J.A.B. Bulao & Associates

PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY (PFDA) VS. CENTRAL BOARD OF ASSESSMENT APPEALS, LOCAL BOARD OF ASSESSMENT APPEALS OF LUCENA CITY, CITY OF LUCENA, LUCENA CITY ASSESSOR AND LUCENA CITY TREASURER (G.R. NO. 178030, 15 DECEMBER 2010). SUBJECTS: GOVT INSTRUMENTALITY NOT SUBJECT TO REAL PROPERTY TAX AND ITS PROPERTY CANT BE AUCTIONED TO PAY FOR TAX DILINQUENCY; WHY PFDA IS NOT A GOCC; BRIEF TITLE: PHIL FISHERIES DEVELOPMENT AUTHORITY VS. CENTRAL BOARD OF ASSESSMENT APPEALS ET AL.

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DIGEST:

PFDA WHICH MANAGED THE LUCENA FISHING PORT COMPLEX WAS ORDERED  BY LUCENA CITY TO PAY REAL PROPERTY TAX ON THE FISHING PORT. LBAA, CBAA AND CTA ALL AFFIRMED THE ORDER OF LUCENA CITY. SC RULED THAT PFDA IS EXEMPT BECAUSE IT IS A GOVERNMENT INSTRUMENTALITY NOT A GOVERNMENT OWNED AND CONTROLLED CORPORATION. BUT PORTIONS OF THE PORT LEASED TO PRIVATE ENTITIES NOT EXEMPT FROM REAL PROPERTY TAX.

DOCTRINES:

PFDA, NOT BEING A GOVERNMENT OWNED OR CONTROLLED CORPORATION IS NOT SUBJECT TO REAL PROPERTY TAX.

The ruling of the Court of Tax Appeals is anchored on the wrong premise that the PFDA is a government-owned or controlled corporation. On the contrary, this Court has already ruled that the PFDA is a government instrumentality and not a government-owned or controlled corporation.

WHY PFDA IS NOT A GOCC; PROPERTY OF GOVT INSTRUMENTALITY CANNOT BE SOLD AT PUBLIC AUCTION TO SATISFY TAX DILINQUENCY; 

In the 2007 case of Philippine Fisheries Development Authority v. Court of Appeals,⁶ the Court resolved the issue of whether the PFDA is a government-owned or controlled corporation or an instrumentality of the national government. In that case, the City of Iloilo assessed real property taxes on the Iloilo Fishing Port Complex (IFPC), which was managed and operated by PFDA. The Court held that PFDA is an instrumentality of the government and is thus exempt from the payment of real property tax, thus:

The Court rules that the Authority [PFDA] is not a GOCC but an instrumentality of the national government which is generally exempt from payment of real property tax. However, said exemption does not apply to the portions of the IFPC which the Authority leased to private entities. With respect to these properties, the Authority is liable to pay property tax. Nonetheless, the IFPC, being a property of public dominion cannot be sold at public auction to satisfy the tax delinquency.

x x x

Indeed, the Authority is not a GOCC but an instrumentality of the government. The Authority has a capital stock but it is not divided into shares of stocks. Also, it has no stockholders or voting shares. Hence it is not a stock corporation. Neither is it a non-stock corporation because it has no members.

The Authority is actually a national government instrumentality which is defined as an agency of the national government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only governmental but also corporate powers.⁷ (Emphasis supplied)

BUT PORTIONS OF THE PORT BEING LEASED TO PRIVATE ENTITIES ARE SUBJECT TO REAL ESTATE TAX.

The exercise of the taxing power of local government units is subject to the limitations enumerated in Section 133 of the Local Government Code.⁹ Under Section 133(o)¹⁰ of the Local Government Code, local government units have no power to tax instrumentalities of the national government like the PFDA. Thus, PFDA is not liable to pay real property tax assessed by the Office of the City Treasurer of Lucena City on the Lucena Fishing Port Complex, except those portions which are leased to private persons or entities. (UNDERSCORING SUPPLIED).

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D E C I S I O N

CARPIO, J.:

The Case

This petition for review¹ assails the 9 May 2007 Decision² of the Court of Tax Appeals in C.T.A. EB No. 193, affirming the 5 October 2005 Decision of the Central Board of Assessment Appeals (CBAA) in CBAA Case No. L-33. The CBAA dismissed the appeal of petitioner Philippine Fisheries Development Authority (PFDA) from the Decision of the Local Board of Assessment Appeals (LBAA) of Lucena City, ordering PFDA to pay the real property taxes imposed by the City Government of Lucena on the Lucena Fishing Port Complex.

