Tay Chun Suy v. CA
Tay Chun Suy v. CA
Tay Chun Suy v. CA
SYLLABUS
DECISION
BELLOSILLO , J : p
As between the buyer of a vessel at a prior extrajudicial foreclosure and the buyer at
a subsequent auction sale, both buyers failing to register their transactions, who has a
better right of dominion over the vessel?
On 9 May 1978, Sta. Clara Lumber Co., Inc. (SCLC), obtained a loan of
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P18,514,357.56 from private respondent Development Bank of the Philippines (DBP). As
security for the loan, SCLC mortgaged some of its properties, among which was a vessel,
MV Sta. Clara I. Upon SCLC's failure to pay the loan, the mortgage was foreclosed. On 18
August 1982, the Clerk of Court and Provincial Sheriff Ex-O cio of Sultan Kudarat, Aurelio
M. Rendon, conducted an auction sale and sold the vessel to DBP for P3,600,000.00. He
thereafter issued a certi cate of sale dated 18 August 1982 in favor of DBP. 1 However,
DBP did not register with the Philippine Coast Guard the mortgage; neither the foreclosure
nor the auction sale.
In December 1983, DBP and Sta. Clara Housing Industries, Inc. (SCHI), entered into a
Lease/Purchase Agreement 2 which provided that DBP should lease some of the former
properties of SCLC, including MV Sta. Clara I, to the latter and transfer actual ownership
over these properties upon completion by the lessee of the stipulated lease/purchase
payment. LibLex
On 10 July 1986, petitioner caused the levy and attachment of the same vessel, MV
Sta. Clara I, in order to satisfy a judgment rendered by the Regional Trial Court, Br. XII,
Davao City, in Civil Case No. 15970, "Tay Chun Suy v. Sta. Clara Lumber Co., Inc." At the time
of the levy, the coastwise license of the vessel was in the name of Sta. Clara Lumber Co.,
Inc.
On the scheduled date of the execution sale, Atty. Necitas Kintanar, counsel for
SCHI, verbally informed Deputy Sheriff Manases M. Reyes, Jr., who was to conduct the sale,
t hat MV Sta. Clara I was no longer owned by SCLC but by DBP pursuant to a prior
extrajudicial sale. Despite such information, Sheriff Reyes, Jr., proceeded with the sale and
awarded the vessel to petitioner for P317,000.00. 3
Meanwhile, on 23 July 1986, MV Sta. Clara I was again levied upon and attached by
Deputy Sheriff Alfonso M. Zamora by virtue of a writ of attachment issued by the Regional
Trial Court, Br. XI, Cebu City, in Civil Case No. CEB-5162, "Philippine Trigon Shipyard
Shipping Corp. v. Sta. Clara Housing Industries, Inc., et al." 4 On 24 July 1986, the same
court issued an order appointing Philippine Trigon Shipyard Shipping Corporation as
depositary of the attached vessel with authority to operate the vessel temporarily. MV Sta.
Clara I was then taken from the port of Davao City to Cebu City.
Upon being informed of the execution sale to petitioner, DBP led a complaint
before the Regional Trial Court, Br. XVII, Davao City, for annulment of the execution sale,
recovery of possession, damages and attorney's fees with prayer for restraining order and
preliminary injunction. 5 Petitioner moved to dismiss the complaint for alleged lack of
jurisdiction, cause of action and/or legal personality to sue on the part of DBP. 6
On 28 October 1986, the court denied the motion to dismiss but granted DBP's
prayer for a writ of preliminary injunction. 7 Petitioner moved for reconsideration of the
denial but on 19 November 1986, the motion was likewise denied. 8
Forthwith, petitioner led with the Court of Appeals a petition for certiorari and
mandamus with prohibition assailing the Orders of 28 October and 19 November 1986 of
the trial court. On 11 March 1987, the Court of Appeals dismissed the petition. 9
Petitioner appealed to this Court by way of a petition for review on certiorari,
docketed as G.R. No. 78383, "Tay Chun Suy vs. Development Bank of the Philippines, et al."
In the resolution of 28 September 1987 (not 30 September 1987), the Third Division of this
Court denied the petition for lack of merit. 10
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On 4 December 1987, the trial court issued a decision which, among other matters,
declared that DBP was the lawful owner of MV Sta. Clara I and that the public auction sale
conducted by Deputy Sheriff Manases Reyes, Jr., on 16 July 1986 and the resultant
certificate of sale were null and void. 11
On 16 December 1987, petitioner sought recourse to the Court of Appeals. On 28
February 1990, the appellate court dismissed his appeal. 1 2 On 23 May 1990, the motion
to reconsider the dismissal was denied. 13
Hence, this petition for review on certiorari. Petitioner contends that the Court of
Appeals erred (1) in nding that the sheriff's auction sale of the vessel did not enjoy the
presumption of regularity; and (2) in a rming the decision of the trial court declaring DBP
as the true and exclusive owner of MV Sta. Clara I. 14
Well-entrenched is the rule that factual ndings of the trial court, as well as those of
the Court of Appeals, are entitled to great weight and respect. 1 5 This rule once more nds
application in the case at bar.
