6. Proceedings Where Property is Claimed by Third Persons

U. Provisional Remedies (part 3 of 3)

(d) The actual market value of the property. The applicant must also give a bond, executed to the adverse party in double the value of the property as stated in the affidavit aforementioned, for the return of the property to the adverse party if such return be adjudged, and for the payment to the adverse party of such sum as he may recover from the applicant in the action. (2a) Section 3. Order. – Upon the filing of such affidavit and approval of the bond, the court shall issue an order and the corresponding writ of replevin describing the personal property alleged to be wrongfully detained and requiring the sheriff forthwith to take such property into his custody. (3a) Section 4. Duty of the sheriff. – Upon receiving such order, the sheriff must serve a copy thereof on the adverse party, together with a copy of the application, affidavit and bond, and must forthwith take the property, if it be in the possession of the adverse party, or his agent, and retain it in his custody. If the property or any part thereof be concealed in a building or enclosure, the sheriff must demand its delivery, and if it be not delivered, he must cause the building or enclosure to be broken open and take the property into his possession. After the sheriff has taken possession of the property as herein provided, he must keep it in a secure place and shall be responsible for its delivery to the party entitled thereto upon receiving his fees and necessary expenses for taking and keeping the same. (4a) Section 5. Return of property. – If the adverse party objects to the sufficiency of the applicant’s bond, or of the surety or sureties thereon, he cannot immediately require the return of the property, but if he does not so object, he may, at any time before the delivery of the property to the applicant, require the return thereof, by filing with the court where the action is pending a bond executed to the applicant, in double the value of the property as stated in the applicant’s affidavit for the delivery thereof to the applicant, if such delivery be adjudged, and for the payment of such sum to him as may be recovered against the adverse party, and by serving a copy of such bond on the applicant. (5a) Section 6. Disposition of property by sheriff. – If within five (5) days after the taking of the property by the sheriff, the adverse party does not object to the sufficiency of the bond, or of the surety or sureties thereon; or if the adverse party so objects and the court affirms its approval of the applicant’s bond or approves a new bond, or if the adverse party requires the return of the property but his bond is objected to and found insufficient and he does not forthwith file an approved bond, the property shall be delivered to the applicant. If for any reason the property is not delivered to the applicant, the sheriff must return it to the adverse party. (6a) Section 7. Proceedings where property claimed by third person. – If the property taken is claimed by any person other than the party against whom the writ of replevin had been issued or his agent, and such person makes an affidavit of his title thereto, or right to the possession thereof, stating the grounds therefor, and serves such affidavit upon the sheriff while the latter has possession of the property and a copy thereof upon the applicant, the sheriff shall not be bound to keep the property under replevin or deliver it to the applicant unless the applicant or his agent, on demand of said sheriff, shall file a bond approved by the court to indemnify the third-party claimant in a sum not less than the value of the property under replevin as provided in section 2 hereof. In case of disagreement as to such value, the court shall determine the same. No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action therefor is filed within one hundred twenty (120) days from the date of the filing of the bond. The sheriff shall not be liable for damages, for the taking or keeping of such property, to any such third-party claimant if such bond shall be filed. Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property, or prevent the applicant from claiming damages against a third-party claimant who filed a frivolous or plainly spurious claim, in the same or a separate action. When the writ of replevin is issued in favor of the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall not be required, and in case the sheriff is sued for damages as a result of the replevin, he shall be represented by the Solicitor General, and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of the funds to be appropriated for the purpose. (7a) Section 8. Return of papers. – The sheriff must file the order, with his proceedings indorsed thereon, with the court within ten (10) days after taking the property mentioned therein. (8a) Section 9. Judgment. – After trial of the issues, the court shall determine who has the right of possession to and the value of the property and shall render judgment in the alternative for the delivery thereof to the party entitled to the same, or for its value in case delivery cannot be made, and also for such damages as either party may prove, with costs. (9a) Section 10. Judgment to include recovery against sureties. – The amount, if any, to be awarded to any party upon any bond filed in accordance with the provisions of this Rule, shall be claimed, ascertained, and granted under the same procedure as prescribed in section 20 of Rule 57. (10a)

Exceptions: Third-party claims

The doctrine of judicial stability does not apply where a third-party claimant is involved. (Santos v. Bayhon, G.R. No. 88643, 1991).

