Title
Alemar's Sibal and Sons, Inc. vs. Elbinias
Case
G.R. No. 75414
Decision Date
Jun 4, 1990
Alemar's, under rehabilitation receivership, contested a writ of execution for a default judgment, arguing suspension of claims. Supreme Court ruled execution improper, ordered return of payment, and upheld suspension of proceedings.
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Case Digest (G.R. No. 75414)

Facts:

  1. Initiation of the Case:
    On December 11, 1984, private respondent G.A. Yupangco & Co., Inc. (G.A. Yupangco) filed a collection suit against Alemar's Bookstore, owned by petitioner Alemar's Sibal & Sons, Inc. (Alemar's), for unpaid obligations, damages, and preliminary attachment.

  2. Default Judgment:
    On August 30, 1985, the Regional Trial Court (RTC) rendered a default judgment in favor of G.A. Yupangco, ordering Alemar's to pay P39,502.57 plus 2% monthly interest, 25% attorney's fees, and costs of suit.

  3. Rehabilitation Receivership:
    On September 23, 1985, Ledesma, Saludo & Associates, as the appointed rehabilitation receiver for Alemar's, filed an omnibus motion to intervene, set aside the default judgment, and suspend proceedings. This was based on an August 1, 1984 SEC order placing Alemar's under rehabilitation receivership and suspending all claims against it.

  4. Court's Response to Receivership:
    On October 29, 1985, the RTC denied the motion to intervene and set aside the default judgment but granted the motion to suspend proceedings. It allowed G.A. Yupangco to present the judgment to the receiver for settlement.

  5. Issuance of Writ of Execution:
    On January 7, 1986, G.A. Yupangco moved for the issuance of a writ of execution to enforce the default judgment, which had become final and executory. The writ was issued on January 15, 1986.

  6. Payment and Dispute:
    On January 31, 1986, the Bank of the Philippine Islands (BPI) encashed a check for P62,240.00 to satisfy the judgment. Alemar's moved to discharge the writ and return the payment, arguing that the execution violated the suspension order.

  7. Denial of Motion to Discharge:
    On May 15, 1986, the RTC denied Alemar's motion to discharge the writ, reasoning that discharging it would delay G.A. Yupangco's claim and that the receivership did not preclude execution.

Issue:

  1. Whether the respondent court could validly proceed with the execution of a final judgment for payment of a sum of money despite the judgment debtor (Alemar's) being placed under rehabilitation receivership.

Ruling:

The Supreme Court granted the petition, reversing the RTC's May 15, 1986 order. It held that the execution of the judgment was improper because Alemar's was under rehabilitation receivership, which suspended all claims against it. The Court ordered the suspension of all proceedings in the case and directed G.A. Yupangco to return the amount it received through the writ of execution.

Ratio:

  1. Finality of Judgment and Exceptions:
    While a final and executory judgment is generally enforceable as a ministerial duty of the court, exceptions exist, such as when deferment is necessary in the higher interest of justice. In this case, the rehabilitation receivership of Alemar's warranted a stay of execution.

  2. Legal Effect of Rehabilitation Receivership:
    The SEC order suspending all claims against Alemar's was binding. The purpose of rehabilitation receivership is to preserve the corporation's assets for equitable distribution among creditors, preventing any creditor from gaining an undue advantage.

  3. Equality Among Creditors:
    During rehabilitation, all creditors must stand on equal footing. Allowing one creditor to enforce a judgment through execution would frustrate the purpose of receivership by giving that creditor preferential treatment over others.

  4. Jurisdictional Limits:
    The RTC exceeded its jurisdiction by allowing the writ of execution to proceed, as it violated the SEC's suspension order and undermined the rehabilitation process.

  5. Precedent:
    The Court cited cases like Central Bank vs. Morfe and Lipana vs. Development Bank of Rizal, which upheld the suspension of execution in similar circumstances involving insolvent or distressed entities.


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