THE MANILA REMNANT CO., INC. PETITIONER, VS. HON. COURT OF APPEALS, AND SPS. OSCAR C. VENTANILLA AND CARMEN GLORIA DIAZ, RESPONDENTS.

The present petition is an offshoot of our decision in Manila
Remnant Co., Inc. (MRCI) v. Court of Appeals, promulgated on November 22, 1990.

That case involved parcels of land in Quezon City which were
owned by petitioner MRCI and became the subject of its agreement with A.U.
Valencia and Co., Inc. (AUVCI) by virtue of which the latter was to act as the
petitioner’s agent in the development and sale of the property. For a stipulated fee, AUVCI was to convert
the lands into a subdivision, manage the sale of the lots, execute contracts
and issue official receipts to the lot buyers. At the time of the agreement, the president of both MRCI and AUVCI was
Artemio U. Valencia.

Pursuant to the above agreement, AUVCI executed two contracts to
sell dated March 3, 1970, covering Lots 1 and 2, Block 17, in favor of spouses
Oscar C. Ventanilla and Carmen Gloria Diaz for the combined contract price of
P66,571.00, payable monthly in ten years. After ten days and without the knowledge of the Ventanilla couple,
Valencia, as president of MRCI, resold the same parcels to Carlos Crisostomo,
one of his sales agents, without any consideration. Upon orders of Valencia, the monthly payments of the Ventanillas
were remitted to the MRCI as payments of Crisostomo, for which receipts were
issued in his name. The receipts were
kept by Valencia without the knowledge of the Ventanillas and Crisostomo. The Ventanillas continued paying their
monthly installments.

On May 30, 1973, MRCI informed AUVCI that it was terminating
their agreement because of discrepancies discovered in the latter’s collections
and remittances. On June 6, 1973,
Valencia was removed by the board of directors of MRCI as its president.

On November 21, 1978, the Ventanilla spouses, having learned of
the supposed sale of their lots to Crisostomo, commenced an action for specific
performance, annulment of deeds, and damages against Manila Remnant Co., Inc.,
A.U. Valencia and Co., Inc. and Carlos Crisostomo. It was docketed as Civil Case No. 26411 in the Court of First
Instance of Quezon City, Branch 17­-B.

On November 17, 1980, the trial court rendered a decision
declaring the contracts to sell in favor of the Ventanillas valid and
subsisting, and annulling the contract to sell in favor of Crisostomo. It ordered the MRCI to execute an absolute
deed of sale in favor of the Ventanillas, free from all liens and encumbrances. Damages and attorney’s fees in the total
amount of P210,000.00 were also awarded to the Ventanillas for which the MRCI,
AUVCI, and Crisostomo were held solidarity liable.

The lower court ruled further that if for any reason the transfer
of the lots could not be effected, the defendants would be solidarity liable to
the Ventanillas for reimbursement of the sum of P73,122.35, representing the
amount paid for the two lots, and legal interest thereon from March 1970, plus
the decreed damages and attorney’s fees. Valencia was also held liable to MRCI for moral and exemplary damages
and attorney’s fees.

From this decision, separate appeals were filed by Valencia and
MRCI. The appellate court, however,
sustained the trial court in toto.

MRCI then filed before this Court a petition for certiorari to
review the portion of the decision of the Court of Appeals upholding the
solidary liability of MRCI, AUVCI and Carlos Crisostomo for the payment of
moral and exemplary damages and attorney’s fees to the Ventanillas.

On November 22, 1990, this Court affirmed the decision by the
Court of Appeals and declared the judgment of the trial court immediately
executory.

The Present Case

On January 25, 1991, the spouses Ventanilla filed with the trial
court a motion for the issuance of a writ of execution in Civil Case No.
26411. The writ was issued on May 3,
1991, and served upon MRCI on May 9, 1991.

In a manifestation and motion filed by MRCI with the trial court
on May 24, 1991, the petitioner alleged that the subject properties could not
be delivered to the Ventanillas because they had already been sold to Samuel
Marquez on February 7, 1990, while their petition was pending in this
Court. Nevertheless, MRCI offered to
reimburse the amount paid by the respondents, including legal interest plus the
aforestated damages. MRCI also prayed
that its tender of payment be accepted and all garnishments on their accounts
lifted.

The Ventanillas accepted the amount of P210,000.00 as damages and
attorney’s fees but opposed the reimbursement offered by MRCI in lieu of the
execution of the absolute deed of sale. They contended that the alleged sale to Samuel Marquez was void,
fraudulent, and in contempt of court and that no claim of ownership over the
properties in question had ever been made by Marquez.

On July 19, 1991, Judge Elsie Ligot-Telan issued the following
order:

“To ensure that there is enough amount to cover the value of
the lots involved if transfer thereof to plaintiff may no longer be effected,
pending litigation of said issue, the garnishment made by the Sheriff upon the
bank account of Manila Remnant may be lifted only upon the deposit to the Court
of the amount of P500,000.00 in cash.”

