FIRST DIVISION
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SPOUSES Eduardo and elsa versola, petitioners, - versus - hon. court of
appeals, Sheriff reynaldo b. madolaria, judge Respondents. |
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G.R. No. 164740 Present: PANGANIBAN,
C.J. Chairperson, YNARES-SANTIAGO, AUSTRIA-MARTINEZ, CALLEJO, SR., and CHICO-NAZARIO, JJ. Promulgated: July 31, 2006 |
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CHICO-NAZARIO, J.:
This Petition for Review under Rule
45 of the Rules of Court, filed by petitioners spouses Eduardo and Elsa Versola, seeks to nullify and set aside the 28 April 2004 Decision[1] and
28 July 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 79300, which affirmed
the Orders dated 6 January 2003 and 14 July 2003 of the Regional Trial Court
(RTC) of Quezon City, Branch 217, in Civil Case No.
Q-93-16003.
This case has its genesis from a loan
transaction entered into by private respondent Dr. Victoria T. Ong Oh and a certain Dolores Ledesma,
wherein the former granted a P1,000,000.00 loan to the latter. As a security for said loan, Ledesma issued to private respondent a check for the same
amount dated 10 February 1993 and promised to execute a deed of real estate
mortgage over her house and lot located at Tandang Sora, Quezon City, covered by
Transfer Certificate of Title (TCT) No. RT-51142. The execution of the deed of real estate
mortgage did not materialize, but Ledesma delivered the
owner’s duplicate copy of the TCT No. RT-51142 to private respondent.
Thereafter, Ledesma
sold the said house and lot to petitioners for P2,500,000.00. Petitioners paid Ledesma
P1,000,000.00 as downpayment, with the
remaining balance of P1,500,000.00 to be paid in monthly installments of
P75,000.00[2] starting
P1,500,000.00. Petitioners, however, were only able to pay
the amount of P50,000.00 to Ledesma. To raise the full amount that Ledesma demanded, petitioners applied for a loan with Asiatrust Bank, Inc. (Asiatrust)
in the amount of P2,000,000.00. In
the course of the application for said loan, petitioners, private respondent,
and Ledesma convened with Asiatrust
to arrive at a scheme to settle the obligation of Ledesma
to private respondent and the obligation of petitioners to Ledesma. After the meeting, the following agreement[3]
was arrived at: (1) private respondent
would grant Ledesma an additional loan of P450,000.00,
making the latter’s loan from the former amount to P1,450,000.00 (the
amount of P1,450,000.00 would then be credited to petitioners as full
settlement of the purchase price of the property); (2) Ledesma
would execute a Deed of Sale transferring ownership over her house and lot,
covered by TCT No. RT-51142, to petitioners; (3) private respondent would then deliver
the duplicate copy of TCT No. RT-51142 to Asiatrust; (4)
once petitioners had secured a title to the said house and lot in their names,
they would execute a real estate mortgage over it in favor of Asiatrust to secure their loan of P2,000,000.00; and
(5) Asiatrust would then grant a loan of P2,000,000.00
to petitioners with a written guarantee that the P1,500,000.00 would be
given directly by Asiatrust to private respondent
after the mortgage lien of Asiatrust would have been
annotated on the title of the said property.
In keeping with the foregoing
agreement, private respondent granted Ledesma an
additional loan of P450,000.00. Ledesma, in turn, executed a Deed of Sale transferring the
title of the subject property to petitioners. Private respondent then delivered the title of
the said property to Asiatrust. The Deed of Sale was registered and TCT No.