The Facts

The facts as found by the CBAA are as follows:

The records show that the Lucena Fishing Port Complex (LFPC) is one of the fishery infrastructure projects undertaken by the National Government under the Nationwide Fish Port-Package. Located at Barangay Dalahican, Lucena City, the fish port was constructed on a reclaimed land with an area of 8.7 hectares more or less, at a total cost of PHP 296,764,618.77 financed through a loan (L/A PH-25 and 51) from the Overseas Economic Cooperation Fund (OECF) of Japan, dated November 9, 1978 and May 31, 1978, respectively.

The Philippine Fisheries Development Authority (PFDA) was created by virtue of P.D. 977 as amended by E.O. 772, with functions and powers to (m)anage, operate, and develop the Navotas Fishing Port Complex and such other fishing port complexes that may be established by the Authority. Pursuant thereto, Petitioner-Appellant PFDA took over the management and operation of LFPC in February 1992.

On October 26, 1999, in a letter addressed to PFDA, the City Government of Lucena demanded payment of realty taxes on the LFPC property for the period from 1993 to 1999 in the total amount of P39,397,880.00. This was received by PFDA on November 24, 1999.

On October 17, 2000 another demand letter was sent by the Government of Lucena City on the same LFPC property, this time in the amount of P45,660,080.00 covering the period from 1993 to 2000.

On December 18, 2000 Petitioner-Appellant filed its Appeal before the Local Board of Assessment Appeals of Lucena City, which was dismissed for lack of merit. On November 6, 2001 Petitioner-Appellant filed its motion for reconsideration; this was denied by the Appellee Local Board on December 10, 2001.³

PFDA appealed to the CBAA. In its Decision dated 5 October 2005, the CBAA dismissed the appeal for lack of merit. The CBAA ruled:

Ownership of LFPC however has, before hand, been handed over to the PFDA, as provided for under Sec. 11 of P.D. No. 977, as amended, and declared under the MCIAA case [Mactan Cebu International Airport Authority v. Marcos, G.R. No. 120082, 11 September 1996, 261 SCRA 667]. The allegations therefore that PFDA is not the beneficial user of LFPC and not a taxable person are rendered moot and academic by such ownership of PFDA over LFPC.

x x x

PFDA’s Charter, P.D. 977, provided for exemption from income tax under Par. 2, Sec. 10 thereof: “(t)he Authority shall be exempted from the payment of income tax”. Nothing was said however about PFDA’s exemption from payment of real property tax: PFDA therefore was not to lay claim for realty tax exemption on its Fishing Port Complexes. Reading Sec. 40 of P.D. 464 and Sec. 234 of R.A. 7160 however, provided such ground: LFPC is owned by the Republic of the Philippines, PFDA is only tasked to manage, operate, and develop the same. Hence, LFPC is exempted from payment of realty tax.

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The ownership of LFPC as passed on by the Republic of the Philippines to PFDA is bourne by Direct evidence: P.D. 977, as amended (supra). Therefore, Petitioner-Appellant’s claim for realty tax exemption on LFPC is untenable.

WHEREFORE, for all of the foregoing, the herein Appeal is hereby dismissed for lack of merit.

SO ORDERED.⁴

PFDA moved for reconsideration, which the CBAA denied in its Resolution dated 7 June 2006.⁵ On appeal, the Court of Tax Appeals denied PFDA’s petition for review and affirmed the 5 October 2005 Decision of the CBAA.

Hence, this petition for review.

The Ruling of the Court of Tax Appeals

The Court of Tax Appeals held that PFDA is a government-owned or controlled corporation, and is therefore subject to the real property tax imposed by local government units pursuant to Section 232 in relation to Sections 193 and 234 of the Local Government Code. Furthermore, the Court of Tax Appeals ruled that PFDA failed to prove that it is exempt from real property tax pursuant to Section 234 of the Local Government Code or any of its provisions.

The Issue

The sole issue raised in this petition is whether PFDA is liable for the real property tax assessed on the Lucena Fishing Port Complex.

The Ruling of the Court

The petition is meritorious.

In ruling that PFDA is not exempt from paying real property tax, the Court of Tax Appeals cited Sections 193, 232, and 234 of the Local Government Code which read:

Section 193. Withdrawal of Tax Exemption Privileges. ‒ Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or -controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.

Section 232. Power to Levy Real Property Tax. ‒ A province or city or a municipality within the Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land, building, machinery, and other improvement not hereinafter specifically exempted.

