JOSEPH TAY CHUN SUY, PETITIONER, VS. COURT OF APPEALS, EXECUTIVE JUDGE OF THE SEVENTH JUDICIAL REGION CEBU CITY, THE PRESIDING JUDGE, REGIONAL TRIAL COURT, SEVENTH JUDICIAL REGI…

Petitioner Joseph Tay Chun Suy filed a special civil action for certiorari and prohibition with the Court of
Appeals against six orders issued by the respondent judges in Civil Case No.
CEB-5162 in the Regional Trial Court of Cebu City entitled “Philippine
Trigon Shipyard Corporation v. Sta. Clara Housing Industries, Inc., Mayad
Shipping Lines, Inc., Tay Chun Suy, and the Provincial Sheriff (Davao
City).”

The petition was dismissed by the Court of Appeals on August 28, 1989,^[1]
and reconsideration was denied on November
7, 1989.^[2]
The petitioner is now before us and asks
us to reverse the respondent court for upholding the said orders.

On March 26, 1984, Judge Mariano C. Tupas of the Regional Trial Court of Davao,
Branch 12, rendered judgment in Civil
Case No. 15,970 ordering the defendant therein,
Sta. Clara Lumber Co., Inc., to pay herein petitioner Tay Chun Suy, as
plaintiff, the principal sum of P181,194.90
with 12% as interest from January 23, 1981, up to the date of said
decision, plus 25% of the collectible amount
as attorney’s fees and the sum of P1,000.00
as costs.^[3]
The decision became final and executory, and a writ of execution was issued, pursuant to which the motor vessel Sta. Clara I, owned by Sta.
Clara Lumber Co., Inc. under Coastwise
License No. 86-0008, was levied upon. On July 16, 1986, the vessel with its
accessories was sold at public
auction to the petitioner as the
highest bidder for the sum of P317,000.00 and a sheriff’s certificate
of sale was issued in his
favor. On July 18, 1986, the trial court, on the petitioner’s motion,
ordered the Eighth Coast Guard District of Davao City to register the motor
vessel in his name.

On the same date, private respondent Philippine Trigon Shipyard
Corportion filed in the Regional Trial Court of Cebu City a complaint for a sum
of money and damages with prayer for preliminary attachment, later docketed as
Civil Case No. CEB-5162, against Sta. Clara Housing Industries, Inc. SCHII),
Mayad Shipping Lines, herein petitioner Tay Chun Suy, and the Provincial
Sheriff (Davao City).

The complaint alleged that Sta. Clara I was originally owned by the Sta. Clara Lumber Co., Inc., which
mortgaged the vessel, together with other properties, to the Development Bank
of the Philippines. The latter
foreclosed the mortgage and was the highest bidder at the auction sale, thus
becoming the sole owner of the said vessel. Thereafter, DBP entered into a Lease-Purchase Agreement with Sta. Clara
Housing Industries, Inc. and possession of the vessel was forthwith turned over
to SCHII and its agent, Mayad Shipping Lines.

On March 10, 1986, Trigon and Mayad, the latter acting as agent
of SCHII, entered into a Bareboat Charter Party^[4] under
which Trigon was to drydock said vessel for repairs, put her in good running
order and seaworthy condition, and thereafter use her as its charterer.

The Charter Party further provided that all repair bills for
labor and materials not exceeding P250,000.00 would be for the charterer’s
account and any amount in excess thereof would be for the owner’s account. Trigon said it incurred repair expenses
amounting to P1,992,862.55 and so claimed an existing maritime lien on the
vessel in the amount of P1,742,862.55.