RT-51142 in the name of Ledesma was cancelled and a
new one, TCT No. 83104, was issued in the names of petitioners. Thereafter, Asiatrust
approved the loan application of petitioners, after which the latter issued a
check in the amount of P1,500,000.00 to private respondent. However, when Asiatrust
tried to register the Real Estate Mortgage covering the subject property
executed in its favor by petitioners, it discovered a notice of levy on
execution was annotated on the title in connection with Ledesma’s
obligation to a certain Miladay’s Jewels, Inc., in
the amount of P214,284.00. Because
of this annotated encumbrance, Asiatrust did not
register said Real Estate Mortgage and refused to release the P2,000,000.00
loan of petitioners. When private
respondent presented Ledesma’s check for payment, the
same was dishonored for the reason that the account was already closed. Subsequently, when private respondent
presented for payment the check issued by petitioners, the said check was
likewise dishonored because there was a stop payment order. With the dishonor
of the checks and with Asiatrust’s refusal to release
the P2,000,000.00 loan of petitioners, private respondent came away
empty-handed as she did not receive payment for the P1,500,000.00 loan
she granted to Ledesma that was assumed by
petitioners. As a result, private
respondent filed a Complaint for Sum of Money against Ledesma,
petitioners, and Asiatrust before the RTC, Branch
217,
After trial, the RTC, in a Decision
dated
Wherefore, in view of the foregoing, judgment is
hereby rendered in favor of the plaintiff Dr. Victoria Ong
Oh and against defendant-spouses Eduardo and Elsa Versola. The appellants Versolas
are hereby ordered to pay to Dr. Victoria Ong Oh the
following:
a) the
sum of one million five hundred thousand pesos (P1,500,000.00) plus
legal interest to be computed from the time of judicial demand;
b) one
hundred thousand pesos (P100,000.00) as moral damages and fifty thousand
pesos (P50,000.00) as exemplary damages; and,
c) attorney’s
fees of one hundred thousand pesos (P100,000.00).[4]
Undaunted,
petitioners appealed the trial court’s Decision to the Court of Appeals, with
the appeal docketed as CA-G.R. CV No. 54399.
In
a Decision dated
WHEREFORE, the appealed Decision is hereby MODIFIED in
this wise: the Court orders appellants spouses Eduardo and Elsa Versola to pay appellee Victoria
T. Ong Oh One Million Five Hundred Thousand (P1,500,000.00)
Pesos with legal interest from
No appeal having been filed, the foregoing
Decision attained finality.
On
P2,835,000.00.
For
failure of petitioners to redeem the property during the redemption period, a Sheriff’s
Final Deed of Sale was issued in favor of private respondent on
On
In
an Order dated
In
an Order dated
Petitioners
then filed a Petition for Certiorari
before the Court of Appeals, docketed as CA-G.R. SP No. 79300, alleging grave
abuse of discretion on the part of the trial court Judge in confirming the
judicial sale of their family home.
In
a Decision dated
Hence, the instant Petition.
Petitioners submit the following
issues for the Court’s consideration:
A. WHETHER OR NOT COMPLIANCE ON (sic) THE PROVISIONS
OF THE FAMILY CODE SPECIFICALLY ARTICLES 152 TO 160 IN RELATION TO THE
PROVISION OF ARTICLE III SECTION 1 OF THE CONSTITUTION, IS MANDATORY; and
B. WHETHER OR NOT THE PROVISION UNDER ARTICLE 160
REQUIRING AN APPLICATION TO THE COURT FOR AN ORDER DIRECTING THE AUCTION
Petitioners aver that prior to the
auction sale of their family home, they registered their opposition and
objection to the same by filing with the trial court an “Urgent Motion to
Suspend Auction Sale on the Property of Defendants under TCT No. 83104 located
at Sunville Subdivision, Quezon
City,” dated 12 September 2000 which was admittedly treated by the court as a “mere
scrap of paper and is deemed not filed.”
They also claim that a day before the scheduled auction sale, they filed
with the sheriff of the trial court an “Objection/Exception to the Sheriff’s
Sale of Defendant Sps. Eduardo and Elsa Versola’s Family Home Pending Court Order or Clearance”
which the latter disregarded. Petitioners
maintain that said objection to the sale was based on the fact that there was
no order or clearance from the trial court for the sheriff to proceed with the
auction sale, in clear violation of Article 160 of the Family Code, which
requires an application by the creditor and a determination of the actual value
of the family home by the court ordering the sale of property under execution.