Section 234. Exemptions from Real Property Tax. ‒ The following are exempted from payment of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivision except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;

(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonprofit or religious cemeteries and all lands, buildings and improvements actually, directly, and exclusively used for religious, charitable or educational purposes;

(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or -controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power;

(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and

(e) Machinery and equipment used for pollution control and environmental protection.

Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or -controlled corporations are hereby withdrawn upon the effectivity of this Code.

The Court of Tax Appeals held that as a government-owned or controlled corporation, PFDA is subject to real property tax imposed by local government units having jurisdiction over its real properties pursuant to Section 232 of the Local Government Code. According to the Court of Tax Appeals, Section 193 of the Local Government Code withdrew all tax exemptions granted to government-owned or controlled corporations. Furthermore, Section 234 of the Local Government Code explicitly provides that any exemption from payment of real property tax granted to government-owned or controlled corporations have already been withdrawn upon the effectivity of the Local Government Code.

The ruling of the Court of Tax Appeals is anchored on the wrong premise that the PFDA is a government-owned or controlled corporation. On the contrary, this Court has already ruled that the PFDA is a government instrumentality and not a government-owned or controlled corporation.

In the 2007 case of Philippine Fisheries Development Authority v. Court of Appeals,⁶ the Court resolved the issue of whether the PFDA is a government-owned or controlled corporation or an instrumentality of the national government. In that case, the City of Iloilo assessed real property taxes on the Iloilo Fishing Port Complex (IFPC), which was managed and operated by PFDA. The Court held that PFDA is an instrumentality of the government and is thus exempt from the payment of real property tax, thus:

The Court rules that the Authority [PFDA] is not a GOCC but an instrumentality of the national government which is generally exempt from payment of real property tax. However, said exemption does not apply to the portions of the IFPC which the Authority leased to private entities. With respect to these properties, the Authority is liable to pay property tax. Nonetheless, the IFPC, being a property of public dominion cannot be sold at public auction to satisfy the tax delinquency.

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Indeed, the Authority is not a GOCC but an instrumentality of the government. The Authority has a capital stock but it is not divided into shares of stocks. Also, it has no stockholders or voting shares. Hence it is not a stock corporation. Neither is it a non-stock corporation because it has no members.

The Authority is actually a national government instrumentality which is defined as an agency of the national government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only governmental but also corporate powers.⁷ (Emphasis supplied)

This ruling was affirmed by the Court in a subsequent PFDA case involving the Navotas Fishing Port Complex, which is also managed and operated by the PFDA. In consonance with the previous ruling, the Court held in the subsequent PFDA case that the PFDA is a government instrumentality not subject to real property tax except those portions of the Navotas Fishing Port Complex that were leased to taxable or private persons and entities for their beneficial use.⁸

Similarly, we hold that as a government instrumentality, the PFDA is exempt from real property tax imposed on the Lucena Fishing Port Complex, except those portions which are leased to private persons or entities.

The exercise of the taxing power of local government units is subject to the limitations enumerated in Section 133 of the Local Government Code.⁹ Under Section 133(o)¹⁰ of the Local Government Code, local government units have no power to tax instrumentalities of the national government like the PFDA. Thus, PFDA is not liable to pay real property tax assessed by the Office of the City Treasurer of Lucena City on the Lucena Fishing Port Complex, except those portions which are leased to private persons or entities.

Besides, the Lucena Fishing Port Complex is a property of public dominion intended for public use, and is therefore exempt from real property tax under Section 234(a)¹¹ of the Local Government Code. Properties of public dominion are owned by the State or the Republic of the Philippines.¹² Thus, Article 420 of the Civil Code provides:

Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth. (Emphasis supplied)

The Lucena Fishing Port Complex, which is one of the major infrastructure projects undertaken by the National Government under the Nationwide Fishing Ports Package, is devoted for public use and falls within the term “ports.” The Lucena Fishing Port Complex “serves as PFDA’s commitment to continuously provide post-harvest infrastructure support to the fishing industry, especially in areas where productivity among the various players in the fishing industry need to be enhanced.”¹³ As property of public dominion, the Lucena Fishing Port Complex is owned by the Republic of the Philippines and thus exempt from real estate tax.

WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 9 May 2007 of the Court of Tax Appeals in C.T.A. EB No. 193. We DECLARE the Lucena Fishing Port Complex EXEMPT from real property tax imposed by the City of Lucena. We declare VOID all the real property tax assessments issued by the City of Lucena on the Lucena Fishing Port Complex managed by Philippine Fisheries Development Authority, EXCEPT for the portions that the Philippine Fisheries Development Authority has leased to private parties.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

ANTONIO EDUARDO B. NACHURA

Associate Justice

DIOSDADO M. PERALTA ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE C. MENDOZA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice

Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA

Chief Justice

1Under Rule 45 of the 1997 Rules of Civil Procedure.

