G.R. No. 27122 ; August 31, 1927
HAI CAIJI, plaintiff-appellant, vs. THE SUGAR ESTATES DEVELOPMENT COMPANY, LTD., defendant-appellee.

Ponente: JOHNSON, J.

FACTS

1. On July 2, 1924, Hai Caiji (appellant) filed a complaint against spouses Martiniano Eugenio and Angela Carrillo for the recovery of a sum of money (P9,579.75) and obtained a writ of attachment on their property.
2. At the time of the attachment, the property was already subject to a first mortgage in favor of “La Sagrada Orden de Predicadores.”
3. On July 8, 1924, the spouses executed a second mortgage over the same property in favor of The Sugar Estates Development Company, Ltd. (appellee), which was registered the following day.
4. Martiniano Eugenio died on September 9, 1924. An administrator was appointed for his estate, and commissioners were designated to hear claims. Pursuant to Section 700 of the Code of Civil Procedure, Hai Caiji’s pending action was dismissed, and his claim was presented to the commissioners, who allowed it in the amount of P8,529.75.
5. Later, on December 7, 1925, the appellee filed an action to foreclose its second mortgage. The property was sold at public auction for P42,000, yielding a surplus after payment of the first mortgage.
6. Hai Caiji claimed priority over the surplus proceeds by virtue of his earlier attachment lien, which preceded the appellee’s second mortgage. The appellee demurred, arguing that the dismissal of the main action dissolved the attachment lien.

ISSUE

Does the dismissal of an action, upon which an attachment has been issued, dissolve the attachment and extinguish the lien created on the attached property?

RULING

YES. The Supreme Court affirmed the lower court’s decision sustaining the demurrer and dismissing the complaint.

The Court held that the dismissal of the main action (Civil Case No. 26517) had the effect of dissolving the attachment issued in that case. Consequently, any lien or preference created by the attachment was extinguished. The appellant’s claim, while allowed by the estate commissioners, became an ordinary claim against the estate without any preferential lien on the specific property previously attached.

The Court relied on Section 700 of the Code of Civil Procedure, which explicitly provides that actions pending against a deceased person for the recovery of money “shall be discharged from the attachment” upon the appointment of commissioners, and the claim may then be presented to the commissioners. This statutory provision mandated the dissolution of the attachment upon the dismissal of the case due to the death of the defendant and the proceedings in the estate settlement.

Since the attachment lien was dissolved, the appellant had no superior right to the surplus proceeds from the foreclosure sale over the appellee, whose second mortgage was duly registered after the attachment but before its dissolution. The complaint failed to state a cause of action, and as the facts were fully stated, no amendment could cure the defect.

DISPOSITIVE PORTION:
The judgment of the lower court is affirmed, with costs against the appellant.