G.R. No. L-24434 - Reganon vs. Imperial

Case Summary (G.R. No. L-24434)

Factual Background

On February 22, 1963, the heirs of Pedro Reganon filed a complaint for recovery of ownership and possession of approximately one-hectare portion of a parcel of land identified as Lot No. 1 or Lot No. 4952, situated at Miasi, Polanco, Zamboanga del Norte, covered by O.T.C. No. 1447, with an area of 7.9954 hectares, and sought damages against Rufino Imperial.

The defendant did not file an answer within the reglementary period. Consequently, on April 8, 1963, the plaintiffs moved to have him declared in default, and on April 10, 1963, the trial court granted the motion. On April 23, 1963, plaintiffs presented their evidence ex parte before the Clerk of Court acting as Commissioner.

On May 6, 1963, the Court rendered judgment declaring the plaintiffs the lawful owners entitled to peaceful possession and enjoyment, ordering defendant to vacate the portion he occupied and to restore peaceful possession to plaintiffs. It also sentenced defendant to pay P1,929.20 and the costs.

Post-Judgment Execution and Levy

After judgment, on November 29, 1963, plaintiffs moved for issuance of a writ of execution, which the trial court granted on December 9, 1963. In response, the Deputy Provincial Sheriff submitted on February 8, 1964 a sheriff’s return reporting garnishment and sale of a carabao and goat belonging to defendant for P153.00, and attachment and sale of defendant’s parcel of land covered by Tax Declaration No. 4694 situated in Sicet, Polanco, Zamboanga del Norte, for P500.00. The sales were made to the only bidder, namely plaintiffs’ counsel Atty. Vic T. Lacaya.

The Court further recorded a parallel development concerning the guardianship of Eulogio Imperial. On March 13, 1964, PNB deposited in the PNB—Dipolog Branch the residuary estate of its former ward Eulogio Imperial, in the amount of P10,303.80, pursuant to an order of Branch I in Sp. Proc. No. R-145. Subsequently, on May 25, 1964, the heirs of Eulogio Imperial—including defendant—executed a Deed of Extrajudicial Partition, apportioning P1,471.97 as Rufino Imperial’s share.

Alias Writ of Execution and Bank-Share Garnishment

Informed of the partition and the availability of defendant’s supposed share, plaintiffs filed on June 5, 1964 an ex parte motion for issuance of an alias writ of execution and for an order directing the manager or representative of the PNB—Dipolog Branch to hold defendant’s share and deliver it to the provincial sheriff for application to the outstanding balance of the money judgment. The trial court granted the motion in an order dated June 9, 1964.

On June 17, 1964, the Deputy Provincial Sheriff issued a sheriff’s notification for levy addressed to defendant, giving notice of the garnishment of the rights, interests, shares, and participation that defendant might have over the residuary estate of late Eulogio Imperial, consisting of the money deposited with the PNB—Dipolog Branch.

Defendant’s Motions for Reconsideration and Quashal

Defendant, through counsel, appeared for the first time on June 24, 1964. He filed a motion for reconsideration of the June 9, 1964 order and sought to quash the alias writ of execution issued pursuant thereto. Plaintiffs opposed on July 6, 1964.

On July 14, 1964, the trial court denied the motion. Defendant filed a second motion for reconsideration, which the trial court also denied on August 11, 1964. Defendant then appealed to the Court.

The Issues Raised on Appeal

Defendant-appellant raised two issues. First, he contended that upon the death of a ward, money accumulated in his guardianship proceedings and deposited in a bank remained in custodia legis and therefore could not be attached. Second, he argued that the residuary estate of a U.S. veteran, consisting of the aggregate accumulated monthly allowances he received from the United States Veterans Administration (USVA), was exempt from execution.

Parties’ Contentions and Arguments

Defendant’s theory on the first issue relied on the general principle that property under custodia legis could not be attached, and he maintained that the bank-deposited funds representing the ward’s residuary estate remained under that protection.

The plaintiffs’ position was that the governing procedural regime had changed. The Court noted that while an earlier case, Asia Banking Corp. v. Elser, held that custodia legis property could not be attached under the former Rules, the new Rules of Court, effective January 1, 1964, now provided the procedure for attachments when the property sought is in custodia legis. The Court emphasized that under Rule 57, Sec. 7 (last paragraph), a copy of the order of attachment had to be filed with the proper court and notice served upon the custodian of the property, which the Court treated as a clear indication that custodia legis property was now attachable, though subject to the mode prescribed by the rule.