2Rollo, pp. 65-90. Penned by Associate Justice Juanito C. Castañeda, Jr., with Presiding Justice Ernesto D. Acosta and Associate Justices Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, and Olga Palanca-Enriquez, concurring.

3Id. at 215-216.

4CTA rollo, pp. 60-62.

5Id. at 68-71.

6G.R. No. 169836, 31 July 2007, 528 SCRA 706.

7Id. at 710, 712-714.

8Philippine Fisheries Development Authority v. Court of Appeals, G.R. No. 150301, 2 October 2007, 534 SCRA 490.

9Manila International Airport Authority v. City of Pasay, G.R. No. 163072, 2 April 2009, 583 SCRA 234.

10Section 133(o) of the Local Government Code reads:

SECTION 133. Common Limitations on the Taxing Powers of the Local Government Units. – Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:

x x x

(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and local government units.

11Section 234. Exemptions from Real Property Tax. ‒ The following are exempted from payment of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivision except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;

12Manila International Airport Authority v. Court of Appeals, G.R. No. 155650, 20 July 2006, 495 SCRA 591, 644.

13Lucena Fish Port Complex, <http://www.pfda.da.gov.ph/lfpc.html> (visited 13 December 2010).

CHERRYL B. DOLINA VS. GLENN D. VALLECERA (G.R. NO. 182367, 15 DECEMBER 2010) SUBJECTS: FILIATION; REMEDIES FOR CHILD SUPPORT.

DOCTRINES:

REMEDY FOR OBTAINING SUPPORT FOR CHILD IF FATHER DENIES HE IS THE FATHER OF THE CHILD.

Dolina’s remedy is to file for the benefit of her child an action against Vallecera for compulsory recognition in order to establish filiation and then demand support.  Alternatively, she may directly file an action for support, where the issue of compulsory recognition may be integrated and resolved.^[1][11]

WHY PATERNITY MUST BE ESTABLISHED FIRST.

. . . If filiation is beyond question, support follows as matter of obligation. . . .

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While the Court is mindful of the best interests of the child in cases involving paternity and filiation, it is just as aware of the disturbance that unfounded paternity suits cause to the privacy and peace of the putative father’s legitimate family.^[2][12]  Vallecera disowns Dolina’s child and denies having a hand in the preparation and signing of its certificate of birth.  This issue has to be resolved in an appropriate case. 

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DECISION

ABAD, J.:

This case is about a mother’s claim for temporary support of an unacknowledged child, which she sought in an action for the issuance of a temporary protection order that she brought against the supposed father.

The Facts and the Case

In February 2008 petitioner Cherryl B. Dolina filed a petition with prayer for the issuance of a temporary protection order against respondent Glenn D. Vallecera before the Regional Trial Court (RTC) of Tacloban City in P.O. 2008-02-07^[3][1] for alleged woman and child abuse under Republic Act (R.A.) 9262.^[4][2]  In filling out the blanks in the pro-forma complaint, Dolina added a handwritten prayer for financial support^[5][3] from Vallecera for their supposed child.  She based her prayer on the latter’s Certificate of Live Birth which listed Vallecera as the child’s father.  The petition also asked the RTC to order Philippine Airlines, Vallecera’s employer, to withhold from his pay such amount of support as the RTC may deem appropriate.

Vallecera opposed the petition.  He claimed that Dolina’s petition was essentially one for financial support rather than for protection against woman and child abuses; that he was not the child’s father; that the signature appearing on the child’s Certificate of Live Birth is not his; that the petition is a harassment suit intended to force him to acknowledge the child as his and give it financial support; and that Vallecera has never lived nor has been living with Dolina, rendering unnecessary the issuance of a protection order against him.

On March 13, 2008^[6][4] the RTC dismissed the petition after hearing since no prior judgment exists establishing the filiation of Dolina’s son and granting him the right to support as basis for an order to compel the giving of such support.  Dolina filed a motion for reconsideration but the RTC denied it in its April 4, 2008 Order,^[7][5] with an admonition that she first file a petition for compulsory recognition of her child as a prerequisite for support.  Unsatisfied, Dolina filed the present petition for review directly with this Court.

The Issue Presented

The sole issue presented in this case is whether or not the RTC correctly dismissed Dolina’s action for temporary protection and denied her application for temporary support for her child.

