24-K Property Ventures, Inc. vs. Young Builders Corporation Case Digest

24-K Property Ventures, Inc. Vs. Young Builders Corporation

G.R. No. 193371. December 5, 2016

Facts

On 7 August 1996, petitioner and respondent entered into a Construction Contract wherein respondent undertook to construct for petitioner a 20-storey office/residential building along Tomas Morato, Quezon City for the price of P165,000,000.00. In 1988, petitioner was hit by the Asian Financial Crisis of 1997 and it incurred arrearages. Respondent refused to continue with the construction unless petitioner issued securities for its unpaid obligations. Petitioner then executed in respondent's favor a Deed of Real Estate Mortgage over two parcels of land covered by TCT No. N-164112 and No. N-164113. At that time, these lots were bare and without improvements. In 1999, respondent filed a complaint for collection of sum of money against petitioner before the CIAC. Meanwhile, petitioner commenced the construction of another condominium project on the two parcels of land.

On 19 December 2005, the CIAC rendered a Final Award ordering petitioner to pay respondent the sum of P91,084,206.43, with interest at the rate of 6% per annum from the date of the final award, and 12% per annum from the date the award becomes final and executory until it is fully paid. This award became final and executory on 28 October 2008. In the meantime, while the case was on appeal, the CIAC, upon motion of respondent, issued a writ of execution dated 2 May 2006 for the award of P91,084,206.43, as well as for the amount of Pl,208,801.81 as arbitration costs.

Sheriff Villegas serve the writ and the letter of request for compliance to petitioner's counsel who acknowledged receipt thereof. Sheriff Villegas also served notices of garnishment to the following banks: Banco de Oro Universal Bank, Philippine National Bank, Metropolitan Bank and Trust Company, United Coconut Planters Bank, and East West Banking Corporation. Sheriff Villegas subsequently levied on the real properties of petitioner, particularly on those covered by Condominium Certificate of Title No. N-14163, No. N-14183 and No. N-14286, etc. and Transfer Certificate Title No. N-164112 and No. N-164113.13 The levy effected by Sheriff Villegas was on sixteen (16) condominium units of Lansbergh Place and on the two parcels of land upon which Torre Venezia, a 27-storey building with 302 condominium units, presently stands.

Petitioner filed a Manifestation with Motion to Suspend Enforcement of Notice of Sale and Re-computation of Award but the auction sale proceeded and the subject properties were sold to respondent for Pl 10,504,888.05. A Certificate of Sale was consequently issued in respondent's favor.

Petitioner filed a Motion to Set Aside Execution Sale, claiming that the sale was violative of various provisions of the Rules of Court and that the subject properties were sold at a grossly inadequate price. The CIAC, however, denied said motion as well as the subsequent Motion for Reconsideration.

Petitioner elevated the case to the Court of Appeals (CA), contending that the CIAC gravely abused its discretion in upholding the execution sale. The CA dismissed the petition. Hence, the present petition for review on certiorari.

Issue: Whether the levy effected on the real properties of petitioner was proper.

Ruling

No. It is doctrinal that "a lawful levy of execution is a prerequisite to an execution sale, either of real estate or of personalty, to the conveyance executed in pursuant thereof, and to the title acquired thereby." A proper levy is indispensable to a valid execution sale, and an execution sale, unless preceded by a proper levy, is void and the purchaser in said sale acquires no title to the property sold thereunder. In the case at bar, we find that the levy effected on the real properties of petitioner was improper.

A valid demand for the immediate payment of the full

amount stated in the writ of execution and all lawful

fees is necessary to a proper levy.

The first crucial step in the execution of money judgments is a valid demand on the judgment obligor, usually via a valid service of the writ of execution. In the case at bar, the Sheriffs Report/Return stated:

By virtue of the Writ of Execution, dated May 2, 2006 issued by Construction Industry Arbitration Commission, the undersigned sheriff tried to serve said writ upon officer of respondent corporation, however, despite [diligent] effort exerted by herein sheriff to serve to the officer of respondent corporation[,] [service] proved futile because they refused to acknowledge receipt thereof x x x.

Noticeably, the Sheriffs Report/Return failed to specifically indicate material information on the alleged attempted service on petitioner. It failed to state the name of the officer who allegedly refused to receive the writ and the circumstances surrounding such refusal, and even the date when said attempted service was allegedly made.

The CIAC and the CA unquestionably accepted Sheriff Villegas' ambiguous statements regarding the alleged attempted service on petitioner, relying on the presumption that the former performed his official duty regularly. The Court, however, holds that such presumption cannot be applied in the case at bar given the abstracted and vague declarations in the Sheriffs Report/Return.

A valid levy must first be effected on personal properties, if any,

and then on real properties if personal properties are insufficient

to answer for the judgment.

In case the judgment debtor fails to choose which of his properties should be levied upon, the sheriff must first levy on the judgment debtor's personal properties, if any, and should such properties be insufficient, then the sheriff may levy on the judgment debtor's real properties. In all of these cases, the sheriff may levy and sell only such properties as are sufficient to satisfy the judgment debt and the lawful fees.

The Sheriffs Report/Return, presumably in an effort to comply with the Rules, stated that a levy on petitioner's bank accounts was first attempted. The CA accepted the sheriffs statements as gospel truth. In its recital of facts, the CA stated that "on 05 May 2006, [Sheriff Villegas] served Notice of Garnishment to a number of banks but he was informed that the petitioner had no deposits, credits or money in those banks. On 9 May 2006, he levied on two real properties of the petitioner.

And yet, the levy on petitioner's real properties was made on 9 May 2006, clearly showing that petitioner was deprived of the opportunity to have his personal properties garnished or levied upon first before his real properties. All in all, it being shown that there was no proper levy in the case at bar, the consequent execution sale is thus declared invalid.

WHEREFORE, in view of the foregoing, the present petition is hereby GRANTED. The execution sale over the properties covered by TCT Nos. N-164112 and N-164113 in favor of respondent is declared NULL and VOID.