ALEMAR’S SIBAL & SONS, INC., PETITIONER, VS. HONORABLE JESUS M. ELBINIAS, IN HIS CAPACITY AS THE PRESIDING JUDGE OF REGIONAL TRIAL COURT, NATIONAL CAPITAL REGION, BRANCH CXLI (1…

Assailed in this petition for certiorari with prayer for
preliminary mandatory injunction is the order dated May 15, 1986 issued by respondent Regional Trial
Court, Branch 141 (Makati)
denying petitioner’s motion to discharge the writ of execution despite an
earlier order suspending proceedings in said court.

On December 11, 1984,
private respondent G.A. Yupangco and Co. Inc. (G.A. Yupangco) filed an action with respondent trial court for
collection of a sum of money with prayer for damages and preliminary attachment
against Alemar’s Bookstore, a business entity owned and managed by petitioner Alemar’s Sibal & Sons,
Inc.  (Alemar’s).^[1]

On August 30, 1985,
respondent court rendered its decision, to wit:

“Wherefore, finding plaintiff’s claim to be substantiated, the
Court hereby renders judgment by default, ordering defendant, Alemar’s Book Store, to pay G.A. Yupangco
& Co. Inc., the following:

1)   P39,502.57
representing defendant’s unpaid obligation, plus 2% per month interest
beginning December 11, 1984,
until fully paid;

2)   the
stipulated 25% of the recoverable amount as attorney’s fees; and

3)   cost
of suit.”^[2]

Subsequently, on September
23, 1985, Ledesma, Saludo
and Associates, as intervenor-movant, filed an
omnibus motion informing the respondent trial court that the petitioner Alemar’s has been
placed under rehabilitation receivership by the Securities and Exchange
Commission and that movant has been appointed as its
receiver.  It prayed that it be allowed
to intervene, that the decision of August 30, 1985 be set aside and that further proceedings in
this case be suspended.^[3] Attached to its motion is the order of the
Securities and Exchange Commission dated August 1, 1984 which states in part:

“Therefore, pursuant to Presidential Decree No. 902-A, as
amended, the Securities and Exchange Commission hereby appoints as
Rehabilitation Receiver, Ledesma Saludo
& Associates x x x in
order to meet the imminent danger of dissipation, loss, wastage or destruction of
the assets and other properties and deterioration of vital financial ratios x x x of said corporation and to
ensure the orderly payment of claims against the said corporation.

“All actions for claims against the corporation pending before
any court, tribunal, board or body are suspended accordingly.

“No disbursements or expenditures of funds shall be made other
than what is usual in the ordinary course of the business operations of the
corporation.  All withdrawals against the
accounts of the corporation shall be signed or authorized by any partner
designated by the Rehabilitation Receiver. 
Resolutions of the Board of Directors of Alemar’s
Sibal & Sons, Inc. pertaining to check
signatories shall be made subject to the foregoing conditions.“^[4]

In its opposition, G.A. Yupangco
maintained that it received notice of the receivership only on January 10, 1985 or after one month
after the collection suit.  It further
averred that the motion to intervene by the receiver was not seasonably made.

Accordingly, on October
29, 1985, respondent court issued an order, the dispositive
portion of which reads:

“Wherefore, on the ground raised by plaintiff that movant now is barred from its present action, the court
hereby denies the motion for intervention, and the motion to set the aforesaid
judgment by default; however, movant’s motion to
suspend the proceedings in this Court is granted as plaintiff may present said
judgment by default to the receiver as the basis for the settlement of its
claim defendant.”^[5]

In a motion dated January
7, 1986, G.A. Yupangco urged the issuance
of a writ of execution to
implement the August 30, 1985
default judgment which had become final and executory,
there being no motion for reconsideration or appeal.  The corresponding writ was issued on January 15, 1986.^[6]

Petitioner Alemar’s moved for the
discharge of the writ on the ground that its
issuance was improper since the proceedings in Civil Case No. 9252 have
been suspended pursuant to the October 29, 1985 order. 
Respondent court, however, held the resolution of the motion in
abeyance.

On January 31, 1986,
the branch manager of the Bank of the Philippine Islands, after having
previously stopped payment of the cashier’s check issued to satisfy the August 30, 1985 money judgment,
allowed the encashment of said check in the amount of P62,240.  And in compliance with a subsequent order of the respondent court, BPI also compensated G.A. Yupangco for the delay in payment in an amount equivalent
to the interest of P62,240.00 from January 17, 1986 to January 31, 1986 or a total of 14 days.^[7]

Contending that the payment of P62,240.00 to G.A. Yupangco through the BPI has defeated the purpose for which
petitioner has been placed under receivership, petitioner filed a supplement to
its motion to discharge the writ of execution praying that the aforesaid
payment be returned to petitioner or to its account with the BPI.

