Amendment on Indemnity Bonds and Prescription Period

Section 1 amends Section 451 of Act No. 190, as amended by Act No. 3531.
Section 2 applies a prescription and cancellation rule to indemnity bonds filed under the prior Section 451 before Acts No. 4108 took effect.

Acts No. 4108 establishes a framework for enforcing third-party claims to property levied under attachment or execution through an indemnity-bond mechanism.
Acts No. 4108 imposes a shortened 100-and-20 days prescription framework for actions connected with indemnity bonds and for enforcement of third-party claims.

A person who alleges ownership of property levied on or who has a legal interest in such property can claim it by serving a written, verified claim on the sheriff or the officer acting in his stead.
The verified claim must set out the claimant’s title to the property and the claimant’s right to possession.
The filing of the third-party claim is the process that allows the claimant to seek enforcement in relation to the attachment levy.
The sheriff’s obligation to keep the claimed property depends on whether an indemnity bond is filed.

If a sheriff is faced with a third-party claim under Section 451, the sheriff is not bound to keep the property claimed unless the plaintiff files a bond indemnifying the officer against such claim.
The bond amount must not be greater than the value of the property in the local market.
If there is disagreement as to the value or the terms or sureties of the bond, the court with jurisdiction over the case where the writ was issued decides the issue.
The court’s decision on disagreement is made after hearing the sheriff, the plaintiff, and the third party.

Upon filing the indemnity bond, the sheriff must proceed forthwith to comply with the writ.
If an injunction has been issued, the sheriff’s proceeding is affected, and the indemnity-bond consequences described in Section 451 apply in that situation.
The indemnity bond is understood to be cancelled if action is not brought upon the bond within 120 days after the sale.
The 120-day period also governs cancellation and enforceability under Section 451 for third-party claim effects.

No claim to property levied on by the sheriff is valid against the sheriff, and no claim is received or treated as notice of any rights against the sheriff, unless a third party made a claim as provided in Section 451 and enforced it through the proper action.
The enforcement must be done within 120 days after the sale.
The 120-day enforcement requirement conditions whether the third-party claim can be effective against the sheriff.

When the execution or attachment is for the benefit of the Government of the Philippine Islands and is made under the immediate supervision of the Solicitor-General, the indemnity bond mentioned in Section 451 is not required.
When the sheriff is sued for damages resulting from such Government execution or attachment, the sheriff is represented by the Solicitor-General.
If the sheriff is held liable by final decision, the amount is paid by the Insular Treasurer from funds appropriated for that purpose.

Section 451 preserves the ability of the owner of the levied property to vindicate the claim by any proper action within the period established by laws governing prescription.
The vindication by proper action remains available notwithstanding the indemnity-bond framework and the 120-day bond-related rules.

Section 2 establishes that all rights of action against indemnity bonds filed under Section 451 before Acts No. 4108 took effect are subject to prescription.
Section 2 requires cancellation of those bonds unless action is brought thereon within 120 days after Acts No. 4108 took effect.