MRCI then filed a manifestation and motion for reconsideration
praying that it be ordered to reimburse the Ventanillas in the amount of
P263,074.10 and that the garnishment of its bank deposit be lifted. This motion was denied by the trial court in
its order dated September 30, 1991. A
second manifestation and motion filed by MRCI was denied on December 18,
1991. The trial court also required
MRCI to show cause why it should not be cited for contempt for disobedience of
its judgment.

These orders were questioned by MRCI in a petition for certiorari
before the respondent court on the ground that they were issued with grave
abuse of discretion.

The Court of Appeals ruled that the contract to sell in favor of
Marquez did not constitute a legal impediment to the immediate execution of the
judgment. Furthermore, the cash bond
fixed by the trial court for the lifting of the garnishment was fair and
reasonable because the value of the lot in question had increased considerably.
The appellate court also set aside the show-cause order and held that the trial
court should have proceeded under Section 10, Rule 39 of the Rules of Court and
not Section 9 thereof.^[1]

In the petition now before us, it is submitted that the trial
court and the Court of Appeals committed certain reversible errors to the
prejudice of MRCI.

The petitioner contends that the trial court may not enforce its
garnishment order after the monetary judgment for damages had already been
satisfied and the amount for reimbursement had already been deposited with the
sheriff. Garnishment as a remedy is
intended to secure the payment of a judgment debt when a well-founded belief
exists that the erring party will abscond or deliberately render the execution
of the judgment nugatory. As there is
no such situation in this case, there is no need for a garnishment order.

It is also averred that the trial court gravely abused its
discretion when it arbitrarily fixed the amount of the cash bond for the
lifting of the garnishment order at P500,000.00.

MRCI further maintains that the sale to Samuel Marquez was valid
and constitutes a legal impediment to the execution of the absolute deed of
sale to the Ventanillas. At the time of
the sale to Marquez, the issue of the validity of the sale to the Ventanillas
had not yet been resolved. Furthermore,
there was no specific injunction against the petitioner re-selling the
property.

Lastly, the petitioner insists that Marquez was a buyer in good
faith and had a right to rely on the recitals in the certificate of title. The subject matter of the controversy having
passed to an innocent purchaser for value, the respondent court erred in
ordering the execution of the absolute deed of sale in favor of the
Ventanillas.

For their part, the respondents argue that the validity of the
sale to them had already been established even while the previous petition was
still pending resolution. That petition
only questioned the solidary liability of MRCI to the Ventanillas. The portion of the decision ordering the
MRCI to execute an absolute deed of sale in favor of the Ventanillas became
final and executory when the petitioner failed to appeal it to the Supreme
Court. There was no need then for an
order enjoining the petitioner from re-selling the property in litigation.

They also point to the unusual lack of interest of Marquez in
protecting and asserting his right to the disputed property, a clear indication
that the alleged sale to him was merely a ploy of the petitioner to evade the
execution of the absolute deed of sale in their favor.

The petition must fail.

The validity of the contract to sell in favor of the Ventanilla
spouses is not disputed by the parties. Even in the previous petition, the recognition of that contract was not
assigned as error of either the trial court or appellate court. The fact that the MRCI did not question the
legality of the award for damages to the Ventanillas also shows that it even
then already acknowledged the validity of the contract to sell in favor of the
private respondents.

On top of all this, there are other circumstances that cast
suspicion on the validity, not to say the very existence, of the contract with
Marquez.

First, the contract to sell in favor of Marquez was entered into
after the lapse of almost ten years from the rendition of the judgment of the
trial court upholding the sale to the Ventanillas.

Second, the petitioner did not invoke the contract with Marquez
during the hearing on the motion for the issuance of the writ of execution
filed by the private respondents. It
disclosed the contract only after the writ of execution had been served upon it.

Third, in its manifestation and motion dated December 21, 1990,
the petitioner said it was ready to deliver the titles to the Ventanillas
provided that their counterclaims against the private respondents were paid or
offset first. There was no mention of
the contract to sell with Marquez on February 7, 1990.

Fourth, Marquez has not intervened in any of these proceedings to
assert and protect his rights to the subject property as an alleged purchaser
in good faith.

At any rate, even if it be assumed that the contract to sell in
favor of Marquez is valid, it cannot prevail over the final and executory
judgment ordering MRCI to execute an absolute deed of sale in favor of the
Ventanillas. No less importantly, the records
do not show that Marquez has already paid the supposed balance amounting to
P616,000.00 of the original price of over P800,000.00.^[2]

The Court notes that the petitioner stands to benefit more from
the supposed contract with Marquez than from the contract with the Ventanillas
with the agreed price of only P66,571.00. Even if it paid the P210,000.00 damages to the private respondents as
decreed by the trial court, the petitioner would still earn more profit if the
Marquez contract were to be sustained.

We come now to the order of the trial court requiring the posting
of the sum of P500,000.00 for the lifting of its garnishment order.

