G.R. No. L-3088 - El Banco Espanol-Filipino vs. Peterson

A suit for recovery of the value of ladies’ ready made dresses was filed by Esther Sanchez against Lourdes Mariano in the Court of First Instance at Caloocan City.
A writ of preliminary attachment was issued at Esther Sanchez’s instance upon a bond by Veritas Insurance Company for P11,000.00, resulting in the seizure of property belonging to Lourdes Mariano valued at approximately P15,000.00.
Lourdes Mariano’s motion to discharge the attachment was denied, prompting her to elevate the issue by certiorari to the Court of Appeals.

The Court of Appeals ordered the Trial Court to receive evidence on whether the attachment had been improperly issued, leading the Trial Court to determine that the attachment was indeed irregular and thereby dissolved it.
Trial proceedings then commenced on both the complaint lodged by Esther Sanchez and Lourdes Mariano’s counterclaim.
The counterclaim included claims for damages arising from the wrongful attachment:

Additionally, the Veritas Insurance Company was ordered to pay the full insurance coverage of P11,000.00 to address the total liability of the plaintiff thereon.

Esther Sanchez, unsatisfied with the outcome, perfected her appeal by filing a notice of appeal, an appeal bond, and a record on appeal.
Pending the approval of the record on appeal, Lourdes Mariano filed a motion for the immediate execution of the judgment.
Execution proceeded via the issuance of a writ, resulting in the sheriff garnishing P11,000.00 from Veritas Insurance Company and levying on real and personal property belonging to the conjugal partnership of Esther Sanchez and her husband, Daniel Sanchez.

Daniel Sanchez, husband of Esther Sanchez and administrator of the conjugal partnership, filed a complaint for annulment of the execution in the Court of First Instance at Quezon City.
He argued that:

The conjugal assets could not validly be made to answer for obligations exclusively contracted by his wife; and
Certain personal property, such as household appliances and utensils essential for the conjugal dwelling, were exempt from execution.

He further applied for a preliminary injunction pending the adjudication of his complaint.
The Quezon City Court set the matter for a hearing on the injunction and ordered the sheriff to desist from proceeding with the auction of the property in question.

Lourdes Mariano filed a motion to dismiss Daniel Sanchez’s action, which was denied by the court.
Subsequently, Lourdes Mariano initiated a special civil action of certiorari in the Court of Appeals.
Initially, her petition met with favorable treatment when the appellate court restrained the Quezon City Court from further proceedings; however, the Eighth Division later dismissed her petition on the basis that:

The issues raised in Daniel Sanchez’s separate action were distinct from those previously adjudicated in the Caloocan Court; and
Daniel Sanchez was not a party to the case tried by the Caloocan Court.

That the Appellate Court erred in ruling that the conjugal partnership of Daniel and Esther Sanchez could not be held liable for the obligations incurred by Esther in the joint business with Mariano;
That the Quezon City Court had interfered with the execution process of the Caloocan Court; and
That the Eighth Division improperly took cognizance of a case originally raffled to the Seventh Division.

Whether the conjugal partnership of Daniel and Esther Sanchez can be held liable for the obligations incurred by Esther in her business, given that:

The business was conducted with the consent and knowledge of Daniel Sanchez, and
The profits were partially used for the support and maintenance of the family.

Whether the Quezon City Court of First Instance improperly interfered with the execution process being carried out by the Caloocan Court of First Instance by granting an injunction, particularly on the grounds that:

The ejectment or attachment against conjugal property raised issues distinct from those adjudicated in the original suit, and
The execution originated from a judgment rendered by a co-equal or coordinate court.

Whether it is appropriate for the Eighth Division of the Appellate Court to decide on Lourdes Mariano’s petition if the case had originally been assigned to the Seventh Division, and if such reassignment affected the proper adjudication of the petition.