The Court’s Ruling

Dolina evidently filed the wrong action to obtain support for her child.  The object of R.A. 9262 under which she filed the case is the protection and safety of women and children who are victims of abuse or violence.^[8][6]  Although the issuance of a protection order against the respondent in the case can include the grant of legal support for the wife and the child, this assumes that both are entitled to a protection order and to legal support. 

Dolina of course alleged that Vallecera had been abusing her and her child.  But it became apparent to the RTC upon hearing that this was not the case since, contrary to her claim, neither she nor her child ever lived with Vallecera.  As it turned out, the true object of her action was to get financial support from Vallecera for her child, her claim being that he is the father.  He of course vigorously denied this.

To be entitled to legal support, petitioner must, in proper action, first establish the filiation of the child, if the same is not admitted or acknowledged.  Since Dolina’s demand for support for her son is based on her claim that he is Vallecera’s illegitimate child, the latter is not entitled to such support if he had not acknowledged him, until Dolina shall have proved his relation to him.^[9][7]  The child’s remedy is to file through her mother a judicial action against Vallecera for compulsory recognition.^[10][8]  If filiation is beyond question, support follows as matter of obligation.^[11][9]  In short, illegitimate children are entitled to support and successional rights but their filiation must be duly proved.^[12][10]

Dolina’s remedy is to file for the benefit of her child an action against Vallecera for compulsory recognition in order to establish filiation and then demand support.  Alternatively, she may directly file an action for support, where the issue of compulsory recognition may be integrated and resolved.^[13][11]

It must be observed, however, that the RTC should not have dismissed the entire case based solely on the lack of any judicial declaration of filiation between Vallecera and Dolina’s child since the main issue remains to be the alleged violence committed by Vallecera against Dolina and her child and whether they are entitled to protection.  But of course, this matter is already water under the bridge since Dolina failed to raise this error on review.  This omission lends credence to the conclusion of the RTC that the real purpose of the petition is to obtain support from Vallecera.   

While the Court is mindful of the best interests of the child in cases involving paternity and filiation, it is just as aware of the disturbance that unfounded paternity suits cause to the privacy and peace of the putative father’s legitimate family.^[14][12]  Vallecera disowns Dolina’s child and denies having a hand in the preparation and signing of its certificate of birth.  This issue has to be resolved in an appropriate case. 

ACCORDINGLY, the Court DENIES the petition and AFFIRMS the Regional Trial Court of Tacloban City’s Order dated March 13, 2008 that dismissed petitioner Cherryl B. Dolina’s action in P.O. 2008-02-07, and Order dated April 4, 2008, denying her motion for reconsideration dated March 28, 2008. 

SO ORDERED.

ROBERTO A. ABAD 

                                                              Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

ANTONIO EDUARDO B. NACHURA      DIOSDADO M. PERALTA

                  Associate Justice                                    Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

          I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                      ANTONIO T. CARPIO

                                                   Associate Justice

                                Chairperson, Second Division                  

CERTIFICATION

          Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                             RENATO C. CORONA

                                                            Chief Justice

CRISPIN SARMIENTO VS. ABAD AND LUISITO P. MENDIOLA, SHERIFF 3, METROPOLITAN TRIAL COURT, BRANCH 20, MANILA (A.M. NO. P-07-2383, 15 DECEMBER 2010) SUBJECTS: EXECUTION OF JUDGMENT; ROLE OF SHERIFF; DEFINITION OF MISCONDUCT;

DOCTRINES:

PROCESS OF ENFORCEMENT OF JUDGMENT BY SHERIFF

It is a basic principle of law that money judgments are enforceable only against property unquestionably belonging to the judgment debtor. In the execution of a money judgment, the sheriff must first make a demand on the obligor for payment of the full amount stated in the writ of execution. Property belonging to third persons cannot be levied upon.⁶ Moreover, the levy upon the properties of the judgment obligor may be had by the executing sheriff if the judgment obligor cannot pay all or part of the full amount stated in the writ of execution. If the judgment obligor cannot pay all or part of the obligation in cash, certified bank check or other mode acceptable to the judgment obligee, the judgment obligor is given the option to immediately choose which of his property or part thereof, not otherwise exempt from execution, may be levied upon sufficient to satisfy the judgment. If the judgment obligor does not exercise the option immediately, or when he is absent or cannot be located, he waives such right, and the sheriff can now first levy his personal properties, if any, and then the real properties if the personal properties are insufficient to answer for the judgment.⁷

Therefore, the sheriff cannot and should not be the one to determine which property to levy if the judgment obligor cannot immediately pay because it is the judgment obligor who is given the option to choose which property or part thereof may be levied upon to satisfy the judgment. Since Crispin is not the owner of the subject vehicle that respondent levied on, it was improper for respondent to have enforced the writ of execution on a property that did not belong to Crispin, the judgment debtor/obligor. Respondent evidently failed to perform his duty with utmost diligence.