The records show that SCHI, lessee of the vessel, is an entity separate from SCLC,
and was not a party to the case led by petitioner against the latter. 1 6 Yet, SCHI was
furnished, on a Saturday, copy of the notice of auction sale of MV Sta. Clara I . Sta. Clara
Lumber Co., Inc., which was the proper party, does not appear to have been noti ed. Upon
being informed of the auction sale, counsel for SCHI immediately went to the auction site
and requested that the sale be reset that day on the ground that SCLC was no longer the
owner of the vessel. To support this claim, the Manager of SCHI hurriedly left for her o ce
to secure a copy of the certi cate of sale in favor of DBP as this was demanded by the
sheriff. 17
Given the circumstances obtaining in this case, a delay of a few hours could not have
prejudiced petitioner. A sheriff's ministerial duty to conduct an auction sale is not without
any limitation. In the performance of this duty, he is deemed to know what is inherently
right and inherently wrong. Nonetheless, Sheriff Reyes, Jr., upon the persistent proddings
of petitioner, proceeded with the auction sale. His poor judgment alone would not have
caused any suspicion of bias. However, his precipitate action taken together with the
anomalous proceedings that ensued, and the haste with which he delivered the certi cate
of sale to petitioner in the afternoon of the day of the auction sale lead to the inevitable
conclusion that the whole operation was contrived to benefit petitioner. 1 8 The handwritten
Minutes (Exh. "D") of the auction sale clearly indicate the haste with which they were
prepared, a telltale evidence of the anomalous conduct of the proceedings. On its face, one
cannot determine the name of the successful bidder of the vessel. The 16 July 1986
minutes 1 9 read:
MINUTES
The minutes became even more vague when Sheriff Reyes, Jr., testi ed that there
were only three bidders. From the minutes, however, we nd that all those present offered
bids as there were amounts placed opposite their names —
Atty. Fabro, counsel for DBP:
Q Atty. Positos, counsel for the defendant also bidded, it seems to me?
Sheriff Reyes, Jr.:
A That is, Atty. Positos was present.
Q After the word — Present: is the word Plaintiff (Bidder), are we to
understand or are we made to believe that these people here bidded
because there are amounts corresponding to their names?
A No, actually Mr. Ang, Mr. Arceo and the plaintiff bidded actually during the
auction sale.
Q Why is it that corresponding to the name of Atty. Positos here there are
amounts here —
140,000 — 270,000
180,000 — 290,000
220,000 — 300,000
Signi cantly, the above testimony of Sheriff Reyes, Jr., to the effect that Atty.
Positos did not participate in the bidding was rebutted by the latter. 2 1 In view of the
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ambiguity of the minutes, the trial court was constrained to ask clari catory questions
from Sheriff Reyes, Jr. —
COURT:
Q: The highest bidder, who is the plaintiff here as the highest bidder?
A: AL.
Q: Who is this AL?.
A: AL is the plaintiff.
Q: What is the name of AL, you stated there AL, what does that mean?
Q: Actually there is some signi cance of that word AL as far as you are
concerned?
A: Yes, sir.
Q: What is that AL?
A: Initial (sic) of plaintiff.
Q: Why did you not record the full name of the plaintiff there as the name of
the highest bidder?
A: I only put there the initial (sic) during the proceedings.
xxx xxx xxx
Q: On the face of your minutes I can say that this is not the proper minutes
that should be done by any Sheriff. You should even type your minutes
after the auction sale in order to inform any person later on what actually
happened during the proceedings. Even in stating merely the name of the
plaintiff, you just place here — AL, what is the signi cance of this AL, when
you know that he is supposed to be the plaintiff. He is the plaintiff-bidder
but you placed there only AL. LLjur
Now, in your certi cate of sale what did you state there as the highest
bidder?
A: The name of the plaintiff.
Q: Do you have a certificate of sale?.
A: Yes, sir. (Witness hands to the Court carbon original of a copy of the
certificate of sale).
Q: Do you have in the records copy of this certificate of sale?
A: Yes, Your Honor.
Q: You stated here that you awarded the vessel to Tay Chun Suy, as he is the
highest bidder. You stated in your certi cate of sale — the Plaintiff herein
was the successful bidder who offered his oral bid in the amount of
P317,000.00 you are basing this statement of yours from your minutes of
July 16, 1986, is that correct?
A: Yes, Your Honor.
Q: But the one who won here in the bid was a certain AL only as stated in your
minutes, is that correct?
A: Yes, Your Honor.
Q: Why did you not state in your certi cate of sale that this AL is actually the
one you referred here as Tay Chun Suy, are you not aware that that is the
very material where you based your certi cate of sale and that the
certi cate of sale will tally with the minutes of your proceedings — of the
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auction sale?
(No answer).
COURT:
You are not only to explain that, you have to explain why your certi cate of
sale does not tally with your minutes, you awarded the vessel to one Tay
Chun Suy while what appears in your minutes is that a certain AL . . .