• Execution through a separate action (Rule 39, Sec. 16)
• Preliminary Attachment (Rule 57, Sec. 14)
• Replevin, through intervention, since the main action is still pending (Rule 60, Sec. 7).

Examples

• Warehouseman – must have custody of goods claimed to be owned by two or more persons who do not have the same interest;
• Insurer – when confronted by conflicting claims on the proceeds of an insurance policy
• Lessee – may be filed by a lessee against those who have conflicting claims over the rent due for the property leased; or
• Debtor – when confronted by two or more persons who do not present the same interest and are claiming the right to collect

Opposition

Any interested person may oppose. The Solicitor General or the proper fiscal SHALL appear on behalf of the Government. (R103, S4)

Remedy for one who wants to resolve his/her adverse claim of ownership

File a separate action (for a final determination of the conflicting claims of title) with the RTC. (Pacioles, Jr. v. Chuatoco-Ching, G.R. No. 127920, 2005).

No Objections

If a defendant has no objection or defense to the action or the taking of his property:

• He may file and serve a notice of appearance and a manifestation to that effect, specifically designating or identifying the property in which he claims to be interested, within the time stated in the summons.
• Thereafter, he shall be entitled to notice of all proceedings affecting the same. (Sec. 3, Rule 67)

Nature, Purpose, and Jurisdiction

MANNER OF ATTACHING REAL AND PERSONAL PROPERTY; WHEN PROPERTY ATTACHED IS CLAIMED BY THIRD PERSON

Mistaken Levy

Upon due application of the third person and after summary hearing, the court may command that the property be released from the mistaken levy and restored to the rightful owner or possessor. What said court can do in these instances, however, is limited to a determination of whether the sheriff has acted rightly or wrongly in the performance of his duties in the execution of judgment, more specifically, if he has indeed taken hold of property not belonging to the judgment debtor. The court does not and cannot pass upon the question of title to the property, with any character of finality (Magdalena T. Villasi v. Filomena Garcia, substituted by his heirs, namely, Ermelinda H. Garcia, et al., G.R. No. 190106, 2014)

Examination of Party Whose Property is Attached and Persons Indebted to Him or Controlling His Property

Any person owing debts to the party whose property is attached or having in his possession or under his control any credit or other personal property belonging to such party, may:

• Be required to attend before the court in which the action is pending, or before a commissioner appointed by the court, and be examined on oath; or
• Be required to attend for the purpose of giving information respecting his property, and may be examined on oath. (Sec. 10, Rule 57).

The court may, after such examination, order personal property capable of manual delivery belonging to him, in the possession of the person so required to attend before the court, to be delivered to the clerk of the court or sheriff on such terms as may be just, having reference to any lien thereon or claim against the same, to await the judgment in the action. (Id.).

Remedies of the Third Person Claiming a Property Subject of a Writ of Attachment

• File a terceria by executing an affidavit of his title or right of possession over the property levied on attachment and serving the same to the office making the levy and the adverse party or third party claim (Sec. 16, Rule 39; Sec. 14, Rule 57);
• A writ of replevin (Sec. 7, Rule 60);
• Motion for summary hearing on his claim for the purpose of determining whether the sheriff has acted rightly or wrongly in the performance of his duties in the execution of the writ of attachment, more specifically if he has indeed levied on attachment and taken hold of property not belonging to the plaintiff;
• File a separate action to nullify the levy with damages resulting from the unlawful levy and seizure.

The remedies are CUMULATIVE and any one of them may be resorted to without availing of the other remedies. (Ching v. CA, G.R. No. 124642, 2004).