ROLE OF SHERIFF IN THE EXECUTION OF JUDGMENT

It is undisputed that the most difficult phase of any proceeding is the execution of judgment. The officer charged with this delicate task is the sheriff. The sheriff, as an officer of the court upon whom the execution of a final judgment depends, must necessarily be circumspect and proper in his behavior. Execution is the fruit and end of the suit and is the life of the judgment. He is to execute the directives of the court therein strictly in accordance with the letter thereof and without any deviation therefrom.⁸

Thus, sheriffs play an important part in the administration of justice. In view of their exalted position, their conduct should be geared towards maintaining the prestige and integrity of the court. In Escobar Vda. de Lopez v. Luna,⁹ we ruled that sheriffs have the obligation to perform the duties of their office honestly, faithfully and to the best of their abilities. They must always hold inviolate and invigorate the tenet that a public office is a public trust. As court personnel, their conduct must be beyond reproach and free from any suspicion that may taint the judiciary. They must be circumspect and proper in their behavior. They must use reasonable skill and diligence in performing their official duties, especially when the rights of individuals may be jeopardized by neglect. They are ranking officers of the court entrusted with a fiduciary role. They play an important part in the administration of justice and are called upon to discharge their duties with integrity, reasonable dispatch, due care, and circumspection. Anything less is unacceptable. This is because in serving the court’s writs and processes and in implementing the orders of the court, sheriffs cannot afford to err without affecting the efficiency of the process of the administration of justice. Sheriffs are at the grassroots of our judicial machinery and are indispensably in close contact with litigants, hence their conduct should be geared towards maintaining the prestige and integrity of the court, for the image of a court of justice is necessarily mirrored in the conduct, official or otherwise, of the men and women who work thereat, from the judge to the least and lowest of its personnel.

DEFINITION OF MISCONDUCT

In Office of the Court Administrator v. Judge Fernandez,¹⁰ the Court defined “misconduct” as any unlawful conduct, on the part of a person concerned in the administration of justice, prejudicial to the rights of parties or to the right determination of the cause. It generally means wrongful, improper, unlawful conduct motivated by a premeditated, obstinate or intentional purpose.

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D E C I S I O N

CARPIO, J.:

The Case

A sheriff performs a sensitive role in the dispensation of justice. He is duty-bound to know the basic rules in the implementation of a writ of execution and be vigilant in the exercise of that authority.

The Facts

Crispin Sarmiento (Crispin) was charged with eight counts of violation of Batas Pambansa Blg. 22 before the Metropolitan Trial Court of Manila, Branch 20 (MeTC-Br. 20), docketed as Criminal Case Nos. 345095-102-CR . On 22 September 2003, he was acquitted of the charges for failure of the prosecution to prove his guilt.¹ However, upon the prosecution’s manifestation and motion that the decision did not mention any civil liability that was impliedly instituted in the criminal action, the trial court amended its decision on 3 February 2004 ordering Crispin to pay the private complainants, spouses Daniel and Blesilda Inciong (spouses Inciong), the amount of P295,000 as actual damages plus legal interest of 12% per annum to be reckoned from the filing of the case.² After the decision became final and executory, the spouses Inciong filed a motion for writ of execution which motion was granted in the Order dated 18 April 2006.³ A writ of execution was issued on 8 August 2006.⁴

On 24 August 2007, Crispin filed a Verified Complaint against respondent Luisito P. Mendiola (respondent), Sheriff III of the MeTC-Br. 20, charging the latter with Grave Misconduct, Manifest Partiality, Abuse of Authority, Oppression, Usurpation and Violation of Section 3(e) of Republic Act No. 3019 (RA 3019), otherwise known as the Anti-Graft and Corrupt Practices Act. Crispin alleged that on 12 February 2007, respondent and his companion, Claro Bacolod, a policeman employed in the Warrant Section of the Manila Police Department, forcibly took the Mercedes Benz of his brother, Tirso Sarmiento (Tirso), without presenting any writ of execution from the court. Crispin allegedly explained to them that he is not the owner of the vehicle but a mere caretaker. He showed to them the Deed of Sale of the subject vehicle executed on 24 January 2007 between the seller, Efren Panganiban (Efren), and the buyer, Tirso. He asserted that respondent’s levy of the subject vehicle was illegal since a sheriff is not authorized to attach property not belonging to the judgment debtor.