(emphasis supplied). 22
The procedure followed by Sheriff Reyes, Jr., was patently irregular. The unexplained
inconsistencies in the minutes and the certi cate of sale are so material as to affect the
integrity of the whole proceedings. Noteworthy, too, is the fact that the Minutes (Exh. "D")
do not mention the request of counsel for SCHI for deferment of the auction sale. While
the request was made prior to the auction sale, the trial court was correct in its
observation that the same should have been entered in the minutes because of its
importance and relevance to the sale. 2 3 Under these circumstances, the ruling of the
appellate court sustaining the trial court on the nullity of the auction sale cannot be faulted.
Petitioner vigorously maintains that the failure of DBP to register its title to MV Sta.
Clara I with the Philippine Coast Guard is fatal to its claim of ownership. Likewise, he raises
doubts as to whether the trial court has jurisdiction to issue the writ of preliminary
injunction. 24
In G.R. No. 78383, we rejected these arguments in our resolution of 28 September
1987 —
The respondent appellate court correctly held that the Regional Trial Court
of Davao City, Branch 17, had jurisdiction over the action brought in Civil Case No.
18188 concerning the vessel herein involved which was allegedly purchased by
petitioner in an execution sale, and which execution sale was the result of the
judgment rendered by Branch 12 of the same Regional Trial Court in Civil Case
No. 15970. Branch 17, Regional Trial Court of Davao City, did not undertake to
annul the judgment of the Regional Trial Court of Davao City, Branch 12,
jurisdiction to annul belonging to the Court of Appeals. Respondent appellate
court also correctly held that a certi cate of registration of ownership of a vessel
is only presumptive evidence that the registered owner has legal title to the vessel,
and that DBP's failure to register with the Philippine Coast Guard its prior
acquisition of the vessel is not fatal to its ownership of said vessel, vis-a-vis
petitioner herein, who similarly failed to register the alleged subsequent sale of
the vessel to itself (sic) in an execution sale. 25
This resolution is now nal and executory. The question of whether the non-
registration by DBP is fatal to its claim to the vessel or whether the trial court has
jurisdiction over the action should no longer be raised anew. Once a case has been
decided one way, then another case involving exactly the same point at issue should be
decided in the same manner. 2 6 At any rate, our ruling in Santos v. Bayhon 2 7 should put to
rest petitioner's doubt as to the jurisdiction of the trial court —
The general rule that no court has the power to interfere by injunction with
the judgments or decrees of another court with concurrent or coordinate
jurisdiction possessing equal power to grant injunctive relief, applies only when
no third-party claimant is involved (Traders Royal Bank v. Intermediate Appellate
Court, 133 SCRA 142). When a third-party, or a stranger to the action, asserts a
claim over the property levied upon, the claimant may vindicate his claim by an
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independent action in the proper civil court which may stop the execution of the
judgment on property not belonging to the judgment debtor (emphasis supplied).
Further, petitioner contends that he is a bona fide purchaser for value at the auction
sale and that he came to know about the acquisition by DBP only upon its ling of the
complaint for annulment of the execution sale. 28
The evidence on record belies such contention. Before the auction sale started,
counsel for petitioner was already aware of the cloud on the title of SCLC to the vessel as
shown hereunder —
Atty. Fabros, counsel for DBP:
Q: But you know for a fact that Atty. Kintanar requested for the postponement
of the auction sale in the afternoon because they were ling a third party
claim or that they will still inform DBP of that pending sale, you know that?
LexLib
Notwithstanding his knowledge of the prior claim of DBP, petitioner insisted that the
sheriff proceeded with the auction sale. Under the caveat emptor rule, he assumed the risk
of losing the vessel because his right to it cannot be considered superior to that of DBP.
As we held in one case, 3 0 an execution creditor generally acquires no higher or better right
than what the execution debtor has in the property levied upon. It follows then that if the
judgment debtor had no interest in the property, the execution creditor acquires no interest
therein.
Petitioner never challenged this particular ruling in his appeal to the Court of
Appeals. Hence, he cannot be allowed to ventilate it now in this proceeding. Points of law,
theories, issues and arguments not adequately brought to the attention of the trial court
need not be, and ordinarily will not be, considered by a reviewing Court as they cannot be
raised for the first time on appeal. 3 2
The evidence on record fully supports the ndings of the lower courts. We therefore
find no need to discuss the other arguments raised by petitioner to support his cause.
WHEREFORE, nding no reversible error in the decision of the court a quo, the
petition for review on certiorari is DISMISSED, with costs against petitioner. cdll
SO ORDERED.
Cruz, Davide, Jr. and Quiason, JJ., concur.
Footnotes
1. Annex "A", Record on Appeal, p. 9.
2. Annex "B", Ibid., p. 15.
26. Pines City Educational Center v. The National Labor Relations Commission (Third
Division), G.R. No. 96779, 10 November 1993.
27. G.R. No. 88643, 23 July 1991, 199 SCRA 525, 528.