It was likewise contended by
petitioners that there were serious defects in the conduct of the execution
sale, namely, the sheriff based the execution on the dispositive
portion of the Decision of the RTC and not the modified Decision of the Court
of Appeals, and that there were no documents proving the amount of execution
sale and the determination of the proceeds.
On the other hand, the trial court
found that the allegations of serious defects in the sheriff’s conduct of the
execution sale are unfounded. According
to the trial court, although the sheriff inadvertently quoted the decision of
the trial court in the “Sheriff’s Final Deed of Sale” dated 19 March 2002, the
“Statement of Accounts” submitted by private respondent, as well as the
computation of the sheriff showed that the auction sale was based on the decision of the Court of
Appeals. The bid price amounted to P2,835,000.00,
P1,500,000.00 thereof representing the principal amount owed by
petitioners to private respondent while the remaining P1,335,000.00
represented the legal interest of 12% counted from 24 March 1993 up to 24
August 2000.
As to the allegation that the sheriff
failed to act on petitioners’ Objection/Exception to Sheriff’s Sale of
Defendant Sps. Eduardo and Elsa Versola’s
Family Home, the trial court ratiocinated that such inaction of the sheriff was
justified since petitioners never filed any motion before the said court to
hold in abeyance the impending auction sale.
Accordingly, it held that it was correct for the sheriff to proceed with
the auction sale as there will be no order forthcoming to suspend the sale
absent any motion from petitioners.
Finally, the trial court criticized
petitioner’s claim that the subject property was their family home. The court opined that the claim was never
substantiated by petitioners aside from the fact that they asserted this
defense only after two years since the auction sale has transpired. It added that if not for the private
respondent’s Ex-parte Motion for Issuance of
Confirmation of Judicial Sale of Real Property of Sps.
Eduardo and Elsa Versola filed on
The issue in the main is whether or
not petitioners timely raised and proved that their property is exempt from
execution.
Article 153 of the Family Code
provides:
The family home is deemed constituted on a house and
lot from the time it is occupied as the family residence. From the time of its constitution and so long
as its beneficiaries resides therein, the family home continues to be such and
is exempt from execution, forced sale or attachment except as hereinafter
provided and to the extent of the value allowed by law.
Under the cited provision, a family
home is deemed constituted on a house and lot from the time it is occupied as a
family residence; there is no need to constitute the same judicially or extrajudicially.[7]
The settled rule is that the right to
exemption or forced sale under Article 153 of the Family Code is a personal
privilege granted to the judgment debtor and as such, it must be claimed not by
the sheriff, but by the debtor himself before the sale of the property at
public auction.[8] It is not sufficient that the person claiming
exemption merely alleges that such property is a family home. This claim for exemption must be set up and
proved to the Sheriff.[9] Failure to do so would estop
the party from later claiming the exception.[10]
In the case under consideration,
petitioners allegedly filed with the trial court an “Urgent Motion to Suspend
Auction Sale on the Property of Defendants under TCT No. 83104 located at Sunville Subdivision,
On the day immediately prior to the
scheduled sale of the subject property, petitioners filed with the sheriff an
Objection/Exception to Sheriff’s Sale of Defendant Sps.
Eduardo and Elsa Versola’s Family Home. Petitioners simply alleged there that the
property subject of the intended auction sale was their family home. Instead of substantiating their claim,
petitioners languidly presupposed that the sheriff had prior knowledge that the
said property was constituted by them as their family home. Lamentably, in the said objection,
petitioners did not set forth therein any evidence to substantiate their claim
that the property to be sold at the execution sale was indeed exempt for having
been constituted as a family home. The
objection read:
“Evidently, a court determination of the value of the
family home is indispensable for the same to be subjected to execution sale,
and more importantly, the judgment creditor has to apply for a court order
direction (sic) auction sale of said judicial home.
Your
good office, thru you, has PRIOR knowledge of the fact that the real property
subject of the intended auction sale is the family home being occupied by the
Defendants Spouses Eduardo and Elsa Versola.
