In Jimmy T. Go A.K.A. Jaime T. Gaisano v. Hon. Zeus Abrogar and International Exchange Bank, the Supreme Court addressed whether a judge committed grave abuse of discretion by denying a motion to compel a bank to explain the status of attached shares. The Court ruled that the judge did not abuse discretion, especially since the petitioner himself had previously transferred the shares in question. This decision emphasizes the importance of verifying the status of assets and the limitations on compelling actions from third parties when a party’s own actions have clouded the asset’s ownership.

From Custodia Legis to Missing Shares: When Does a Bank Need to Explain?

The case revolves around a complaint for a sum of money filed by International Exchange Bank against Alberto Looyuko and Jimmy T. Go. As part of the legal proceedings, a writ of attachment was issued, leading to a notice of levy on the China Bank shares of stock supposedly owned by Looyuko and Go. However, when the bank was later ordered to garnish the shares, it responded that most of the specified stock certificates were “no longer outstanding.” This discrepancy prompted Go to file a motion, seeking to compel China Banking Corporation to explain what happened to the shares that were allegedly already under the court’s control, or in custodia legis.

The Regional Trial Court (RTC) denied Go’s motion, finding no reason to direct the Sheriff to desist from implementing a valid writ of execution. The RTC reasoned that whether or not China Banking Corporation explained the reason why the alleged shares of petitioner are no longer outstanding cannot affect at all the implementation of the writ of execution. Go then elevated the matter to the Court of Appeals (CA), arguing that the RTC had committed grave abuse of discretion. The CA, however, sided with the RTC, leading to Go’s petition before the Supreme Court.

One of the key points raised in the Court of Appeals was an Affidavit-Complaint for estafa filed by Go against Looyuko. In this affidavit, Go admitted that he had endorsed the shares in blank and entrusted them to Looyuko sometime in February 1997. This admission became crucial because it predated the notice of levy on attachment served to China Banking Corporation in April 1998. The CA used this information to support its conclusion that Go was aware the shares were no longer in his name at the time of the attachment.

The Supreme Court agreed with the CA’s assessment. It held that the RTC had not acted with grave abuse of discretion in denying Go’s motion. Grave abuse of discretion implies a capricious, whimsical, arbitrary, or despotic exercise of judgment, and the Court found no such behavior on the part of the RTC judge. The RTC was justified in proceeding with the execution of the writ, especially since there were other properties of Go available to satisfy the debt.

The Court also addressed the issue of the Affidavit-Complaint, stating that the CA, in the interest of justice, could consider it even though it was raised for the first time on appeal. The Court emphasized that Go himself had presented the affidavit, and it was relevant to clarifying the whereabouts of the shares. Given Go’s own admission that he had transferred the shares to Looyuko before the attachment, the Court found no basis to compel China Banking Corporation to provide an explanation.

The decision also underscores the order of preference in executing judgments, as outlined in the Revised Rules of Court. Specifically, Sec. 9, Rule 39 states:

1. 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. [Emphasis supplied.]

This provision indicates that personal properties should be levied upon before real properties. However, it does not create an absolute obligation to investigate the status of specific personal properties when there are other assets available.

The case highlights several key principles. First, a party cannot seek to benefit from a situation created by their own prior actions. Go’s transfer of the shares to Looyuko weakened his claim that the bank should be compelled to explain their status. Second, courts have discretion in managing the execution of judgments, and they are not obligated to pursue every possible avenue if other viable options exist. Finally, the decision reinforces the importance of due diligence in asset management and the potential consequences of failing to verify ownership.

FAQs

What was the key issue in this case?	The key issue was whether the trial court committed grave abuse of discretion in denying the petitioner’s motion to compel a bank to explain the status of shares that were supposedly attached. The Supreme Court ultimately ruled that no such abuse occurred.
Why did the bank claim the shares were “no longer outstanding”?	The shares were no longer under the petitioner’s name because, prior to the attachment, the petitioner had endorsed the shares in blank and entrusted them to another individual, Alberto Looyuko. Looyuko had then transferred the shares to his name.
What is meant by in custodia legis?	In custodia legis refers to property that is under the control and protection of the court. In this case, the petitioner claimed the shares were already under the court’s control due to the writ of attachment.
What is grave abuse of discretion?	Grave abuse of discretion means the tribunal acted in a capricious, whimsical, arbitrary, or despotic manner in the exercise of its judgment. The Supreme Court found no such abuse in this case.
What role did the Affidavit-Complaint play in the decision?	The Affidavit-Complaint, filed by the petitioner against Looyuko, contained an admission that the shares had been transferred before the attachment. This was critical evidence undermining the petitioner’s claim.
What does the Revised Rules of Court say about levying property?	The Revised Rules of Court, specifically Sec. 9, Rule 39, states that if a judgment obligor cannot pay, the officer shall levy on personal properties first, and then on real properties if the personal properties are insufficient.
Could the bank have been compelled to provide an explanation?	The Court ruled that the bank could not be compelled because the petitioner’s own actions (transferring the shares) created the situation. Additionally, the trial court had discretion and other avenues for satisfying the judgment.
What is the practical implication of this ruling?	The ruling highlights the importance of verifying asset ownership and the limitations of seeking court orders against third parties when a party’s own actions have complicated the situation.

This case serves as a reminder of the importance of clear title and due diligence in financial matters. The Supreme Court’s decision reaffirms the principle that parties are bound by their prior actions and that courts have discretion in managing the execution of judgments. It also underscores the need to verify the status of assets before initiating legal proceedings.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Jimmy T. Go A.K.A. Jaime T. Gaisano v. Hon. Zeus Abrogar and International Exchange Bank, G.R. No. 152672, October 02, 2007