While the petitioners have readily complied with the order of the
trial court for the payment of damages to the Ventanillas, they have, however,
refused to execute the absolute deed of sale. It was for the purpose of ensuring their compliance with this portion of
the judgment that the trial court issued the garnishment order which by its
terms could be lifted only upon
the filing of a cash bond of P500,000.00.

The petitioner questions the propriety of this order on the
ground that it has already partially complied with the judgment and that it has
always expressed its willingness to reimburse the amount paid by the
respondents. It says that there is no
need for a garnishment order because it is willing to reimburse the Ventanillas
in lieu of execution of the absolute deed of sale.

The alternative judgment of reimbursement is applicable only if
the conveyance of the lots is not possible, but it has not been shown that
there is an obstacle to such conveyance. As the main obligation of the petitioner is to execute the absolute deed
of sale in favor of the Ventanillas, its unjustified refusal to do so warranted
the issuance of the garnishment order.

Garnishment is a species of attachment for reaching credits
belonging to the judgment debtor and owing to him from a stranger to the
litigation.^[3]
It is an attachment by means of which the plaintiff seeks to subject to his
claim property of the defendant in the hands of a third person or money owed by
such third person or garnishee to the defendant.^[4] The
rules on attachment also apply to garnishment proceedings.

A garnishment order shall be lifted if it established that:

(a) the party whose accounts have been
garnished has posted a counterbond or has made the requisite cash deposit;^[5]

(b) the order was improperly or irregularly
issued^[6]
as where there is no ground for garnishment^[7] or
the affidavit and/or bond filed therefor are defective or insufficient;^[8]

(c) the property attached is exempt from
execution, hence exempt from preliminary attachment^[9] or

(d) the judgment is rendered against the
attaching or garnishing creditor.^[10]

Partial execution of the judgment is not included in the above
enumeration of the legal grounds for the discharge of a garnishment order. Neither does the petitioner’s willingness to
reimburse render the garnishment order unnecessary. As for the counterbond, the lower court did not err when it fixed
the same at P500,000.00. As correctly
pointed out by the respondent court, that amount corresponds to the current
fair market value of the property in litigation and was a reasonable basis for
determining the amount of the counterbond.

Regarding the refusal of the petitioner to execute the absolute deed
of sale, Section 10 of Rule 39 of the Rules of Court reads as follows:

Sec. 10. Judgment for specific acts; vesting title – If a judgment
directs a party to execute a conveyance of land, or to deliver deeds or other
documents, or to perform any other specific act, and the party fails to comply
within the time specified, the court may direct the act to be done at the cost
of the disobedient party by some other person appointed by the court and the
act when so done shall have like effect as if done by the party. If real or personal property is within the
Philippines, the court in lieu of directing a conveyance thereof may enter
judgment divesting the title of any party and vesting it in others and such
judgment shall have the force and effect of a conveyance executed in due form
of law.

Against the unjustified refusal of the petitioner to accept
payment of the balance of the contract price, the remedy of the respondents is
consignation, conformably to the following provisions of the Civil Code:

Art. 1256. If the creditor
to whom tender of payment has been made refuses without just cause to accept
it, the debtor shall be released from responsibility by the consignation of the
thing or sum due. x x x

Art. 1258. Consignation
shall be made by depositing the things due at the disposal of the judicial
authority, before whom the tender of payment shall be proved, in a proper case,
and the announcement of the consignation in other cases.

The consignation having been made, the interested parties shall also
be notified thereof.

Art. 1260. Once the
consignation has been duly made, the debtor may ask the judge to order the
cancellation of the obligation.

Accordingly, upon consignation by the Ventanillas of the sum due,
the trial court may enter judgment canceling the title of the petitioner over
the property and transferring the same to the respondents. This judgment shall have the same force and
effect as a conveyance duly executed in accordance with the requirements of the
law.

In sum, we find that:

1.      
No legal impediment
exists to the execution, either by the petitioner or the trial court, of an
absolute deed of sale of the subject property in favor of the respondent
Ventanillas; and

2.      
The lower court did
not abuse its discretion when it required the posting of a P500,000.00 cash
bond for the lifting of the garnishment order.

WHEREFORE, the petition is DENIED and the challenged
decision of the Court of Appeals is AFFIRMED in toto, with costs against
the petitioner. It is so ordered.

Davide, Jr., Bellosillo, Quiason, and
Kapunan, JJ., concur.

^[1]
Penned by Court of Appeals Associate Justice Gloria C. Paras, with Associate
Justices Asaali S. Isnani and Ricardo Galvez, concurring.

^[2]
Rollo, pp. 69-73.

^[3]
Francisco, The Revised Rules of Court in the Philippines, Vol. IV-A, 1971, p.
11.

^[4]
Ibid. at p. 12.

^[5]
Section 12, Rule 57, Rules of Court.

^[6]
Section 13, ibid.

^[7]
Section 1, ibid.

^[8]
Section 3, ibid.

^[9]
Sections 2 and 5, ibid.

^[10]
Section 19, ibid.