In his Comment, respondent denied the charges. He alleged that he showed to Crispin the copy of the Order dated 18 April 2006 granting the issuance of the writ of execution and a Notice of Levy Upon Personal Property but Crispin refused to acknowledge these documents. Respondent further averred that he went to the house of Efren, the alleged seller, prior to the implementation of the writ of execution and he was assured by the latter’s son that the car was already sold to Crispin about two or three years ago. Respondent contended that if Tirso was indeed the owner, then he should have been the one to have filed the instant administrative case. Respondent pointed out that he was not remiss in his duties as a court personnel and did not violate RA 3019 because he acted in good faith during the implementation of the writ of execution.

OCA Report and Recommendation

The Office of the Court Administrator (OCA) found respondent guilty of Simple Misconduct. An examination of the records would show that respondent levied upon the subject vehicle despite the fact that its ownership belonged to Crispin’s brother as evidenced by the Deed of Sale executed on 24 January 2007, a month before the implementation of the writ of execution on 12 February 2007. Respondent failed to present evidence to bolster his claim that the subject vehicle was sold to Crispin.

The OCA opined that the court, in issuing a writ of execution, may enforce its authority only on the properties of the judgment debtor and the respondent must only subject to execution property belonging to the judgment debtor. If he levies on the properties of third persons in which the judgment debtor has no interest, he is acting beyond the limits of his authority. Thus, as found by the OCA, respondent’s transgression constitutes simple misconduct which is classified as a less grave offense under Section 52, B(2), Rule IV of the Revised Uniform Rules on Administrative Cases where the penalty is suspension of one month and one day to six months, for the first offense and, dismissal from the service, for the second offense. Since this is respondent’s first offense, the OCA recommended that respondent be fined P10,000.

The Court’s Ruling

As admitted by respondent in his Comment, he levied a 1984 model Mercedes Benz with plate number PKY 703 but Crispin refused to hand the key of the car thus prompting him to engage the services of a wrecker to tow and bring the car to the court compound. He claims he acted in good faith and only performed his official duty in implementing the writ of execution.

We do not agree.

Sheriff Clavier M. Cachombo, Jr. (Clavier) was the one who first implemented the writ of execution on the same Mercedes Benz with plate number PKY 703. Apparently, respondent failed to read thoroughly the Sheriff’s Partial Return dated 15 September 2006⁵ which was annexed in his Comment. It was stated therein that “upon verification with the Land Transportation Office, it was found out that the said motor vehicle was registered under the name of Efren Panganiban since June 2002 and until March 31, 2006 in San Juan, Metro Manila and was never registered under the name of the defendant.” Thus, the service of the writ of execution was temporarily held in abeyance until such time that any property of the defendant, complainant in this administrative case, had been positively identified. Clearly, respondent should have refrained from implementing the writ of execution on the same vehicle.

Respondent claims the son of the registered owner of the subject vehicle assured him that the car was sold to Crispin, but respondent failed to present concrete evidence to prove his claim. Moreover, the Deed of Sale presented by Crispin showed that Efren sold the subject vehicle to Tirso and not to Crispin. This clearly shows that the subject vehicle did not belong to Crispin.

It is a basic principle of law that money judgments are enforceable only against property unquestionably belonging to the judgment debtor. In the execution of a money judgment, the sheriff must first make a demand on the obligor for payment of the full amount stated in the writ of execution. Property belonging to third persons cannot be levied upon.⁶ Moreover, the levy upon the properties of the judgment obligor may be had by the executing sheriff if the judgment obligor cannot pay all or part of the full amount stated in the writ of execution. If the judgment obligor cannot pay all or part of the obligation in cash, certified bank check or other mode acceptable to the judgment obligee, the judgment obligor is given the option to immediately choose which of his property or part thereof, not otherwise exempt from execution, may be levied upon sufficient to satisfy the judgment. If the judgment obligor does not exercise the option immediately, or when he is absent or cannot be located, he waives such right, and the sheriff can now first levy his personal properties, if any, and then the real properties if the personal properties are insufficient to answer for the judgment.⁷
Therefore, the sheriff cannot and should not be the one to determine which property to levy if the judgment obligor cannot immediately pay because it is the judgment obligor who is given the option to choose which property or part thereof may be levied upon to satisfy the judgment. Since Crispin is not the owner of the subject vehicle that respondent levied on, it was improper for respondent to have enforced the writ of execution on a property that did not belong to Crispin, the judgment debtor/obligor. Respondent evidently failed to perform his duty with utmost diligence.