On the second issue, defendant asserted that the residuary estate derived from USVA monthly allowances was exempt from execution. The Court, however, rejected the characterization. It observed that the exemption embodied in Republic Act No. 360 was aimed at benefiting U.S. veterans residing in the Philippines, and it treated the claimed exemption as non-transferable in effect once the recipient had died. The Court further relied on the fact that the heirs had executed an extrajudicial partition, which, in its view, made the property belong to the individual heirs rather than the estate.

Legal Reasoning on Custodia Legis and the Effect of Death of the Ward

The Court held that defendant’s reliance on the old rule of non-attachability of custodia legis did not control. It stated that under the new Rules of Court, property in custodia legis could be attached, provided the attachment complied with the procedural requirements stated in the rule.

On the substantive effect of death, the Court explained that the death of the ward necessarily terminated the guardianship, with only the duty to complete accounting and settlement remaining. The Court treated this doctrinal point as decisive to show that, at the time plaintiffs moved for the alias writ and bank-shares delivery, the guardianship proceedings no longer subsisted.

The record also supported this conclusion. The Court cited an order in the guardianship proceeding from Branch I directing the Philippine National Bank to deposit the ward’s residuary estate in the bank agency in Dipolog “preparatory to the eventual distribution” to heirs, and stating that after proof of deposit the guardian would be relieved and “this proceedings shall be considered closed and terminated.” The Court found that the condition had been fulfilled when, on March 13, 1964, PNB deposited the residuary estate in the PNB—Dipolog Branch.

The Court also reasoned that upon the ward’s death on September 13, 1962, the rights to the succession transmitted to heirs from the moment of death, and that the heir who is of legal age immediately succeeds to the dominion, ownership, and possession of the properties of the predecessor when the estate is not burdened with debt. It cited Art. 777, New Civil Code, and Cuevas v. Abesamis and Butte v. Uy & Sons, reinforcing that the heirs’ transmissible interests could be subject to execution purposes.

Finally, the Court held that in this case the heirs had already executed a Deed of Extrajudicial Partition on May 25, 1964, which, the Court said, sufficed to settle the entire estate for practical purposes even without court approval if the requisites for validity were fulfilled. It ruled that this meant the residuary estate was no longer under custodia legis in any relevant sense and that heirs could withdraw and divide the deposited amount. It also noted that the only claimed reason the heirs had not withdrawn the deposit was an alleged incident concerning an alleged illegal withdrawal by Gloria Gomez, which the Court described as subject of another appeal to the Court of Appeals, but it held that such incident did not negate the termination of guardianship and the consequent removal of the property from custodia legis.

Legal Reasoning on the Alleged Exemption of the U.S. Veteran’s Residuary Estate

The Court rejected defendant’s argument that the residuary estate was exempt from execution because it had been set aside from USVA monthly allowances. It characterized such pensions, annuities, or gratuities as personal in nature, “right personalissima,” founded on necessity, and intended to tide the recipient over during old age and/or disability. The Court reasoned that upon the recipient’s death the necessity motivating the grant necessarily ceased, and therefore the exemption could not survive to shield the estate for execution.

The Court further relied on the statutory and practical context it attributed to Republic Act No. 360. It described the law as calculated to benefit U.S. veterans residing in the Philippines and as a manifestation of comity. It then tied the exemption issue to the partition fact. Because the heirs had executed an extrajudicial partition, the Court treated the property as having become the property of the individual heirs rather than remaining as estate property.

The Court cited Alcala v. Pabalan to support the proposition that once heirs, by mutual agreement, have divided the estate among themselves, an heir cannot later procure appointment of an administrator to administer the estate or part thereof, and that the property becomes that of individual heirs whether or not it remains undivided.

Disposition of the Appeal

Applying these reasons to the validity of the alias writ and the levy directed at defendant’s share deposited with the PNB—Dipolog Branch, the Court sustained the trial court’s orders. It held that attachment and garnishment were procedurally permissible under the new Rules of Court even when the property was previously within custodia legis, and that in any event the death of the ward and the closure and termination of the g

Case Syllabus (G.R. No. L-24434)

The case reached the Court through an appeal by defendant-appellant Rufino Imperial from three interlocutory orders of the Court of First Instance of Zamboanga del Norte (Dipolog, Branch II) dated June 9, 1964, July 14, 1964, and August 11, 1964.
The challenged orders stemmed from the trial court’s treatment of a money judgment for damages arising from a property recovery suit, and the ensuing alias writ of execution and related levy against funds deposited in a bank in a guardianship proceeding.
Both parties admitted the material facts, and the appeal presented only questions of law.

