G.R. No. L-5534
HERBERT S. WALKER and W. J. ROHDE, plaintiffs-appellees, vs. JOSE McMICKING, defendant-appellant.
December 23, 1909

FACTS:
Herbert S. Walker (plaintiff-appellee) owned a carriage factory. On June 30, 1908, he sold the factory and its contents to “Arenas & Co.” for P3,200, with P600 paid upfront and the balance in installments. The contract (Exhibit A) stipulated that if Arenas & Co. failed to pay any installment within 30 days of its due date, the sale would be rescinded, and Walker would be entitled to retake possession. Arenas & Co. paid the first installment but defaulted on the subsequent September and December 1908 payments.

In early January 1909, by virtue of the contract provision, Walker rescinded the sale and took possession of the factory and its contents. Co-plaintiff W.J. Rohde, owner of the land where the factory stood, also took possession with Walker due to unpaid rent by Arenas & Co., claiming a preferred right under Article 1922(7) of the Civil Code.

Subsequently, defendant-appellant Jose McMicking acquired possession of the property and later sold it. McMicking claimed his possession stemmed from a writ of attachment issued on December 16, 1908, against Arenas & Co. The sheriff, however, did not take actual custody of the attached goods but left them with Arenas & Co., explicitly relieving himself of responsibility.

Walker and Rohde filed an action in the Court of First Instance of Manila to recover possession of the property or, in default thereof, its value of P1,500. McMicking filed a general denial. The lower court ruled in favor of Walker, adjudging him the right to recover the articles or P539 with interest. McMicking appealed, raising errors regarding the validity of the attachment, the rescission of the sale, the necessity of returning payments upon rescission, and the valuation of the goods.

ISSUE:
1. Was the attachment levied by the sheriff on December 17, 1908, validly executed in accordance with the Code of Civil Procedure?
2. Was the sale contract between Walker and Arenas & Co. validly rescinded, affecting the defendant?
3. Could the defendant insist on the return of payments made by Arenas & Co. to Walker as a condition for the rescission to be effective against him?

RULING:
The Supreme Court affirmed the judgment of the lower court, with costs.

1. On the validity of the attachment: The Court ruled that the attachment was invalid and of no effect. Section 428 of the Code of Civil Procedure requires the officer to “safely keep” the movable property of the defendant. The sheriff’s act of leaving the goods with Arenas & Co. and expressly relieving himself of responsibility was not a compliance with the statute. A mere verbal declaration of seizure or service of writ is insufficient; there must be an actual assumption of control by the sheriff, either personally or through representatives, to constitute a valid attachment. The attachment became invalid the moment the sheriff lost actual or constructive control over the property. The Court also noted that the defendant’s general denial was inconsistent with presenting the attachment as a defense, which would typically be a confession and avoidance requiring specific pleading.

2. On the validity of the rescission: The Court held that the sale contract was validly rescinded. The fourth clause of the contract (Exhibit A) explicitly gave Walker the right to rescind and retake possession upon Arenas & Co.’s failure to pay installments. Arenas & Co. acceded to the rescission and delivered the property to Walker. The contract constituted the “law covering the rights of the respective parties” (Articles 1254 and 1255, Civil Code), and Walker performed all necessary actions to effect the rescission.

3. On the return of payments upon rescission: The Court ruled that the defendant-appellant could not insist on the return of money paid by Arenas & Co. to Walker. Arenas & Co. was not a party to the action and had made no claim for the return of the money. Any such right would belong to Arenas & Co., and they would be the only ones who could insist upon it. This question was not involved in the present action between Walker and McMicking.

The Court further found no error in the lower court’s valuation of the property at P539, stating that a forced sale price is not a fair criterion for ascertaining true value. Therefore, since the plaintiffs innocently and rightfully acquired possession, and the defendant subsequently took possession of property belonging to them and sold it, the defendant was liable to return the property or its value.