It is undisputed that the most difficult phase of any proceeding is the execution of judgment. The officer charged with this delicate task is the sheriff. The sheriff, as an officer of the court upon whom the execution of a final judgment depends, must necessarily be circumspect and proper in his behavior. Execution is the fruit and end of the suit and is the life of the judgment. He is to execute the directives of the court therein strictly in accordance with the letter thereof and without any deviation therefrom.⁸

Thus, sheriffs play an important part in the administration of justice. In view of their exalted position, their conduct should be geared towards maintaining the prestige and integrity of the court. In Escobar Vda. de Lopez v. Luna,⁹ we ruled that sheriffs have the obligation to perform the duties of their office honestly, faithfully and to the best of their abilities. They must always hold inviolate and invigorate the tenet that a public office is a public trust. As court personnel, their conduct must be beyond reproach and free from any suspicion that may taint the judiciary. They must be circumspect and proper in their behavior. They must use reasonable skill and diligence in performing their official duties, especially when the rights of individuals may be jeopardized by neglect. They are ranking officers of the court entrusted with a fiduciary role. They play an important part in the administration of justice and are called upon to discharge their duties with integrity, reasonable dispatch, due care, and circumspection. Anything less is unacceptable. This is because in serving the court’s writs and processes and in implementing the orders of the court, sheriffs cannot afford to err without affecting the efficiency of the process of the administration of justice. Sheriffs are at the grassroots of our judicial machinery and are indispensably in close contact with litigants, hence their conduct should be geared towards maintaining the prestige and integrity of the court, for the image of a court of justice is necessarily mirrored in the conduct, official or otherwise, of the men and women who work thereat, from the judge to the least and lowest of its personnel.

In Office of the Court Administrator v. Judge Fernandez,¹⁰ the Court defined “misconduct” as any unlawful conduct, on the part of a person concerned in the administration of justice, prejudicial to the rights of parties or to the right determination of the cause. It generally means wrongful, improper, unlawful conduct motivated by a premeditated, obstinate or intentional purpose.

We agree with the OCA’s finding that respondent is guilty of simple misconduct. Under Section 52, B(2), Rule IV of the Revised Uniform Rules on Administrative Cases in the Civil Service, simple misconduct is punishable by suspension for one (1) month and one (1) day to six (6) months for the first offense, and dismissal for the second offense. Since this is respondent’s first offense, we find the OCA’s recommendation imposing a fine of P10,000 to be in order.

WHEREFORE, we find respondent Luisito P. Mendiola, Sheriff III of the Metropolitan Trial Court of Manila, Branch 20, guilty of Simple Misconduct. We FINE him P10,000, with a warning that a repetition of the same or similar offense in the future shall be dealt with more severely.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

ANTONIO EDUARDO B. NACHURA

Associate Justice

DIOSDADO M. PERALTA ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE C. MENDOZA

Associate Justice

1 Annex “A” of the respondent’s Comment.

2 Annex “B” of the respondent’s Comment.

3 Annex “C” of the respondent’s Comment.

4 Annex “D” of the respondent’s Comment.

5 Annex “E” of the respondent’s Comment.

6 Teodosio v. Somosa, A.M. No. P-09-2610 (Formerly A.M. OCA IPI No. 09-3072-P), 13 August 2009, 595 SCRA 539, 557-558.

7 Section 9 (b) of Rule 39 provides:

Sec. 9. Execution of judgments for money, how enforced. –

x x x

(b) Satisfaction by levy. – If the judgment obligor cannot pay all or part of the obligation in cash, certified bank check or other mode of payment acceptable to the judgment obligee, the officer shall levy upon the properties of the judgment obligor of every kind and nature whatsoever which may be disposed of for value and not otherwise exempt from execution giving the latter the option to immediately choose which property or part thereof may be levied upon, sufficient to satisfy the judgment. If the judgment obligor does not exercise the option, the officer shall first levy on the personal properties, if any, and then on the real properties if the personal properties are insufficient to answer for the judgment.

The sheriff shall sell only a sufficient portion of the personal or real property of the judgment obligor which has been levied upon.

x x x.

8 Mariñas v. Florendo, A.M. No. P-07-2304, 12 February 2009, 578 SCRA 502, 510-511.

9 A.M. No. P-04-1786 (Formerly OCA I.P.I. No. 02-1341-P), 13 February 2006, 482 SCRA 265, 275-276.

10 480 Phil. 495, 500 (2004).