Parties and Procedural Posture

The plaintiffs-appellees were the heirs of Pedro Reganon, who sued Rufino Imperial for recovery of ownership and possession of a portion of land and for damages.
The complaint was filed on February 22, 1963 in the Court of First Instance of Zamboanga del Norte (Dipolog, Branch II).
The trial court declared defendant in default after he failed to answer within the reglementary period, upon the plaintiffs’ motion dated April 8, 1963, granted in an order dated April 10, 1963.
The plaintiffs then presented their evidence ex parte on April 23, 1963, and the court rendered a decision on May 6, 1963 declaring plaintiffs the lawful owners entitled to peaceful possession, ordering defendant to vacate the occupied portion, and awarding money damages of P1,929.20 plus costs.
The plaintiffs moved for execution on November 29, 1963, and the court granted issuance of a writ of execution in an order dated December 9, 1963.
The sheriff’s return reported limited enforcement acts consisting of levy and sale of a carabao and goat for P153.00, and attachment and sale of another parcel for P500.00, with both sales made to the plaintiffs’ counsel.
When plaintiffs sought further satisfaction of the remaining judgment balance, the court issued an alias writ of execution and an order directing bank-related handling of the defendant’s share, in the June 9, 1964 order.
Defendant first appeared through counsel and promptly filed a motion for reconsideration and to quash the alias writ, which the court denied on July 14, 1964, and denied again on August 11, 1964 after a second motion for reconsideration.
Defendant appealed to the Court raising two issues concerning custodia legis and alleged exemption of the funds.

Key Factual Allegations

The subject land involved about one-hectare portion of a parcel described as Lot No. 1 or Lot No. 4952, situated at Miasi, Polanco, Zamboanga del Norte, covered by O.T.C. No. 1447, with an area of 7.9954 hectares.
The plaintiffs obtained a judgment on May 6, 1963 ordering defendant to vacate and restoring peaceful possession to plaintiffs, and awarding P1,929.20 plus costs.
In the execution proceedings, the sheriff reported that earlier garnishment and sales produced nominal proceeds and did not fully satisfy the judgment.
In a separate proceeding, Eulogio Imperial was a former ward, and the Philippine National Bank deposited the residuary estate in the Philippine National Bank–Dipolog Branch on March 13, 1964, in the amount of P10,303.80, pursuant to an order in Sp. Proc. No. R-145.
After that deposit, the heirs of Eulogio Imperial executed on May 25, 1964 a Deed of Extrajudicial Partition, which apportioned P1,471.97 as Rufino Imperial’s share.
In response, plaintiffs filed an ex parte motion on June 5, 1964 seeking an alias writ of execution and an order directing the bank manager or representative to hold defendant’s share and deliver it to the provincial sheriff for application to the balance of the money judgment.
The sheriff then issued on June 17, 1964 a sheriff’s notification for levy addressed to defendant, giving notice of garnishments of the rights, interests, shares, and participation defendant had over the residuary estate consisting of the bank deposit.
Defendant’s counsel appeared for the first time on June 24, 1964 and filed motions to reconsider and quash.
Eulogio Imperial died on September 13, 1962, after which the guardianship proceedings were treated as terminated through conditional closure ordered on February 8, 1964, subject to deposit and proof of deposit.
The conditional closure long became fulfilled when deposit evidence showed the bank had deposited the residuary estate on March 13, 1964.
Defendant’s exemption argument relied on the nature of the residuary estate as coming from monthly allowances granted during the lifetime of Eulogio Imperial by the United States Veterans Administration (USVA).
Defendant also pointed to an alleged incident where Gloria Gomez allegedly withdrew P1,080.00 by authority of Branch I of the Court of First Instance of Zamboanga del Norte, and plaintiffs acknowledged that the related dispute was then on appeal before the Court of Appeals.

Issues on Appeal

The first issue asked whether, upon the death of a ward, money accumulated in guardianship proceedings and deposited in a bank remains in custodia legis and therefore not subject to attachment.
The second issue asked whether the residuary estate of a U.S. veteran, formed from the aggregate accumulated monthly allowances from the USVA, is exempt from execution.
The appeal required the Court to reconcile earlier jurisprudence on custodia legis with the new Rules of Court effective January 1, 1964, and to determin