G.R. No. L-17384; October 31, 1961
NESTOR RIGOR VDA. DE QUIAMBAO, ET AL., petitioners, vs. MANILA MOTOR COMPANY, INC., and the HON. COURT OF APPEALS, respondents.

FACTS

Gaudencio Quiambao purchased a car on installment from Manila Motor Company. Upon his default, the company obtained a judgment for the unpaid balance. In 1941, a writ of execution was issued, and the sheriff levied on two parcels of land owned by Quiambao. To forestall the execution sale, Quiambao pleaded for time and offered to surrender the car to the company. The company’s attorney accepted the car and issued a receipt stating it was received “pending settlement of the judgment.” Quiambao later made a partial payment of P500. During the war, the Japanese forces seized the car from the company’s possession. After the war, Manila Motor Company collected war damage compensation for the lost car. In 1953, the company sought to reactivate the pre-war writ of execution to sell the levied properties to satisfy the remaining judgment debt. The heirs of Quiambao (petitioners) filed an action to annul the writ.

ISSUE

The core issues are: (1) whether the surrender of the car constituted a rescission of the sale or a waiver of the right to execute the judgment; (2) whether the collection of war damage compensation amounted to a foreclosure of the chattel mortgage; and (3) whether the right to execute the judgment was extinguished by prescription or moratorium laws.

RULING

The Supreme Court affirmed the Court of Appeals’ decision, ruling for the respondent company. On the first issue, the surrender of the car did not constitute a rescission or waiver. The factual circumstances distinguished this case from H.E. Heacock Co. vs. Buntal Manufacturing. Here, it was the debtor, Quiambao, who initiated the surrender to merely suspend the execution sale, not the creditor demanding return of the property to rescind the sale. The receipt explicitly stated the car was held “pending settlement of the judgment,” and Quiambao’s subsequent partial payment confirmed the debt remained outstanding. The company’s repeated post-war demands for payment further negated any intent to waive the judgment.
On the second issue, the collection of war damage compensation did not equate to a foreclosure of a chattel mortgage. The car was not received by the company for the purpose of appropriating it to satisfy the debt, but merely as security. The compensation was for the loss of the company’s possessory interest (as bailee) due to enemy seizure, not a satisfaction of the mortgage debt. The amount received was properly credited to reduce the judgment obligation.
On the third issue, the right to execute the judgment was not barred. The pre-war levy on the land, effected within the five-year period for enforcing a judgment by motion, was a valid act that placed the property in custodia legis for the satisfaction of the debt. Following the doctrine in Government vs. Echaus, a valid levy made within the prescribed period can be enforced by a sale thereafter, even beyond the five-year period, provided the action is brought within the ten-year prescriptive period for judgments. The wartime moratorium laws merely suspended the enforcement of the right but did not extinguish the obligation. The company’s reactivation of the execution in 1953 was within the allowable timeframe. The judgment was modified only to credit the amount received from the War Damage Commission against the debt.