Allow
us to enter our objection/exception to the auction sale which is without the
benefit of a court order. We accordingly ask that the sale be suspended/held in
abeyance pending the court order directing the sale of the family home.”[14] (Underscoring
supplied.)
It was only after almost two years
from the time of the execution sale and after the “Sheriff’s Final Deed of
Sale” was issued did petitioners rigorously claim in their Opposition to
private respondent’s Ex-parte Motion for Issuance of
Confirmation of Judicial Sale of Real Property of Sps.
Eduardo and Elsa Versola that the property in
question is exempt from execution. Even
then, there was no showing that petitioners adduced evidence to prove that it
is indeed a family home.
In the case of Honrado v. Court of Appeals,[15] the
family home of the petitioner therein was levied upon to answer for his
judgment debt, and the sale of the said property was set. Petitioner was served with a copy of the
notice of sale which he opposed. Petitioner,
however, allowed the sale at the public auction to proceed and the Sheriff to
execute a certificate of sale over the property in favor of the private
respondent therein. The petitioner remained
silent and failed to seek relief from the Sheriff or the court until after
almost one year from the date of the auction sale when he filed his motion to
declare the property exempt from execution.
But even in the said motion, petitioner did not present evidence that the
property was a family home. Finding that
petitioner’s claim of exemption was not substantiated and was filed belatedly,
the Court therein ruled:
While it is true that the family home is constituted
on a house and lot from the time it is occupied as a family residence and is
exempt from execution or forced sale under Article 153 of the Family Code, such
claim for exemption should be set up and proved to the Sheriff before
the sale of the property at public auction. Failure to do so would estop the party from later claiming the exemption x x x.[16] (Emphasis supplied.)
In view of the facts obtaining in
this case, and taking into consideration the applicable jurisprudence on the
matter, the Court finds that petitioners’ assertion for exemption is a mere
afterthought, a sheer artifice to deprive private respondent of the fruits of
the verdict of her case.
As the Court aptly inculcated:
Certainly, reasonable time, for purposes of the law on
exemption, does not mean a time after the expiration of the one-year period provided
for in Section 30 of Rule 39 of the Rules of Court for judgment debtors to
redeem the property sold on execution, otherwise it would render nugatory final
bills of sale on execution and defeat the very purpose of execution – to put an
end to litigation. We said before, and We repeat it now, that litigation must
end and terminate sometime and somewhere, and it is essential to an effective
administration of justice that, once a judgment has become final, the winning
party be not, through a mere subterfuge, deprived of the fruits of the verdict.
x x x .[17]
WHEREFORE, the
petition is DENIED. The judgment of
the Court of Appeals dismissing the petition in CA-G.R. SP No. 79300, for lack
of merit, is hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
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MINITA
V. CHICO-NAZARIO
Associate Justice |
WE CONCUR:
Chief Justice
Chairperson
Associate Justice
Associate Justice
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ROMEO J.
CALLEJO, SR. Associate Justice |
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Pursuant to Article VIII, Section 13
of the Constitution, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
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ARTEMIO V.
PANGANIBAN Chief Justice |
[1] Penned by Associate Justice
[2] Records, p. 51.
[3]
[4] Rollo, p. 67.
[5]
[6] Rollo, p. 130.
[7] Manacop v. Court of Appeals, 342 Phil. 735, 741 (1997).
[8] Honrado v. Court of Appeals, G.R. No. 166333, 25 November 2005, 476 SCRA, 280, 288.
[9]
[10]
[11] The records of the case appear silent as to the reason why the “Urgent Motion to Suspend Auction Sale on the Property of Defendants under TCT No. 83104” was treated as a mere scrap of paper.
[12] Formaran
III v. Trabajo-Daray, A.M. No. RTJ-04-1885,
[13] Traders Royal Bank v. Court of Appeals, G.R. No. 60222, 22 April 1992, 208 SCRA 199, 205.
[14] Rollo, p. 132.
[15] Supra note 8.
[16]
[17]