G.R. No. 109573 July 13, 1995
Seven Brothers Shipping Corporation, petitioner, vs. The Court of Appeals, Hon. Ramon Am. Torres as Judge of the Regional Trial Court, Br. VI, Cebu City and Shipyard & Engineering Works, Inc., respondents.

FACTS

Private respondent Shipyard & Engineering Works, Inc. filed a collection case against Maritime Company of the Philippines (MCP) and obtained a writ of preliminary attachment over the MV “Mayon.” The vessel was subsequently sold at a public auction to petitioner Seven Brothers Shipping Corporation for P3.6 million. The Intermediate Appellate Court later nullified this auction sale due to the gross inadequacy of the purchase price. The decision became final. The vessel, which petitioner had repaired at great expense, was then delivered to a mortgagee bank, Banque Indochine, for foreclosure. Acting on a motion from private respondent, the trial court ordered the sheriff to repossess the vessel to maintain the court’s custody, as the nullification of the sale reverted the vessel to its status under attachment.
After repossessing the vessel, private respondent moved to dismiss its own complaint and to lift the attachment, seeking to allow the vessel to leave the country. The trial court denied these motions. Petitioner, having lost possession of the vessel it purchased and repaired, filed a motion to withdraw its P3.6 million purchase price deposited with the court. The trial court denied this motion, and the Court of Appeals affirmed the denial. Petitioner elevated the case via certiorari.

ISSUE

Whether the petitioner is entitled to the return of its purchase price after the judicial sale was nullified and it was deprived of possession of the vessel.

RULING

Yes, the petitioner is entitled to the return of the purchase price. The Supreme Court granted the petition. The legal logic is anchored on the principles of obligations and contracts, specifically the vendor’s obligation in a sale. Under Article 1547 of the Civil Code, the vendor is bound to transfer ownership and deliver the object of the sale. Correspondingly, Article 1163 obliges the vendor to preserve the thing with the diligence of a good father of a family from the perfection of the contract until its delivery. Here, the judicial sale was nullified by final judgment. Consequently, the vessel reverted to its status as property under custodia legis (court custody), and petitioner was rightfully enjoined from taking possession. Since the trial court, through the sheriff as the attaching officer, could not deliver the vessel to petitioner, it is incumbent upon the court to return the purchase price. To rule otherwise would undermine the integrity of judicial sales, as no party would participate if the risk of losing both the property and the purchase money existed. Furthermore, the remedy of appeal was deemed inadequate in this instance, as it would not promptly relieve petitioner from the injurious effects of the order, making the extraordinary remedy of certiorari appropriate.