARIO MERCADER, respondents.

FACTS

A final judgment was rendered against petitioner Leandro Alazas, ordering him to pay damages to private respondent Rosario Mercader. To satisfy the judgment, the sheriff levied upon and sold at public auction Alazas’s shares in Gala Inc. Mercader was the winning bidder for 1,580 shares in a first auction and 803 shares in a second auction, with the proceeds applied to the judgment debt. Based on these sales, the judgment was deemed fully satisfied.
However, corporate officers of Gala Inc., including its cashier and corporate secretary, repeatedly informed the sheriff and the court that Alazas actually owned only one share in the corporation as of dates prior to the execution, having allegedly disposed of his other holdings. Contending that the levied shares did not exist and the judgment therefore remained unpaid, Mercader filed a motion under Section 39, Rule 39 of the Rules of Court for an examination of Alazas as a judgment debtor to discover his hidden assets. The trial court granted the motion.

ISSUE

Whether the trial court lost jurisdiction to order an examination of the judgment debtor under Section 39, Rule 39 after the judgment had been executed and deemed satisfied by the sheriff’s return.

RULING

The Supreme Court ruled that the trial court retained jurisdiction to order the examination. The legal logic is that while a trial court’s jurisdiction becomes ministerial once a judgment becomes final and executory, and a fully satisfied judgment terminates the case, these principles presuppose a valid and complete satisfaction. Here, a legitimate doubt existed regarding the actual satisfaction of the judgment due to the stark contradiction between the sheriff’s execution based on corporate records and the sworn representations of corporate officers that the debtor owned only one share.
This paradox created a factual issue as to whether the execution sales conveyed any real property interest or were merely illusory, potentially leaving the judgment unpaid. The remedy under Section 39, Rule 39 is precisely designed for such post-judgment scenarios to investigate whether a judgment debtor has concealed assets to evade execution. The trial court’s authority to ensure the effective enforcement of its final decision includes the power to inquire into the truth of the satisfaction. The alleged clerical error in the order referring to “Gala Enterprises” instead of “Gala Inc.” was inconsequential. Therefore, the examination of Alazas was a proper exercise of the court’s jurisdiction to ascertain the true state of the judgment’s satisfaction and prevent a possible clever scheme to defraud the creditor. The petition was dismissed.