Cagayan de Oro v. CA Digest

Cagayan de Oro v.
CA
GR No. 129713
December 15, 1999
Ponente: Justice Ynares-Santiago

Digester: Ong, Nichole Fitzgerald C.
On the matter of Execution, satisfaction, and effect of judgments
Doctrine: In executing a money judgment against the property of the

judgment debtor, the sheriff shall levy on all property belonging to the
judgment debtor as is amply sufficient to satisfy the judgment and costs
and sell the same paying to the judgment creditor so much of the proceeds
as will satisfy the amount of the judgment debt and costs.
A valid levy on execution places the property subject of execution

under the jurisdiction and authority of the court.
To effect a levy upon a realty, the sheriff is required to do two

specific things: (1) file with the register of deeds a copy of the order of
attachment or execution, together with the description of the attached
property and notice of attachment or execution; and (2) leave with the
occupant of the property copy of the same order, description and notice.
Without a proper levy, the property is not placed under the authority
of the court. The court does not acquire jurisdiction over the property
subject of execution, hence, it could not transmit title thereto at the time of
the sale.
Facts:
In 1977, petitioner Cagayan de Oro Coliseum, Inc. obtained from one
Santiago Maceren a loan in the amount of P149,253.73. As security for the
loan, petitioner executed a promissory note and a mortgage over all its
assets including a parcel of land situated in the poblacion of the City.
The loan, together with the promissory note and the mortgage, were
later assigned by Maceren to the Commercial Credit Corporation of
Cagayan de Oro (Commercial Credit). Petitioner failed to pay the loan
when it became due, hence, the Commercial Credit commenced foreclosure
proceedings on the said parcel of land.
Five stockholders of petitioner corporation instituted before the then

Court of First Instance (CFI) a petition for injunction against Commercial
Credit alleging that the loan was contracted by Diego Imperio, the
president of the corporation, without authority from the stockholders; and
that the creditor, Santiago Maceren, was corporate treasurer and a member
of the Board of Directors of petitioner corporation at the time the loan was
obtained. Eventually, the parties entered into a compromise agreement
whereby the five stockholders ratified the loan of the corporation to
Commercial Credit in the amount of P249,263.23, computed as of February
15, 1980; the corporation bound itself to pay the loan in equal monthly
installments of P11,000.00 and agreed that failure to pay any of the
installments shall render the judgment immediately executory, with
penalty on overdue and unpaid installments at the rate of three per cent
(3%) per month plus five per cent (5%) of the outstanding balance as
additional attorney's fees.
On March 4, 1983, Commercial Credit filed with the court a quo, now
the Regional Trial Court an "Ex-Parte Motion for the Issuance of a Writ of
Execution." Commercial Credit alleged that petitioner corporation failed to
pay several installments on its loan and left an outstanding balance of
P70,152.68, excluding sheriff's expenses. The trial court granted the motion
on March 9, 1983. The following day, the Branch Clerk of Court issued the
writ of execution on the personal and real properties of petitioner
corporation. On March 11, the deputy sheriff filed a notice of levy on
petitioner's title with the Register of Deeds.
Petitioner forthwith filed a "Motion for Reconsideration of the Order

of Execution" alleging that the issuance of the order of execution ex-parte
violated petitioner's right to due process; that a hearing should have been
conducted on the motion for execution because petitioner had already
made payments in the total amount of P419,429.95, resulting in an
overpayment of P94,028.12.
In an order dated November 26, 1986, the trial court denied

petitioner's motion for reconsideration. The trial court, however, reduced
petitioner's principal obligation from P70,152.68 to P64,956.19 but ordered
it to pay the three per cent (3%) monthly penalty charge until full payment
and five per cent (5%) of the outstanding balance as additional attorney's
fees. Accordingly, the court ordered the issuance of a writ of execution for
the collection of said amount. Pursuant to this writ, Deputy Provincial
Sheriff Maximiano Mabanag, Jr. published the notice of auction sale
scheduled on January 23, 1987. The sale did not proceed on said date,
however, due to some internal problems in the office of the sheriff.
Meanwhile, petitioner filed with the Court of Appeals an action for

annulment of judgment of the trial court, docketed as CA-G.R. SP No.
10888, wherein it sought to set aside the compromise judgment on the
ground of fraud and misrepresentation which it discovered only in 1983.
Petitioner pleaded four causes of action, one of which is that “The Branch
Clerk of Court issued a writ of execution and the Deputy Provincial Sheriff
issued a notice of auction sale before petitioner received a copy of the order
denying its motion for reconsideration.”
On February 13, 1987, the Court of Appeals rendered a decision

favorable to the petitioner had made payments totalling P303,758.15, it
equitably reduced the penalty of three per cent (3%) per month to only one-
half per cent (1/2%) per month on the overdue and unpaid installments,
and the five per cent (5%) additional attorney's fees to only two per cent
(2%) of the outstanding balance.
Meanwhile, on January 19, 1987, herein respondent Sheriff Mabanag

issued an Amended Sheriff's notice of sale setting the sale of the property
at public auction on February 13, 1987, or on the same day the Court of
Appeals promulgated its decision. At the Auction Sale the property was
sold to the highest bidder, herein respondent Richard Go King.
Both parties moved for reconsideration of the decision of the Court of

