G.R. No. L-67496 and G.R. No. L-68257, July 7, 1986
TOP RATE INTERNATIONAL SERVICES, INC., petitioner, vs. INTERMEDIATE APPELLATE COURT and RODRIGO TAN, doing business under the name and style “ASTRO AUTOMOTIVE SUPPLY,” and POLARIS MOTOR SUPPLY COMPANY, respondents.

FACTS

These consolidated petitions involve two separate collection suits filed by private respondents Rodrigo Tan (Astro Automotive Supply) and Polaris Motor Supply Company against Consolidated Mines, Inc. (CMI) and its president. To secure their claims, they obtained writs of preliminary attachment over CMI’s properties. The sheriff levied on real properties covered by TCT Nos. S-68500 and S-68501. However, these properties were already mortgaged to a consortium of twelve banks to secure a massive obligation. Furthermore, during the pendency of the suits, CMI was declared insolvent. With court approval in the insolvency proceedings, CMI sold the same properties to petitioner Top Rate International Services, Inc. Top Rate then filed third-party claims, seeking to discharge the attachments on the grounds that the properties had been sold to it and that the attachments constituted an over-levy, as the respondents’ combined claims were minuscule compared to the properties’ value.

ISSUE

Whether the attachments levied by the private respondents on the mortgaged properties of CMI constituted an invalid over-levy.

RULING

The Supreme Court dismissed the petitions and affirmed the appellate court’s decisions, ruling that there was no invalid over-levy. The legal logic is anchored on the nature of the interest that was actually attached. When the respondents applied for attachment, the properties in question were already encumbered by a prior and superior mortgage in favor of the consortium banks. Consequently, CMI’s ownership interest in the properties was no longer full title but was reduced to a mere equity of redemption—the right to redeem the properties after foreclosure. The Court clarified that an equity of redemption is an intangible, incorporeal right, distinct from the physical property itself. The levy, therefore, attached only this specific right of CMI, not the full value of the real properties. The value of an equity of redemption cannot be quantified or equated with the market value of the property; its worth is contingent and speculative, depending on the outcome of foreclosure and redemption. Thus, the argument of over-levy fails because the levy was on an intangible right, not the corporeal assets. The subsequent sale to Top Rate in the insolvency proceedings was subject to this existing lien on CMI’s equity of redemption, which the respondents had validly attached.