G.R. No. 47338 , June 27, 1941
FRANCISCO EGMIDIO, plaintiff and appellee, vs. LEON REGALADO and another, defendants. PHILIPPINE GUARANTY CO., INC., bondsman and appellant.

FACTS

On June 24, 1935, Francisco Egmidio filed a complaint against Leon Regalado and Teotimo Ventilacion in the Court of First Instance of Manila to recover P7,000 for damages caused by the sinking of his vessel due to their negligence. The court issued a writ of preliminary attachment. The following day, June 25, the Provincial Sheriff of Iloilo levied the attachment on the sum of P5,085.92 deposited in the Provincial Treasury of Iloilo. This money was the proceeds from writs of execution issued by the Court of First Instance of Iloilo in Civil Cases Nos. 9877 and 9911, where the defendants here (Regalado and Ventilacion) were the plaintiffs and the Visayan Shipping Co. was the defendant. On June 27, 1935, the defendants moved in the Manila court to have the attachment lifted upon posting a bond. The court granted the motion on August 12, 1935, and on September 25, 1935, the defendants posted a bond of P5,200 with Philippine Guaranty Co. as surety. Consequently, the Manila court lifted the attachment on October 1, 1935. On March 19, 1936, the Manila court absolved Ventilacion but condemned Regalado to pay Egmidio P7,221 with legal interest and costs. Regalado appealed, but his appeal was dismissed for abandonment. It is noted that the P5,085.92 in the provincial treasurer’s custody was not delivered to the defendants during this period. On April 20, 1936, in Civil Case No. 9877, the Iloilo court issued an order declaring null the attachment levied by the provincial sheriff on the sum of P4,598.77 due to Leon Regalado (part of the P5,085.92) pursuant to the judgment in that case, and ordered its immediate delivery to Regalado, which was done. Having obtained a favorable judgment, Egmidio secured a writ of execution from the Manila court on October 16, 1936, but the sheriff returned it unsatisfied, alleging Regalado’s insolvency. On January 28, 1938, Egmidio moved in the Manila court for execution against the bond posted by Regalado, which the court ordered on February 5, 1938. On March 8, 1938, Regalado moved to quash the writ of execution, arguing that the sum of P4,598.77 was awarded to him by order of the Iloilo court, not the Manila court, and that he received it as compensation under Act No. 3428 , which exempts such compensation from attachment. Despite an order having been issued in favor of the defendant declaring the attachment and bond null, the Manila court, considering Egmidio’s motion for reconsideration, issued a writ of execution against Philippine Guaranty Co. for P5,200. This is the subject of the appeal.

ISSUE

Whether the writ of execution against the surety bond posted by Philippine Guaranty Co. is valid, considering the nature and status of the funds originally attached.

RULING

The Supreme Court ruled that the writ of execution against the surety bond is not valid and must be revoked. The Court held:
1. The sum of P5,085.92 credited to the defendants and in the custody of the Provincial Sheriff in the provincial treasury when the attachment was levied was in custodia legis (in the custody of the law). Following established doctrine in this jurisdiction, such funds are not subject to attachment.
2. Furthermore, the sum was awarded to the defendants as compensation under Act No. 3428 . Section 35 of this Act provides that all compensation is exempt from the claims of creditors.
Having established these points, the Court concluded that the bond posted by Philippine Guaranty Co., Inc., had no consideration and lacked an object. Therefore, it was and is ineffective. Being null, it cannot constitute the basis for a cause of action, as in the eyes of the law, it does not and never did exist.
Consequently, the appealed order is revoked, with costs against the appellee in both instances.