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POWER SECTOR ASSETS v. MAUNLAD HOMES

FACTS:

The case involves an unlawful detainer case filed by Respondent Maunlad Homes, Inc. against National Power Corporation (NPC) in the Municipal Trial Court in Cities (MTCC), Malolos City, Bulacan. NPC was ordered by the MTCC to vacate the premises and pay compensation to the respondent. NPC appealed the decision to the Regional Trial Court (RTC), which affirmed the MTCC decision. Respondent filed a motion for execution, which was opposed by NPC. The RTC denied NPC's motion for reconsideration and granted respondent's motion for execution. A Writ of Execution pending appeal was issued. Respondent filed an urgent motion for a Break Open Order since execution was prevented by the security guards of NPC's warehouse. The RTC issued a Break Open Order authorizing the entry into NPC's warehouse. The sheriff issued a Notice of Levy on certain properties. Petitioner Power Sector Assets and Liabilities Management Corporation (PSALM) filed an Affidavit of third-party claim and a Manifestation with Urgent Ex Parte Motion for Issuance of Status Quo Order with the RTC, claiming ownership of the levied properties. The RTC held in abeyance the public sale of the properties. The RTC later denied PSALM's motions and directed the sheriff to proceed with the writ of execution. PSALM filed a petition for certiorari before the Court of Appeals, which was dismissed.

Petitioner PSALM filed a petition for certiorari before the Court of Appeals (CA) assailing the denial of its third-party claim. PSALM claimed that it filed a third-party claim under Section 16 of Rule 39 of the 1997 Rules of Civil Procedure, asserting ownership of the levied properties under the EPIRA law. PSALM argued that the CA should have considered the substantive issues it raised regarding its ownership of the properties. However, the CA dismissed the petition on procedural grounds, stating that a plain, speedy, and adequate remedy exists under Section 16 of Rule 39. PSALM filed a motion for reconsideration, which was denied. PSALM now seeks review on certiorari of the CA's dismissal.

The case involves a complaint filed by the plaintiff, a shipping corporation, against the defendant, a bank, for the recovery of properties seized by the bank's sheriff. The properties were placed as collateral for a loan granted by the defendant to a third party. The plaintiff claimed that it had a valid third-party claim over the properties and that the seizure and detention were wrongful. The plaintiff alleged that it suffered damages as a result of the defendant's actions. The bank, on the other hand, denied the plaintiff's claims and asserted its right to seize and detain the properties in accordance with the law.

ISSUES:

  1. Whether or not the dismissal of the petition for certiorari filed by the third-party claimant is proper.

  2. What is the proper remedy from the denial of a third-party claim?

  3. Can an appeal or petition for certiorari be used to challenge the denial of a third-party claim?

RULING:

  1. Yes, the dismissal of the petition for certiorari is proper. A petition for certiorari under Rule 65 may be filed when there is no other plain, speedy, and adequate remedy in the ordinary course of law and when a tribunal, board, or officer exercising judicial or quasi-judicial functions has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction. In this case, the third-party claimant cannot appeal from the denial of its claim and the denial of the claim is not appealable. The proper remedy for the third-party claimant is to file a separate and independent action to vindicate its claim of ownership or right of possession of the levied properties.

  2. The proper remedy from the denial of a third-party claim is to file a separate and independent action to determine the ownership of the attached property or to file a complaint for damages chargeable against the bond filed by the judgment creditor in favor of the sheriff.

  3. An appeal or petition for certiorari is not the proper remedy to challenge the denial of a third-party claim.

PRINCIPLES:

  • The doctrine of "Ei incumbit probatio qui dicit, non qui negat" or "He who asserts, not he who denies, must prove" applies in cases where a claim of ownership or right of possession is asserted by a third-party claimant.

  • For the remedy of terceria to prosper, the claim of ownership or right of possession to the levied property must be unmistakably established by the third-party claimant.

  • The transfer of ownership of properties, even if it were to be considered as by operation of law, would still require the execution of certain documents as conditions precedent for a valid transfer.

  • In cases of transfer of assets and properties, the liabilities and obligations incurred by the original owner should also be accounted for by the transferee.

  • A third-party claimant may invoke the supervisory power of the court to have the property released from mistaken levy and restored to the rightful owner or possessor. The court can only determine if the sheriff has acted rightly or wrongly in the performance of his duties and can require the sheriff to restore the property to the claimant's possession if warranted by the evidence. However, the court cannot pass upon the question of title to the property with any character of finality. (Section 16, Rule 39, Rules of Court)

  • A third-party claimant may also avail of the remedy known as "terceria" by serving an affidavit of title to the officer making the levy and to the judgment creditor. The officer shall not be bound to keep the property unless the judgment creditor indemnifies the officer against the claim by a bond. An action for damages may be filed against the sheriff within 120 days from the filing of the bond. (Section 17, Rule 39, Rules of Court)

  • A third-party claimant may file a separate and independent action to vindicate its claim of ownership or right of possession of the levied properties against the judgment creditor or the purchaser of the property at the public auction sale. It is in this separate and independent action that the issue of the third-party claimant's title to the levied properties can be resolved with finality. (Queblar v. Garduño)

  • Pursuant to Section 17, Rule 39 of the Revised Rules of Court, a third-party claimant has two remedies: an action for damages against the sheriff to be brought within 120 days from the filing of the bond, and a separate and independent action to vindicate their claim to the property.

  • The denial of a third-party claim to defeat an attachment cannot be appealed or challenged through a petition for certiorari. The proper remedy is to file a separate and independent action to determine ownership or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff.

  • The rights of a third-party claimant should be decided in a separate action to be instituted by the third person. The appeal, if it may be called as such, is a separate reinvindicatory action against the execution creditor or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff.

  • The court may issue a writ of preliminary injunction against the sheriff enjoining the execution sale, which is a speedy and adequate remedy to relieve the third-party claimant from the adverse effects of the lower court's judgment.