JUAN T. DAVID, PETITIONER, VS. THE HONORABLE JUDGE LORENZO C. GARLITOS OF THE COURT OF FIRST INSTANCE OF NUEVA ECIJA, AND THE TESTATE ESTATE OF VICENTE SOTTO, REPRESENTED BY ITS…

This is a petition for certiorari with mandamus to compel the Judge
of the Court of First Instance of Nueva Ecija to issue the
corresponding writ of .execution of the decision of said court in Civil
Case No. 8726, dated December 5, 1941.

The facts involved are as follows:

Kwong Ah Phoy & Co., Inc., a domestic corporation, on July 11,
1939, secured from the Bank of the Philippine Islands an overdraft
accommodation for a sum not exceeding P25,000 with interest of 8 per
cent per annum. To secure payment, a first mortgage was constituted on
a land located in Cabanatuan, Nueva Ecija, covered by Transfer
Certificate of Title No. 2970, together with all its buildings and
improvements. The corporation made use of and exhausted said overdraft
accommodation, and including certain advances made by the Bank the
total obligation as of September 30, 1941, amounted to P30,822. For
failure to pay said obligation the Bank filed Civil Case No. 8726 of
the Court of First Instance of Nueva Ecija to foreclose the mortgage.

In the meantime, in Civil Case No. 5282 of the same court the
corporation was declared insolvent as of September 29, 1939. That was
the reason why the judgment secured by the Bank on December 5, 1941, in
the foreclosure proceedings, Civil Case No. 8726, was against the
assignees of the corporation, sentencing them to pay to plaintiff Bank
P30,822 at 8 per cent per annum from September 30, 1941, until fully
paid, plus the sum of P3,082.20, by way of attorney’s fees, and costs,
giving said assignees 90 days within which to pay the money judgment,
in default of which payment, the property mortgaged would be sold at
public auction.

On August 24, 1944, petitioner Juan T. David acquired from the
plaintiff Bank all its rights and interests in the aforementioned
judgment in Civil Case No. 8726. Later, all the rights and interests of
the insolvent corporation were, by assignment, acquired by Atty.
Vicente Sotto who assumed all its liabilities and obligations, and he
deposited with the court the sum of P106,097.25 in Japanese military
notes to pay and settle all approved claims against the insolvent as
well as the sum of P42,614.83 to pay Juan T. David who, as already
stated, acquired the mortgage credit of the Bank. By order of the court
in the insolvency proceedings dated October 9, 1944, the assignment and
the deposit were approved. We reproduce said order:

“ORDER

“The motion of Atty. Vicente Sotto, dated October 2, 1944, having been submitted, and

“(1) Considering that this Court, in the Order under
date of September 16, 1944, has approved the assignment and transfer of
all the rights and interests of this insolvency in favor of Atty.
Vicente Sotto, as had been proposed by the assignees and upon payment
of all the Obligation and liabilities of the same by the purchaser;

“(2)
Considering that the said purchaser has deposited with the Clerk of
this Court the total amount of all the claims and incumbrances against
this Insolvency; and

” (3) Considering that no opposition whatever had been filed against the above mentioned motion of the purchaser;

“Therefore, this Court orders as follows:

“(a)
The purchaser Vicente Sotto is hereby declared absolute owner of all
the property, real and personal rights, interest and accounts
receivable of the insolvent Estate of Kwong Ah Phoy & Co. Inc.;

“(b)
The clerk of this Court is hereby instructed to deliver to the
Assignees ofthis Insolvency, Messrs. Eufemio Si-Uy and Andrea L.
Navallo Sr. the sum of P106,097.25 deposited by the purchaser, in order
to pay and settle all the approved claims against this insolvency, as
well as the sum of P42,614.83, likewise deposited by the purchaser to
Mr. Juan T. David, sobrogee of the mortgage credit of the Bank of the
Philippine Islands;

“(c) Releasing the surety firms, Far
Eastern Surety and Insurance Co. Inc. and the China Surety &
Insurance Co. from their liability under the bonds executed by them in
favor of Kwong Ah Phoy & Co. Inc.;

“(d) The assignees
are, furthermore, instructed to deliver immediately to the purchaser
Vicente Sotto all the property, real and personal rights and interests,
and accounts receivable, as well as all and whatever funds, books of
account, documents, titles, and papers of this Insolvency; and

“(e) This Insolvency is finally, declared definitely closed.”

On November 7, 1944, the assignees delivered to Atty. Vicente Sotto possession of the properties of the insolvent Corporation.

On November 11, 1944f the two assignees through Atty. Tagakotta
Sotto, son of Atty. Vicente Sotto, went to the house of Juan T. David
in Manila and delivered to him a cashier’s check of the Philippine
National Bank in the amount of P42,614.83 representing the accumulated
balance of the mortgage credit foreclosed by the Bank and later
assigned to David, accompanied by a letter stating that the offer of
payment was being made in compliance with the order of the court in the
insolvency proceedings, at the same time asking for the delivery of the
Torrens Title of the mortgage property and the execution of a
Quit-Claim Deed. After reading the letter, Mr. David returned to
Tagakotta both letter and check and by his conduct showed that “he
refused to allow the redemption of the mortgage with Japanese war
notes, according to Tagakotta, but according to David, he returned them
to said attorney with the request that he hand them over to his
counsel, Mr. Claudio Teehankee, giving his address”. Because of this
the cashier’s check was deposited in court and Atty. Vicente Sotto
together with the two assignees in the insolvency proceedings brought
an action against David in the Court of First Instance of Nueva Ecija,
Civil Case No. 193 to compel him to receive said cashier’s check and to
execute a deed of cancellation of the mortgage, and for P500,000
damages and costs.