On May 15, 1986,
respondent court issued the questioned order denying petitioner’s motions to
discharge the writ of execution.  It
reasoned:

“x x x
.  To discharge the writ would only cause
undue delay in plaintiff’s effort at satisfying its claim under the judgment by
default that had become final and executory.  The fact that defendant is under receivership
presupposes that it has been declared insolvent, and the receiver is supposed
to have brought into its custody all available assets in defendant’s name.  The continuing effectivity
of the writ of execution will not prejudice defendant unless some assets of
defendant have been improperly left out beyond reach of the receiver and/or
creditors.  On the other hand, to
discharge the writ will leave plaintiff with no recourse to enforce the
judgment in its favor.  x x x.”^[8]

Hence this petition which raises the issue of whether or not
respondent court can validly proceed with the execution of a final decision for
the payment of a sum of money despite the fact that the judgment debtor has
been placed under receivership.

It is the general rule that once a decision becomes final and executory, its enforcement becomes the ministerial duty of
the court.  Equally settled is that the
rule admits of certain exceptions, one of which is where it becomes imperative
in the higher interest of justice to direct the deferment of execution.  In the instant case, the stay of execution is
warranted by the fact that petitioner Alemar’s has
been placed under “rehabilitation receivership”.

What are the legal consequences of such a receivership?  For one thing, the SEC has expressly decreed
that “all actions for claims against the corporation pending before any
court x x x are suspended
accordingly”.  Respondent court
apparently demurred to the SEC action when it granted petitioner’s motion to
suspend its own proceedings.  It even
went as far as to suggest to the creditor to present the “judgment by
default to the receiver as the basis
for settlement of its claim against defendant”.  So
when respondent court ordered the execution of its August 30, 1985 judgment, it assumed a rather myopic view of
its own suspension order.  Verily, the
proceedings sought to be suspended by the order of October 29, 1985 necessarily includes the issuance of the
writ of execution.

The cases of Central Bank vs. Morfe,^[9]
and Lipana vs. Development Bank
of Rizal,^[10]
are most enlightening on why an execution in this particular instance could be
legally held in abeyance despite a final judgment.  In both cases, there was an attempt by a
creditor to enforce payment against a bank (which was either declared insolvent
or placed under receivership) obtaining a favorable judgment in the regular
court and insisting upon its execution on the ground that the courts cannot
validly obstruct the enforcement of judgments that have become final and executory.

The rationale behind the Court’s imprimatur of the stay of
execution in the aforementioned cases is squarely applicable to the instant
petition even if Alemar’s is obviously not a banking institution.

It must be stressed that the SEC had earlier ordered the
suspension of all actions for claims against Alemar’s
in order that all the assets of said petitioner could be inventoried and kept
intact for the purpose of ascertaining an equitable scheme of distribution
among its creditors.

During rehabilitation receivership, the assets are held in trust
for the equal benefit of all creditors to preclude one from obtaining an
advantage or preference over another by the expediency of an attachment,
execution or otherwise.  For what would
prevent an alert creditor, upon learning of the receivership, from rushing posthaste to the courts to secure
judgments for the satisfaction of its claims to the prejudice or the less alert creditors.

As between creditors, the
key phrase is “equality is
equity.”^[11]
When a corporation threatened by bankruptcy is taken over by a receiver, all the creditors should stand on an equal
footing.  Not anyone of them should be given any preference
by paying one or some of them ahead of the
others.  This is precisely the reason for the suspension of all pending
claims against the corporation under receivership.  Instead of creditors vexing the courts with
suits against the distressed firm, they are directed to file their claims with the receiver who is a duly appointed officer of the SEC.

When respondent court ruled in favor of G.A. Yupangco
in the collection case, it only determined the exact extent of petitioner’s
indebtedness and in no way gave G.A. Yupangco a
priority over the other creditors. 
However, it clearly exceeded its jurisdiction when it allowed G.A. Yupangco to encash the check of
P62,240.00 pursuant to the writ of execution. 
In so doing, respondent court gave G.A. Yupangco
an undue preference by reducing the assets of the petitioner corporation for
its sole benefit to the grave damage and prejudice of the other creditors, and
thus frustrating the very purpose for which petitioner has been placed under
receivership.

WHEREFORE, the writ is granted.  The questioned order of respondent court
dated May 15, 1986 denying
petitioner’s motion to discharge the writ of execution in Civil Case No. 9252
is hereby reversed and set aside.  All
proceedings in connection with the aforesaid case are declared suspended.  Private respondent G.A. Yupangco
is ordered to return to petitioner Alemar’s the
amount it had actually received through the Bank of the Philippine
Islands.  This decision is immediately executory.  No costs.

SO ORDERED.

Gutierrez, Jr. and Bidin, JJ., concur.

Feliciano and Cortes,
JJ., on leave.

^[1]
Civil Case No. 9252.

^[2]
Annex E, Rollo, p. 23.

^[3]
Annex F, Rollo, pp. 24-27.

^[4]
Annex H, Rollo, pp. 36-37.

^[5]
Annex I, Rollo, p. 39.

^[6]
Annex L, Rollo, 5, 43.

^[7]
Annex O, Rollo, p. 43.

^[8]
Rollo, p. 17.

^[9]
G.R. No. L-34827, March 12, 1975,
63 SCRA 114.

^[10]
G.R. No. 73884, September 24, 1987,
154 SCRA 257.

^[11]
Central Bank vs. Morfe, supra,
citing Ramisch vs. Fulton, 41 Ohio
App. 443, 180 N.E. 735.