A.M. No. MTJ-08-1710 - Ricablanca vs. Barillo

Pedro Martinez obtained a judgment in 1908 from the Court of First Instance of Manila against Maria Aniversario.
Following the judgment, execution was issued and Sheriff Jose McMicking levied upon a boat, known as a pailebot, named Tomasa, allegedly owned by Maria Aniversario.

After the initial execution process, Go Juna intervened in the case.
Go Juna claimed a lien on the boat based on a pledge made by Maria Aniversario on February 27, 1907, as evidenced by a public instrument containing that date.

Martinez contended that the pledge was defective because the property (i.e., the boat) was not delivered as required by Article 1863 of the Civil Code, thereby nullifying the intended preference in favor of Go Juna.
The trial court agreed with Martinez, concluding that the necessary delivery did not take place and thus declared a preference in Martinez’s favor, ordering payment of the funds held by the sheriff in consonance with that preference.

Although the document was intended to serve as a pledge, it also functioned as a public document containing an admission of indebtedness.
This dual character made Article 1924, paragraph 3, letter a applicable, thereby granting the document a character of a credit instrument that, due to its date of execution (anteceding Martinez’s judgment), took preference over the judgment debt.

Maria Aniversario was not joined as a party in the original proceedings.
The validity and enforceability of the indebtedness acknowledged in the document against her were not determined in the case.
Maria Aniversario had expressly repudiated the document as evidencing a valid claim against her when testifying as a witness for Martinez during the trial.

Whether the pledge, as evidenced by the public instrument dated February 27, 1907, was perfected despite the alleged failure to deliver the property, as required by Article 1863 of the Civil Code.
Whether the document, while intended to serve as a pledge, may also be considered as a credit instrument due to its inclusion of an admission of indebtedness, thereby taking priority over the judgment debt against Maria Aniversario.
Whether it is proper to enforce the rights arising from the document against Maria Aniversario, who was not made a party to the proceedings and who had repudiated the validity of the indebtedness claimed.
How the conflicting claims—Martinez’s assertion based on the defective pledge and the implication of a valid credit instrument—should be resolved in relation to the funds held by the sheriff.