On August 16, 1945, Juan T. David filed a petition in Civil Case No.
8726 (foreclosure proceedings) asking for the sale of the property
mortgaged. Atty. Vicente Sotto opposed the petition. In an order dated
October 25, 1945, the lower court deferred action said petition until
Civil Case No. 193 shall have been finally decided, at the same time,
calling the attention of the parties to the fact that the records of
said Civil Case No. 193 were lost during the war and the necessity for
their reconstitution. The records were later reconstituted under Civil
Case No. 193-9.

Subsequently, Atty. Vicente Sotto died, and the court allowed his
son Atty. Tagakotta Sotto, executor of his father’s testate estate to
be substituted as party-plaintiff in said Civil Case No. 193-J.

On November 3, 1949, judgment was rendered in Civil Case No. 193-J
holding that the consignation made by Atty. Vicente Sotto was invalid.
The decision gave him 60 days within which to pay David P42,614.83 with
interest at 8 per cent per annum from October 1, 1944, and David was
given 15 days after payment within which to execute the deed of
cancellation of the mortgage debt. On appeal by plaintiffs to Court of
Appeals, said Tribunal in a lengthy decision held not valid the tender
of payment with the cashier’s check for P42,614.83, and declared the
consignation of said check in court, as not made in accordance with
law, and affirmed the trial court’s decision. The petition filed by
plaintiffs-appellants before the Supreme Court to review the decision
of the Court of Appeals was denied for lack of merit.

Thereafter, David filed a petition dated July 15, 1953, in Civil
Case No. 8726 of the Nueva Ecija court (foreclosure proceedings) asking
for the sale of the mortgaged property in accordance with the decision
of that court of December 5. 1941, in view of the final decision
rendered in Civil Case No. 193-J. Atty. Tagakotta Sotto as executor of
the testate estate of his father Vicente Sotto opposed the petition on
the ground of prescription. The Nueva Ecija court presided over by’
respondent Judge Lorenzo C. Garlitos, denied the petition for execution
saying in part: “Unlucky however, he (David) can no longer take
advantage of the decision rendered in this case, because the same has
totally lost its legal force and effect for having already prescribed.”
David’s motion for reconsideration of said order of denial was denied
by order of September 14, 1953. David has now filed this petition for
certiorari with mandamus against respondent Judge and the testate
estate of Atty. Vicente Sotto, as already stated, to compel the
respondent Judge to issue the corresponding writ of execution of the
final decision in Civil Case No. 8726.

The theory of respondents in resisting the present petition for
certiorari with mandamus and in maintaining the order of respondent
Judge denying the petition for execution in Civil Case No. 8726 is
built on Rule 39, section 6, of the Rules of Court which reads as
follows—

“Sec. 6. Execution by motion or by independent action.—A
judgment may be executed on motion within five years from the date of
its entry. After the lapse of such time, and before it is barred by the
statue of limitations, a judgment may be enforced by action.”

and on the rule of prescription contained in Section 43 of the Code
of Civil Procedure and Article 1144 of the new Civil Code, to the
effect that an action to enforce a judgment or decree must be brought
within 10 years from the time said decree or judgment has become final
and executory. Respondent equally maintain that the mere filing of the
petition for a writ of execution by David (Annex I) in Civil Case No.
8726 on August 16, 1945 asking for the sale of the property mortgaged
in accordance with the decision in said case rendered on December 5,
1941, and even the order of the lower court on October 25,1945,
deferring action upon said petition until Civil Case No. 193-J shall
have been finally decided did not suspend the running of the two
periods of prescription—the first period of five years within which to
execute the judgment and the second period of ten years within which to
file an action on the basis of said judgment. In support of this
contention they cite the case of Compania General de Tabacos vs.
Martinez, 17 Phil., 160, and other Philippine cases decided by this
Court in accordance with the Martinez case, holding that the issuance
of an injunction restraining the execution of a judgment does not
suspend the running of the period of prescription. They claim that if
an injunction restraining an execution does not suspend the running of
the period of prescription, with more reason the mere filing of a
petition for execution and an order merely deferring action on said
petition should not and will not suspend the running of the period of
prescription.

