G.R. No. L-75964 December 1, 1987
Development Bank of Rizal, petitioner, vs. The Honorable Court of Appeals and Ibrahim Omar, respondents.

FACTS

Respondent Ibrahim Omar filed a collection case against petitioner Development Bank of Rizal (DBR). After DBR’s motion to dismiss was denied, it failed to file an answer within the reglementary period and was declared in default. DBR’s motion to lift the order of default was denied. The trial court subsequently rendered a judgment by default against DBR, which became final and executory as DBR did not appeal. Omar then filed an ex-parte motion for execution, which the trial court granted, issuing a writ of execution. DBR’s properties were levied upon.
DBR filed a petition for certiorari with the Court of Appeals, contending the writ was void for lack of notice and hearing, and that its assets were under the trust administration of the Monetary Board, making execution improper. The appellate court dismissed the petition, ruling that execution of a final judgment is a ministerial duty, requiring no prior notice, and that since a formal petition for DBR’s liquidation was not yet filed at writ issuance, Omar did not gain an undue preference.

ISSUE

The primary issue is whether the writ of execution is valid and enforceable against DBR, considering the alleged lack of notice and the bank’s impending liquidation.

RULING

The Supreme Court granted the petition, reversing the lower courts’ orders for execution. On the procedural issue, the Court held that while a defaulting party is generally entitled to notice of further proceedings after filing a motion to set aside the order of default, the rule admits an exception for the issuance of a writ of execution upon a final judgment. Execution of a final judgment is a ministerial duty; the prevailing party is entitled to it as a matter of right, and the judgment debtor need not be given advance notice or a prior hearing.
However, the Court ruled the writ could not be enforced based on substantive grounds related to DBR’s liquidation. The Court found that a petition for assistance in DBR’s liquidation had been approved by the Regional Trial Court prior to the issuance of the writ. Applying the doctrine in Central Bank v. Morfe, the Court held that allowing execution would give Omar a fraudulent preference over other depositors and creditors of the distressed bank. The policy is to prevent a race to the courts by depositors upon learning of a bank’s insolvency, which would prejudice less alert depositors and swamp the courts. The proper remedy for Omar is to present his final judgment to the liquidation court for inclusion in the project of distribution after notice to all creditors. Thus, the execution was set aside.