Note: In that in item no. 3 above, it does not refer to intervention under the Rules of Court. It is rather simply an invocation of the Court's power of supervision and control over the actuations of its officers and employees to the end that it be assured that these conform to the law. (Ong v. Tating, G.R. No. L-61042, 1987).

In resolving the motion of the third party, the court does not and cannot pass upon the question of the title to the property with any character of finality. It can treat the matter only insofar as may be necessary to decide if the sheriff has acted correctly or not. If the claimant’s proof does not persuade the court of the validity of the title, or right of possession thereto, the claim will be denied by the court. (Ching v. CA, G.R. No. 124642, 2004)

Terceria

A stranger to the action, i.e., a person not a party to the action, whose property is seized pursuant to the writ of delivery (attachment), is accorded the remedy known as a terceria, a third party claim. (La Tondeña Distillers, Inc. v. Court of Appeals, G.R. No. 88938, 1992)

Under the remedy of terceria, the sheriff shall not be bound to keep the property under attachment if the property attached is being claimed by any person, other than whom the attachment, or his was issued against and such person:

• Makes an affidavit of his title thereto or right of possession thereof;
• The affidavit states the grounds of the right or title;
• Such affidavit is served upon the sheriff while he is still in possession of the attached property; and
• A copy of the affidavit is served upon the attaching party. (Sec. 14, Rule 57)

However, the sheriff shall be bound to keep the property if the attaching party or his agent shall file a bond, on demand of the sheriff and approved by the court, to indemnify the third-party claimant. The value of the bond shall not be less than the value of the property levied upon. In case of disagreement as to such value, the same shall be decided by the court issuing the writ of attachment. (Id.)

The sheriff shall not be liable for damages for the taking or keeping of such property, to any such thirdparty claimant, if the aforementioned bond shall be filed. (Id.)

No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action therefor is filed within 120 days from the date of the filing of the bond. (Id.)

Nevertheless, nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property, or prevent the attaching party from claiming damages against a third-party claimant who filed a frivolous or plainly spurious claim, in the same or a separate action. (Id.)

EXECUTION OF SPECIAL JUDGMENTS

PROCEEDINGS WHERE PROPERTY IS CLAIMED BY THIRD PERSONS

Who May File Third Party-Claims

Any other person other than the judgment obligor or his agent. (Third-part claimant)

Time to File a Third-Party Claim

The third (3rd) party claim (terceria) may be filed at any time, so as long as the sheriff has the possession of the property levied upon, or before the property is sold under execution.

Purpose of Third-Party Claim:

• To recover the property levied on by the sheriff, although the claimant may vindicate his claim by any proper action even if he has not filed a thirdparty claim.
• To hold the sheriff liable for damages for the taking or keeping of such property, which action for damages, however, must be brought within 120 days from the date of the filing of the bond. (Feria and Noche, Civil Procedure Annotated, 2013 ed., vol. 2, p. 211)

Procedure in Making a Third-Party Claim

Third (3rd) Party Claimant should:

• Make an affidavit of his/her title thereto, or right of possession thereof, stating the grounds of such right or title; and
• Serve such affidavit upon the sheriff and a copy thereof upon the judgment obligee.

Effect: The Officer shall not be bound to keep the property, UNLESS the Judgment Obligee, on demand the officer files an INDEMNITY BOND approved by the court to indemnify the third party claimant in a sum not less than the value of the property levied on.

In case of disagreement as to the value of the property, the Court issuing the writ shall determine the same.

The Officer shall not be liable for damages to any third-party claimant if such bond is filed by the judgment obligee for the taking or keeping of the property.

Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property in a SEPARATE action. (Rule 39, Section 16)

However, the judgment obligee can claim damages against a third-party claimant who filed a frivolous or plainly spurious claim, and such judgment obligee can institute proceedings therefor in the SAME or SEPARATE action.