The later case of Demetriou and Madrid vs. Lesaca and Chunaco,
promulgated on March 31, 1936, published in 63 Phil., 112, however,
qualified the doctrine laid down in the cases cited by the respondent,
particularly the case of Compania General de Tabacos vs. Martinez, in
the sense that the statute of limitations is not suspended where an
injunction suit brought by a judgment debtor is only to restrain sale
of his home place but not asking for an order restraining the issuance
of an execution. The facts in the Demetriou case briefly stated are the
following. Chunaco obtained a final judgment against Demetriou for a
sum of money with interest and costs. A writ of execution was issued but
was returned unsatisfied; a second writ of execution by virtue of which
a levy was made on certain properties claimed by Aurea A. Madrid, wife
of Demetriou was issued. Aurea filed a complaint in intervention
claiming those properties as paraphernal, and she obtained a writ of
preliminary injunction enjoining Chunaco and the Sheriff from selling
at public auction said properties claimed by her. Subsequently,
judgment was rendered on her complaint in intervention, declaring said
properties to be paraphernal of Aurea. A third writ of execution was
issued on October 10,1934, more than five years from the time the
judgment in the original case between Chunaco and Demetriou became
final. This Court held that the third writ was invalid because issued
beyond the 5-year period, for the reason that as already stated, the
injunction obtained by Aurea did not prohibit the execution of the
judgment and so did not suspend the running of the 5-year period.
Explaining its stand and Hie reason for qualifying the doctrine laid
down in the case of Compania General de Tabacos vs. Martinez, this
Court said:

“The decision of the states of the Union are
conflicting on this point. Those of California, where sections 443 and
447 if our Procedural Law were taken hold that the five-year period
within which a judgment may be enforced is not suspended by the
issuance of an injunction restraining the execution of the judgment. (
Solomon vs. Maguire, 29 Cal., 227, 237; Rogers vs. Druffel, 46 Cal.,
654; Cortez vs. Superior Court, 86 Cal., 274, 278; Buell vs. Buell, 92
Cal., 393, cited with approval in Compania General de Tabacos vs.
Martinez, 17 Phil., 160; Arambulo vs. Court of First Instance of Laguna
and Municipality of Santa Rosa, 53 Phil., 302). The contrary view
prevails, however, in Mississippi (Work vs. Harper, 31 Miss., 107,
109); Georgia (Rogers vs. Smith, 98, Ga., 788, 789); and New York
(Underwood vs. Green, 56 N. Y., 247, 248). In our opinion the better
rule is that announced in 21 A.L.R., 1059, citing Series vs. Cromer (88
Va., 426), a case similar to the present, where it was said:

‘An
injunction suit brought by a judgment debtor to restrain the sale of
his home place, but not asking for an order restraining the issuance of
execution, is not such a legal proceeding as to suspend the statute of
limitations under a statute providing that any time during which the
right to sue out execution on a judgment is suspended by the terms
thereof or by legal proceedings shall be omitted in computing the
period of limitations prescribed.’

“It
appears from the record that the injunction issued in civil case No.
4997 was not to enjoin the execution of the judgment, but only to have
the creditor Ciriaco Chunaco and the sheriff Max. M. Romero ‘abstain
from selling at public auction the properties described in the
complaint * * * during the pendency of this case and until further
order of the court/ It is manifest that the issuance of said injunction
at no time prevented Ciriaco Chunaco from executing his judgment
otherwise than by making a public sale of the properties claimed by
Aurea A. Madrid. * * * .”

Applying the legal principle enunciated in the Demetriou case, we
agree with petitioner David that his petition for execution filed on
August 16, 1945, and the order of the trial court deferring action upon
it until Civil Case No. 193-J shall have been finally decided,
suspended the running of the period of prescription. As he correctly
claims, prescription can only operate when there is a right that is
enforceable; or in the case of a final judgment, when there is no legal
impediment to its execution; but when the enforceability of a final
decision is suspended by court order or becomes conditional and
uncertain, prescription may not operate. In his case (Civil Case No.
8726) although he had a final judgment in his favor, despite his
efforts he failed to secure execution thereof not only because of the
refusal of the trial court to grant it, but also because the suit filed
by Atty. Vicente Sotto, Civil Case No. 193-J, based on his alleged
tender of payment and the subsequent consignation in court of the
cashier’s check in an amount calculated to satisfy the final judgment,
rendered the execution of said final judgment conditional and
uncertain. If Atty. Sotto in his suit obtained final favorable judgment
declaring his tender of payment and his consignation of the cashier’s
check, valid, then the final judgment in favor of David will have been
immaterial and of no avail. That was the very reason why the trial
court deferred action on David’s petition for execution dated August
16, 1945, and surely, failure to execute said judgment may not properly
be laid at anyone’s door, much less at that of David. It was only after
the final judgment in the case of Atty. Vicente Sotto against David
(Civil Case No. 193-J) that the judgment in Civil Case No. 8726
regained its finality and executory character. On this basis, and
considering the suspension of the running of the period of
prescription, we find that David filed his petition for execution on
July 15, 1953, within the five-year period as provided for in Rule 39,
section 6, Rules of Court, and that respondent Judge improperly and
unlawfully denied the same on the ground of prescription.

In view of the foregoing, the petition is hereby granted; the order
of respondent Judge denying the petition for execution is hereby set
aside and he is hereby directed to issue the corresponding writ of
execution, with costs.

Paras, C. J., Pablo, Bengzon, Padilla, Reyes, A., Jugo, Bautista Angelo, Labrador, and Concepcion, JJ., concur.