GR L 62699; (August, 1988) (Digest)
G.R. No. L-62699 August 30, 1988
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. Hon. ANTONIO P. SOLANO, Presiding Judge of CFI-Rizal, EMILIO G. MARTINEZ, et al., respondents.
FACTS
Private respondents obtained a favorable final judgment against several defendants, including Clemente Tanjangco, for a sum of money. To satisfy this judgment, the sheriff levied upon Tanjangco’s real properties in Pampanga. However, these properties were mortgaged to petitioner Development Bank of the Philippines (DBP) to secure various loans. DBP filed a Motion for Cancellation of the Notice of Levy in the same case where execution was issued, claiming its mortgage lien enjoyed statutory exemption from attachment or levy. The trial court denied the motion, reasoning that DBP’s preferential right as mortgagee would be respected, meaning the levy could stand but DBP would be paid first from any sale proceeds.
ISSUE
Whether the real properties mortgaged to DBP are exempt from levy on execution under Section 26 of Commonwealth Act No. 459 , as amended.
RULING
Yes, the properties are exempt. The Supreme Court granted DBP’s petition. The legal logic centers on the explicit statutory protection granted to DBP’s securities. Section 26 of Commonwealth Act No. 459 , which created DBP’s predecessor, provides that securities on loans granted by the Bank “shall not be subject to attachment” unless all obligations to the Bank are first fully paid. This provision was carried over and remained in force under DBP’s charter, Republic Act No. 85 , as amended. The exemption is absolute and intended to safeguard the Bank’s assets and ensure its financial stability in performing its developmental functions. The trial court’s order allowing the levy to remain, subject to DBP’s preference, contravened this clear legal mandate. A levy, even if acknowledging a preference, still constitutes an “attachment” or encumbrance from which the law expressly shields the Bank’s collateral. Furthermore, DBP properly sought relief via a motion in the same execution case, not a separate action, as the property was in custodia legis of that court, and it is more expedient to resolve such ancillary matters within the existing proceeding. The Register of Deeds was thus ordered to cancel the Notice of Levy.