On July 21, 1986, Judge Valeriano P. Tomol, Jr. of the Regional
Trial Court of Cebu, Branch 11, issued a writ of preliminary attachment as
prayed for in the complaint upon the filing of a bond by the plaintiff.^[5] The
respondent sheriff then attached the motor vessel as well as the bank accounts
of the petitioner. On July 24, 1986,
the petitioner filed an urgent ex parte motion to dissolve the
writ of preliminary attachment. On the
same date, the trial court issued a second order allowing Trigon to act as
depositary of the attached vessel and to temporarily operate it.^[6]
On July 28, 1986, the petitioner filed a
joint motion to dismiss the complaint and to discharge the
attachment. On August 1, 1986, the
trial court, in a third order, excluded the other properties, real or personal,
and monies as well as bank
deposits in the name of petitioner, thereby leaving only the vessel under
attachment.^[7]
The joint motion to dismiss the complaint and
to discharge the attachment was denied in a fourth order issued on
August 13, 1986.^[8]
A motion for reconsideration of the order dated August 1,1986, filed by the
petitioner on August 11, 1986, was also denied in a fifth order dated August
14, 1986.^[9]
Nothing daunted, the petitioner filed a motion for reconsideration of the
orders dated July 21, August 13 and August 14, 1986, but this too was denied in
the sixth order dated October 8, 1986.^[10]

We shall also
uphold the challenged orders.

The petitioner claims that there was no ground to justify the
order of attachment under Section 1, Rule 57, of the Revised Rules of Court,
which provides:

Section 1. Grounds upon which attachment may issue. – A plaintiff or any proper party may, at
the commencement of the action or at any time thereafter, have the property of
the adverse party attached as security for the satisfaction of any judgment
that may be recovered in the following cases:

(a)     In an action for the
recovery of money or damages on a cause of action arising from contract,
express or implied, against a party who is about to depart from the Philippines
with intent to defraud his creditors;

(b)     In an action for money
or property embezzled or fraudulently misapplied or converted to his own use by
a public officer, or an officer of a corporation, or an attorney, factor,
broker, agent, or clerk, in the course of his employment as such, or by any
other person in a fiduciary capacity, or for a willful violation of duty;

(c)     In an action to
recover the possession of personal property unjustly detained, when the
property, or any part thereof, has been concealed, removed, or disposed of to
prevent its being found or taken by the applicant or an officer;

(d)                                                                                                                                                                            In
an action against a party who has been guilty of fraud in contracting the debt
or incurring the obligation upon which the action is brought, or in concealing
or disposing of the property for the taking, detention or conversion of which
the action is brought;

(e)     In an action against a
party who has removed or disposed of his property, or is about to do so, with
intent to defraud his creditors;

(f)      In an action against
a party who resides out of the Philippines, or on whom summons may be served by
publication.

Contrary to the petitioner’s claim, it is paragraph (c) and not
paragraph (d) that is applicable to the private respondent’s case.

Trigon alleged in its complaint in Civil Case No. CEB-5162 that
Tay Chun Suy and the sheriff of Davao City knew that Sta. Clara Lumber was no
longer the owner and possessor of the vessel at the time the decision in Civil
Case 15,970 was rendered; that the judgment award in that decision was only
P181,194.90 plus 12% interest and 25% of the amount as attorney’s fees and P1,000.00
cost of suit; and that the vessel was sold to Tay Chun Suy at a shockingly low
bid price of P50,000.00 (although the Sheriff’s certificate of sale indicated
P317,000.00) despite the fact that the vessel was easily worth
P5,000,000.00. Under par. (c), Trigon
was entitled to the attachment of the vessel, on its showing that the vessel
was being unjustly detained by the petitioner (through Deputy Sheriff Reyes of
Davao City), who had acquired it under questionable circumstances from one
which was no longer its owner.

The petitioner also claims that since he was not a party to the
Bareboat Charter Party, the private respondent did not have a sufficient cause
of action against him. This contention
is not tenable because he is considered an indispensable party in the Cebu case
under Section 7. Rule 3 of the Revised
Rules of Court, which reads:

Parties in interest without whom no final determination can be had
of an action shall be joined either as plaintiffs or defendants

An indispensable party is one with such an interest in the
controversy that a final decree would necessarily affect his rights, such that
the courts cannot proceed without his presence.^[11]
Unquestionably, any judgment covering the disposition of the vessel would
unavoidably affect the petitioner as its purchaser at the auction sale.

The petitioner also complains that the writ of preliminary
attachment was wrongfully issued because it was based only on the general
allegations contained in the private respondent’s application. The petitioner cites the case of Gruerberg
v. Court of Appeals,^[12] but
this is clearly inapplicable. We find
that Trigon’s affidavit, as well as its
complaint, no less than the order of July 21, 1989, contained specific details
as required by the Rule to justify the issuance of the writ.

