G.R. No. L-47578. April 8, 1941.
PHILIPPINE NATIONAL BANK, plaintiff-appellant, vs. ESTEBAN I. VAZQUEZ, defendant-appellee.

FACTS

On or about May 27, 1925, Esteban I. Vazquez obtained a loan from the Philippine National Bank (PNB) for P24,000, secured by a mortgage on his 1925-26 sugar-cane harvest. The total amount advanced was P19,521.09 with 9% annual interest. After liquidation as of March 31, 1927, the total deficit, including interest, amounted to P19,869.47. PNB filed an action for recovery (Civil Case No. 4031), and on October 31, 1931, the Court of First Instance of Occidental Negros rendered a judgment ordering Vazquez to pay his obligation. This judgment became final and executory. However, it was not enforced by writ of execution within five years. On July 22, 1937, PNB filed a complaint to revive the judgment. In his answer, Vazquez set up a counterclaim. During the pendency of Civil Case No. 4031, PNB had obtained a preliminary attachment on 500 piculs of sugar belonging to Vazquez. The sheriff sold this sugar at public auction for P10.75 per picul, netting P5,250.13. Upon PNB’s petition, this amount was deposited with PNB itself, first in the name of a deputy sheriff and later transferred to an account in the name of the Provincial Sheriff of Occidental Negros. The Provincial Sheriff subsequently made other deposits and withdrawals from this account until it was closed on January 6, 1932. The P5,250.13 was never turned over to PNB. In the revival case, the trial court rendered judgment in favor of PNB but ordered the deduction of P5,250.13 from the amount of the original judgment. PNB appealed, contesting only this deduction.

ISSUE

Whether the proceeds from the sale of the attached sugar (P5,250.13) should be deducted from the amount of the final and executory judgment in Civil Case No. 4031, despite the sheriff’s failure to deliver said proceeds to the judgment creditor (PNB).

RULING

Yes, the deduction was proper. The Supreme Court affirmed the decision of the trial court. The proceeds from the attached property must be treated as a partial satisfaction of the judgment, as between the plaintiff and defendant. Once the judgment in the original case became final, the proceeds from the attached sugar should be considered as applied towards its satisfaction. The sheriff, as an officer levying the writ, becomes a bailee for the benefit of all interested parties, particularly the party who initiated the action. It was the sheriff’s duty to apply the proceeds to satisfy the judgment. The loss or misappropriation of the proceeds by the sheriff, after the plaintiff (PNB) had set the legal process in motion by obtaining the attachment, should fall on the plaintiff and not on the defendant debtor. The defendant cannot be compelled to pay the same amount twice. Whether the Provincial Sheriff was negligent is a separate matter to be resolved in a different action and is immaterial to the controversy between PNB and Vazquez. Therefore, Vazquez is liable for the principal sum of P19,869.47 with stipulated interest, but deducting P5,250.13 as of the date the original judgment became final and executory.