G.R. No. L-42594 October 18, 1979
ELIGIO ROQUE and RODRIGO G. MALONJAO, petitioners, vs. HON. COURT OF APPEALS, HON. JUDGE CARLOS L. SUNDIAM, (CFI-Manila, Branch XXVIII) ASSOCIATED BANKING CORPORATION, FIL-EASTERN WOOD INDUSTRIES, INC., CITY SHERIFF OF MANILA, DEPUTY SHERIFFS ADRIEL GARCIA and BENJAMIN GARVIDA, respondents.

FACTS

Respondent Associated Banking Corporation (the Bank) filed a money claim against Fil-Eastern Wood Industries, Inc. and obtained a writ of preliminary attachment. The sheriff levied upon a barge named “Fil-Eastern V” by registering a notice of levy with the Philippine Coast Guard on February 7, 1974. Prior to this levy, Fil-Eastern had delivered the barge for repairs to Cotabato Visayan Development Corporation, which, after non-payment, exercised its mechanic’s lien and sold the barge at a notarial public auction on April 24, 1974. Petitioner Eligio Roque was the highest bidder and received a Certificate of Sale. The Philippine Coast Guard later issued new certificates of ownership and registration to Roque, renaming the barge “Satellite I.”
Subsequently, the Bank and Fil-Eastern entered into a compromise agreement, which was approved by the court. Upon Fil-Eastern’s default, the Bank moved for execution. The sheriff then seized the barge on August 30, 1974, pursuant to the writ of attachment. Petitioners Roque and Malonjao, claiming ownership through the auction sale, refused to surrender the vessel. The trial court ordered them to surrender the barge under pain of contempt. The Court of Appeals denied their petition to set aside this order, prompting this certiorari action before the Supreme Court.

ISSUE

Whether the trial court and the Court of Appeals committed grave abuse of discretion in ordering the petitioners to surrender the barge despite their claim of ownership acquired through the notarial sale.

RULING

The Supreme Court dismissed the petition, affirming the Court of Appeals. The legal logic is anchored on procedural propriety in enforcement proceedings. The Court held that a third party claiming ownership over property levied upon for execution must file a separate and independent reivindicatory action to assert such claim. Petitioners were not parties to the original case between the Bank and Fil-Eastern, nor did they file a formal third-party claim in the execution proceedings as required by the Rules of Court. Their remedy was not to defy the court’s order for surrender but to institute an independent civil action to establish their ownership and resolve the question of preferential rights.
The issuance of the order of surrender, under pain of contempt, was a legitimate exercise of the trial court’s jurisdiction to enforce its writs and judgments. The Court found no grave abuse of discretion, as the trial court was merely implementing its processes. The validity of Roque’s title, allegedly superior due to the mechanic’s lien sale, was a substantive issue that could not be collaterally attacked in the execution proceedings of a case to which he was a stranger. The proper arena for that determination is a separate suit. The Supreme Court thus lifted the restraining order it had issued, allowing the execution to proceed, but noted petitioners were not precluded from filing an independent action to vindicate their ownership claim.