Republic v Enriquez (166 SCRA 608)

FACTS:

Commissioner of the 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. 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 (Deputy Sheriff of Manila) levied on 2 barges of Maritime pursuant to a writ of execution issued in a Civil Case involving Maritime where the aforesaid 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 prevails over the writ of execution issued by an RTC.

HELD:

BIR Warrant of Distraint prevails. It is well settled that the claim of the government prevails on a tax lien superior to the claim of a private litigant predicated on a judgment. The tax lien attached not only from the service of warrant of distraint but from the time the tax became due and payable.

In the case, the Distraint was made by the Commissioner long before the writ of execution was issued by the RTC. There is no question that at the time of the writ of execution, the 2 barges were no longer properties of Maritime. The power of the court in execution of judgments extends only to properties unquestionable belonging to the judgment debtor. Execution sale 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.

There is no further need for petitioner to establish his rights over the 2 barges as evidence clearly proves that the barges are under distraint and in fact seized by the Commisssioner.

*Notice of Levy and Execution Sale annulled. Respondent is enjoined from further proceeding with the sale.