In contending that the application for attachment contains false
and misleading allegations and that Trigon has no maritime lien, the petitioner
is raising factual issues that this Court cannot review, absent a clear showing that they were
arbitrarily resolved.

The petitioner also cites the case of Flores v. Santos,^[13]
where it was held that if property sought to be attached is in custodia legis,
a copy of the order of
attachment shall be filed with the proper court and notice of attachment served
upon the custodian of such property. His claim is that the private respondent, as well as the respondent
judges and sheriff, failed to show that a copy of the writ of preliminary
attachment issued by the Cebu court was filed with the Davao court, which had custodia
legis of the motor vessel, and that a notice of the attachment had been
served upon the actual custodian of the motor vessel.

We quote with approval the observation of the respondent court
that there is “a paucity of evidence” to support the petitioner’s
allegations that the above-stated requirements have not been complied
with. On the other hand, there is the
presumption that official duty has been regularly performed. Moreover, the record will show that the
notice of attachment was served upon the sheriff of the Davao court who was
then the actual custodian of the vessel sought to be attached.

The petitioner’s contention that there was a hasty ex parte
issuance of the writ of preliminary attachment is also without merit.

In attachment cases, the absence of notice or hearing is allowed
on the ground that the defendant might abscond with or dispose of his property
before a writ of attachment is actually issued.^[14] The
judge before whom the application is made has full discretion in considering
the supporting evidence proffered by the applicant. The sufficiency or insufficiency of an affidavit depends upon the
amount of credit given to it by the judge and its acceptance or rejection is left
to his sound discretion.

The petitioner cannot complain that he was denied his day in court when Judge Tomol issued the
writ of preliminary attachment without hearing. No grave abuse of discretion can be ascribed to the judge for
issuing a writ of attachment ex parte as there is nothing in the
Rules of Court that conditions such issuance on prior notice and hearing.

As a matter of
fact, a hearing would defeat the purpose of this provisional remedy. The time which such a hearing would take
could be enough to enable the defendant to abscond with or dispose of his
property before a writ of attachment is issued.^[15]

The petitioner likewise claims that the enforcement of the writ
of attachment interferes with the jurisdiction of the Regional Trial Court of
Davao, Branch 12, which is a court of coordinate jurisdiction. Again we disagree.

While it is true that property in the custody of the law may not
be interfered with without the permission of the proper court, this rule is
confined to cases where the property belongs to the defendant or where the defendant
has proprietary interests. We have held
that when the sheriff, acting beyond the bounds of his office, seizes a
stranger’s property, the rule does not apply and interference with his custody
is not considered interference with another court’s order of attachment.^[16]

In a separate action filed by a third party who claims to be the
owner of the property attached, the court may render judgment ordering the
sheriff or whoever is in possession of the attached property to deliver it to
the plaintiff or desist from seizing it. In such action, the court may issue an interlocutory order, upon the
filing of such bond as may be necessary, to release the property pending final adjudication of the title. Jurisdiction over an action includes jurisdiction on interlocutory matters
incidental to the cause and deemed necessary to preserve the subject matter of
the suit or protect the parties’ interest.^[17]

The foregoing ruling was reiterated in the later case of Traders
Royal Bank v. IAC (133 SCRA 141 [1984]) and even more recently in the case of
Escovilla v. C.A., G.R. No. 84497, November 6, 1989, where this Court stressed:

“The power of the court in the execution of judgments extends
only over properties unquestionably belonging to the judgment debtor. The levy by the sheriff of a property by
virtue of a writ of attachment may be considered as made under the authority of
the court only when the property levied upon belongs to the defendant. If he attaches properties other than those
of the defendant, he acts beyond the limits of his authority. The court issuing a writ of execution is
supposed to enforce its authority only over properties of the judgment
debtor. Should a third party appear to
claim the property levied upon by the sheriff, the procedure laid down by the
Rules is that such claim should be the subject of a separate and independent action.”^[18]

Under Section 17 of Rule 39, a third person who claims property
levied upon to implement a judgment may vindicate
such claim by action. Obviously, a decision declaring him to be the
owner of the property would not constitute interference with the power or
processes of the court that rendered the judgment sought to be enforced. If that be so, and it is so because property
belonging to a stranger is not subject to levy, then an interlocutory order
such as an injunction, based upon a
claim and prima facie showing of ownership by the
claimant, cannot be considered interference.^[19]

The aforementioned principles are applicable to attachment, and
even though Trigon filed Civil Case No. CEB-5162 against the petitioner only to
enforce a maritime lien and not to claim ownership of the vessel.

