Republic of the Philippines vs Ramon Enriquez

FACTS: On 28 January 1985, the petitioner, through the Commissioner of Internal Revenue, served a Warrant of Distraint of Personal Property on the Maritime Company of the. Philippines to satisfy various deficiency taxes of said company in the total amount of P17,284,882.45, pursuant to unappealed and final tax assessments. The First Coast Guard District acknowledged receipt from the Commissioner of several barges, vehicles and 2 bodegas of spare parts belonging to taxpayer Maritime. Ramon Enriquez, respondent sheriff, levied on two (2) barges of the Maritime Company of the Philippines, pursuant to a writ of execution issued by the RTC in a Civil Case involving Maritime where the said company lost. Enriquez then scheduled a public auction sale including the aforementioned properties. The Commissioner wrote the sheriff informing him that the barges were no longer owned by Maritime as the said barges had been distrained and seized by the BIR in satisfaction of the deficiency taxes. This letter was filed on June 19, 1986 at the office of the sheriff. On June 23, 1986, the sheriff sold the 2 barges and issued certificates of sale to the highest bidder which was the levying creditor. On June 24, 1986, Commissioner filed a petition for prohibition praying that the respondent be ordered to desist and refrain from further proceedings in connection with the execution and that respondent’s notice of levy be null and void. The CA dismissed the petition holding that the sheriff did not commit grave abuse of discretion.

ISSUE: Whether or not the BIR warrant of distraint and notice of seizure of personal property is valid and effective as against the writ of execution issued by RTC and the levy on execution and auction sale of the barges in question.

RULING: BIR warrant of distraint is valid. It is settled that the claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. The tax lien attaches not only from the service of the warrant of distraint of personal property but from the time the tax became due and payable. Besides, the distraint on the subject properties of Maritime Company of the Philippines as well as the notice of their seizure were made by petitioner, through the Commissioner of Internal Revenue, long before the writ of execution was issued by the RTC. There is no question then that at the time the writ of execution was issued, the two (2) barges, MCP-1 and MCP-4, were no longer properties of the Maritime Company of the Philippines. The power of the court in execution of judgments extends only to properties unquestionably belonging to the judgment debtor. Execution sales affect the rights of the judgment debtor only, and the purchaser in an auction sale acquires only such right as the judgment debtor had at the time of sale. It is also well-settled that the sheriff is not authorized to attach or levy on property not belonging to the judgment debtor.