GR L 14329; (December, 1919) (Digest)
G.R. No. L-14329, December 12, 1919
TOMAS HILARIO, VICENTE BAGUIO, J. N. BELTRAN and MARIANO FUENTECILLA, plaintiffs-appellees, vs. W. E. HICKS, KUENZLE & STREIFF, ALHAMBRA CIGAR FACTORY, PACIFIC COMMERCIAL COMPANY, MANILA WINE MERCHANTS & CO. (FORMERLY SULLIVAN & FRANCIS), SAN MIGUEL BREWERY, and DIONISIO VIDAL as deputy sheriff, objector-appellant.
FACTS:
On May 13, 1913, the defendant-creditors obtained a judgment in the Court of First Instance of Lanao for P30,827.40 against A.E. Kramer, as administrator of the estate of Frank Shephard, and his sureties, including the plaintiffs. The creditors procured an immediate execution, leading to a sheriff’s sale on April 25, 1914, of 48 parcels of real property and some personal property belonging to Kramer and the sureties. The sale realized P7,293, with the creditors themselves bidding in many properties. The defendants appealed the judgment to the Supreme Court, which on August 17, 1916, reversed the trial court’s judgment and reduced the recovery to only P2,673.18. The plaintiffs then filed this action to recover damages for the alleged wrongful execution sale, claiming the value of the properties sold and mesne profits. The trial court ruled in favor of the plaintiffs. The defendants appealed.
ISSUE:
Whether the creditors, after the Supreme Court reversed and reduced the monetary judgment, can be compelled to make specific restitution of the properties purchased at the execution sale, or are they liable only for the excess amount realized over the final judgment.
RULING:
The Supreme Court reversed the trial court’s decision and remanded the case. The Court held that the judgment of the Supreme Court in the original case was a reversal, not a mere modification. As a reversal, it vacated the original judgment. Consequently, the creditors have a duty to make restitution to place the parties in the position they would have occupied if the original judgment had been for the correct, smaller amount. However, the nature of the restitution depends on the circumstances:
1. For properties bid in by the creditors at the sheriff’s sale: Specific restitution may be compelled due to the reversal, or alternatively, the creditors may be liable for the profits derived from those properties while in their possession.
2. For properties sold to third parties at the sheriff’s sale: The creditors’ liability is limited to the amount actually realized from those sales, not the properties’ full market value.
3. The plaintiffs’ complaint was defective: It improperly united inconsistent causes of action by seeking both damages for the value of the properties sold (which assumes a wrongful taking) and mesne profits (which assumes a right to specific restitution). Plaintiffs must adopt a consistent theory.
The Court suggested that the plaintiffs (sureties) would be better served by voluntarily dismissing this separate action and filing a motion for appropriate relief in the original case (No. 292) where the judgment was rendered, to allow proper determination of restitution issues. The demurrer interposed by the defendants in the trial court should have been sustained.