When the writ of attachment is issued in favor of the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall NOT be required, and in case the sheriff is sued for damages as a result of the attachment, he shall be represented by the Solicitor General, and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of the funds to be appropriated for the purpose. (Rule 39, Sec. 14)

The third-party claimant may execute an affidavit of his title or right to the possession of the property levied, and serve the same to the officer making the levy and a copy thereof to the judgment creditor. This remedy is known as terceria. The officer shall not be bound to keep the property, unless the judgment creditor files a bond approved by the court to indemnify the third-party claimant in a sum not less than the value of the property levied on. (PSALM v. Maunlad Homes, GR No. 215933, 8 February 2017).

IN RELATION TO THIRD-PARTY CLAIM IN ATTACHMENT AND REPLEVIN

Proceedings where property is claimed by a third person are the same as to a judgment obligee (final and executory judgments), an attaching party (attachment), and an applicant praying for recovery of possession of personal property (replevin), EXCEPT that the amount of the INDEMNITY BOND they file differs.

ATTACHMENT (Rule 57)

To keep the property in the possession of the sheriff, the ATTACHING PARTY or his AGENT, on demand of the sheriff, shall file a BOND approved by the court to indemnify the third-party claimant in a sum not less than the value of the property levied upon. (Rule 57, Sec. 14)

Remedy: Nothing shall prevent a claimant or any third person from vindicating his claim to the property, or prevent the attaching party from claiming damages against a third-party claimant who filed a frivolous or plainly spurious claim, in the SAME or a SEPARATE action. (Rule 57, Sec. 14)

Under Rule 39, Sec. 16, the third party claimant does not have a remedy in the same action because intervention is only allowed before judgment. His remedy is a separate action. However, in Villasi v. Garcia, (G.R. No. 190106, 2014), the third party claimant can file a motion for SUMMARY HEARING.

Certificate of Sale Where Property is Claimed by Third Person

The certificate of sale must make express mention of the existence of such third-party claim. (Rule 39, Sec. 26)

AFFIDAVIT AND BOND; REDELIVERY BOND

SHERIFF’S DUTY IN THE IMPLEMENTATION OF THE WRIT; WHEN PROPERTY IS CLAIMED BY THIRD PARTY

Remedies of Third Parties

• Terceria (third-party claim);
• Separate action to assail recovery of possession;
• File a motion for intervention.

Terceria

When the property taken is claimed against whom replevin had been issued or his agent, the sheriff shall not be bound to keep the property under replevin if such third person shall:

• Make an affidavit of his title to or right of possession over the property;
• Such affidavit states the grounds of such title or right;
• The affidavit is served to the sheriff while the latter has possession of the attached property; and
• A copy of the affidavit is served upon the applicant. (Sec. 7, Rule 60)

However, the sheriff shall still be bound to keep the property if:

• The applicant or his agent, on demand of the sheriff, shall file a bond approved by the court to indemnify the third-party claimant; and
• The bond shall be in an amount not less than the value of the property under replevin as declared in the affidavit of the applicant;

Note: In case of disagreement as to such value, the court shall determine the same. (Id.)

No claim for damages for the taking or keeping of the property may be enforced against the bond, unless the action therefor is filed within 120 days from the date of the filing of the bond. (Id.)

The sheriff shall not be liable for damages, for the taking or keeping of such property, to any such thirdparty claimant, if such bond shall be filed. (Id.)

Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property, or prevent the attaching property claiming damages against a third-party claimant who filed a Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property, or prevent the attaching property claiming damages against a third-party claimant who filed a

When the writ of replevin is issued in favor of the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall not be required, and in case the sheriff is sued for damages as a result of the replevin, he shall be represented by the Solicitor General, and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of the funds to be appropriated for the purpose. (Sec. 7, Rule 60)

Note: This is similar as in third-party claims in execution and in attachment.

In Rule 57, Sec. 14, the affidavit is served upon the sheriff while he has possession of the attached property.

In Rule 60, Sec. 7, the affidavit is served within 5 days in which the sheriff has possession, in connection with Rule 60, Sec. 6.