GR 153478; (October, 2012) (Digest)
G.R. No. 153478 ; October 10, 2012
MR HOLDINGS, LTD., Petitioner, vs. SHERIFF CARLOS P. BAJAR, et al., Respondents.
FACTS
Marcopper Mining Corporation obtained loans from the Asian Development Bank (ADB), secured by a real estate and chattel mortgage over its properties, including Manila Golf Club shares. After an environmental disaster halted its operations, Marcopper defaulted. Pursuant to a support agreement, petitioner MR Holdings, Ltd., a foreign corporation, assumed Marcopper’s debt to ADB, which then assigned all its rights under the loan and mortgage documents to MR Holdings. Marcopper also executed a Deed of Assignment conveying its properties to MR Holdings.
Separately, creditor Solidbank Corporation obtained a partial judgment against Marcopper for loan defaults. The trial court granted execution pending appeal. Sheriff Bajar levied upon Marcopper’s properties, including the Manila Golf Club shares, and scheduled a public auction. MR Holdings intervened, filing a third-party claim and a manifestation of prior lien, asserting its superior rights as assignee of the mortgaged shares. The sheriff proceeded with the sale, and respondents Citadel Holdings and Vercingetorix Corporation were the winning bidders.
ISSUE
Whether the Court of Appeals erred in dismissing MR Holdings’ petition for certiorari challenging the denial of its third-party claim and in upholding the validity of the execution sale.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals. The core legal logic rests on the nature of a third-party claim under Section 16, Rule 39 of the Rules of Court. A third-party claim is merely a provisional remedy; it is not a substitute for a separate, independent action to assert ownership or a superior lien. The sheriff’s role upon receiving a claim is ministerial: he may require an indemnity bond from the judgment creditor to proceed with the levy. The sheriff does not adjudicate the merits of the claim.
The proper recourse for MR Holdings, after its claim was contested, was to institute a separate action to vindicate its alleged superior right over the levied properties. Its failure to file such an action within the reglementary period meant it could not prevent the execution sale. Furthermore, the Court noted that the validity of the very execution sale was ultimately nullified in a related case ( G.R. No. 134049 ). Consequently, the purchasers at the void sale acquired no rights. However, this subsequent nullification does not retroactively validate MR Holdings’ chosen procedural shortcut. The dismissal of its certiorari petition was correct because certiorari is not available to correct errors in judgment where an adequate remedy—like filing a separate action—was available but not pursued.