In support of his claim that the respondent sheriff for Davao
City acted in violation of law when he enforced the writ of preliminary
attachment issued by the Cebu court, the petitioner invokes the admonition in
the case of Policarpio v. Fajardo,^[20] to
wit:

We cannot conclude this decision without reiterating emphatically
Our admonition to all judges that the general practice of the lower courts of
appointing special sheriffs is unauthorized by law except when the sheriff is
party to any action or proceeding or is otherwise incompetent to serve process
therein and when the office of sheriff is vacant.

Significantly, he merely cites the case but does not allege or
present any evidence that the designation of the respondent sheriff was
irregular. Again, the presumption of
regularity must operate against him. Additionally, there is the case of Nasser v. Court of Appeals,^[21]
where we held:

It is likewise evident that respondent judge did not err in
deputizing the Chief of Police of Governor Generoso, as special sheriff under
Sec. 2, Rule 57 of the Revised Rules of Court where the former is expressly
authorized to require not only the sheriff but also other officers of the
province or the sheriffs or other proper officers of different provinces in
this case, the Chief of Police of Governor Generoso, to attach all the
properties of the party against whom it may be issued within the province not
exempt from execution.

Lastly, the petitioner claims that the case filed in Cebu was not
the proper remedy to enforce the alleged lien. He avers that an admiralty proceeding in rem wherein the
vessel is named as a defendant should have been instituted. The following observations in BF Homes, Inc.
v. Court of Appeals^[22] are appropriate:

Attachment is in the nature of a proceeding in rem. It is
against the particular property. The
attaching creditor thereby acquired specific lien upon the attached property
which ripens into a judgment
against the res when the order of sale is made. Such a proceeding is in effect a finding
that the property attached is an indebted thing and a virtual condemnation of
it to pay the owner’s debt. The law
does not provide the length of time an attachment lien shall continue after the
rendition of judgment, and it must therefore necessarily continue until the
debt is paid, or sale is had under execution issued on the judgment or until
judgment is satisfied, or the attachment discharged or vacated in some manner
provided by law. It has been held that
the lien obtained by attachment stands upon as high equitable grounds as a
mortgage lien: x x x

Our conclusion is that none of the six assailed orders is flawed
with error so as to call for their reversal. On the contrary, the respondent Court of Appeals was correct in
upholding them, each being within the competence and sound discretion of the
trial courts.

WHEREFORE, the
petition is DENIED, with costs against the petitioner. It is so ordered.

Grino-Aquino,
Medialdea, and Bellosillo, JJ., concur.

^[1]
Penned by Justice Arturo B. Buena, with Limcaoco and Francisco C., JJ.,
concurring.

^[2]
Rollo, p. 91.

^[3]
Ibid., p. 93.

^[4]
Id., p. 202.

^[5]
id., p. 113.

^[6]
id., p. 118; through Executive Judge Leonardo Canares.

^[7]
id., p. 130.

^[8]
id., p. 135.

^[9]
id., p. 137.

^[10]
id., p. 151.

^[11]
Co v. CA, 193 SCRA 198.

^[12]
138 SCRA 471.

^[13]
23 SCRA 82.

^[14]
Consolidated Bank and Trust Corp. v. CA, 197 SCRA 663.

^[15]
Mindanao Savings and Loan Association v. CA, 172 SCRA 480.

^[16]
Manila Herald Publishing Co., Inc. v. Ramos, 88 Phil. 94; cited in Uy,
Jr. v. CA, 191 SCRA 275.

^[17]
Ibid.

^[18]
Id.

^[19]
Peñalosa v. Villanueva, 177 SCRA 778.

^[20]
78 SCRA 210.

^[21]
191 SCRA 785.

^[22]
190 SCRA 262; citing Government of the Philippine Islands v. Mercado, 67
Phil. 409.