Appeals. Petitioner argued among others that the auction sale was
conducted on February 13, 1987, the day of promulgation of the Court of
Appeals' decision substantially amending the amount of judgment debt.
The CA declared the writ of execution, the sheriff's notice of sale, the public
auction sale and the certificate of sale null and void insofar as they were in
excess of the judgment as modified by its decision.
Both parties filed separate petitions for review before the Supreme
Court. Cagayan de Oro Coliseum’s petition was denied for being filed late
while CCC’s petition (GR No. 78315) was granted setting aside the
resolution of the CA and affirming the judgment of the trial court.
During the pendency of G.R. No. 78315, on August 17, 1988,

respondent Sheriff issued to respondent Go King a Final Deed of
Conveyance over the subject property. TCT No. T-3383 of petitioner was
cancelled and TCT No. T-51704 was issued in the name of respondent Go
King.
After finality of the decision of the Supreme Court in G.R. No. 78315,
petitioner instituted Civil Case No. 89-098 against herein respondents
Sheriff Mabanag and Richard Go King alleging in its amended complaint
that the execution proceedings were null and void for failure to comply
with the requirements of the Rules of Court. The trial court rendered a
decision declaring the deed of sale, the final deed of conveyance, and TCT
No. T-51704 in the name of respondent Go King as null and void, and
denying respondent Go King's motion for writ of possession and petition
for receiver, after finding that the property subject of execution was not
levied upon, that notices of sale were not posted and that there was no
return of the writ of execution of March 10, 1983.
Issue: Whether the execution proceedings were void?
Ratio Decidendi:
Yes, the execution proceedings are void for failure to comply with the
levy and notice requirements.
Execution under Rule 39 of the Revised Rules of Court is a remedy

afforded by law for the enforcement of a judgment, its object being to
obtain satisfaction of the judgment on which the writ is issued. It issues by
order of the court a quo, on motion of the judgment obligee, upon finality
of a judgment or order sought to be enforced, and is directed to an officer
authorizing and requiring him to execute the judgment of the court.
In executing a money judgment against the property of the judgment

debtor, the sheriff shall levy on all property belonging to the judgment
debtor as is amply sufficient to satisfy the judgment and costs, and sell the
same paying to the judgment creditor so much of the proceeds as will
satisfy the amount of the judgment debt and costs.
Levy means the essential act or acts by which an officer sets apart or
appropriates a part or the whole of the property of the judgment debtor for
purposes of the prospective execution sale. The object of a levy is to take
property into the custody of the law, and thereby renders it liable to the
lien of the execution, and put it out of the power of the judgment debtor to
divert it to any other use or purpose. A valid levy on execution places the
property subject of execution under the jurisdiction and authority of the
court. It also creates a lien in favor of the judgment creditor over the right,
title and interest of the judgment debtor in such property at the time of the
levy, subject to liens and encumbrances then existing.
To effect a levy upon a realty, the sheriff is required to do two

specific things: (1) file with the register of deeds a copy of the order of
attachment or execution, together with the description of the attached
property and notice of attachment or execution; and (2) leave with the
occupant of the property copy of the same order, description and notice.
These are prerequisites to a valid levy, non-compliance with any of which
is fatal.
In the instant case, the execution sale of the subject property was
made pursuant to the order of execution of November 26, 1986 and the writ
of execution of December 4, 1986. The November 26, 1986 execution order
and the corresponding writ of execution were not filed with the Register of
Deeds before the auction sale of February 13, 1987. The order of November
26, 1986 was filed and inscribed on petitioner's title only on December 7,
1988 — exactly one (1) year and ten (10) months after the execution sale of
February 13, 1987. The belated filing came after the execution of the
Sheriff's Certificate of Sale, after the issuance of the Sheriff's Certificate of
Final Deed of conveyance; and after cancellation of TCT No. T-3383 of
petitioner and the issuance of TCT No. T- 51704 in the name of respondent
Goking on October 20, 1988. Respondent Sheriff himself admitted on the
witness stand that he did not file a copy of the November 26, 1986 order of
execution with the Register of Deeds before the February 13, 1987 sale on
the belief that the property had already been levied upon by Sheriff Acero.
An examination of TCT No. T-3383 shows that the court order and writ of
execution filed by Sheriff Acero with the Register of Deeds before the
auction sale was not the November 26, 1986 order but the March 9, 1983
order.
The order of November 26, 1986 did not supplement the March 9,
1983 order. It amended the original. The substantial increase in the amount
of debt necessarily affected the kind and number of property that was to be
levied upon and sold, and the price the property was to command at the
public auction sale. The amendment was of such proportion that it
superseded that which it amended and gave rise to an entirely new order.
The March 9, 1983 order was therefore extinguished and the one of
November 26, 1986 became the new order of execution. Since this order
was not filed with the Register of Deeds prior to the execution sale, it
follows that the levy was not effected and the execution sale of February
13, 1987 proceeded without a levy.
A lawful levy on execution is indispensable to a valid sale on

execution. In other words, a sale, unless preceded by a valid levy, is void,
and the purchaser acquires no title to the property sold. Without a proper
levy, the property is not placed under the authority of the court. The court
does not acquire jurisdiction over the property subject of execution, hence,
it could not transmit title thereto at the time of the sale. Where in the
instant case no jurisdiction was acquired over the subject property, the
execution sale was void and of no legal effect.

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Cagayan de Oro v.

Ponente: Justice Ynares-Santiago

Doctrine: In executing a money judgment against the property of the

A valid levy on execution places the property subject of execution

To effect a levy upon a realty, the sheriff is required to do two

Five stockholders of petitioner corporation instituted before the then

Petitioner forthwith filed a "Motion for Reconsideration of the Order

In an order dated November 26, 1986, the trial court denied

Meanwhile, petitioner filed with the Court of Appeals an action for

On February 13, 1987, the Court of Appeals rendered a decision

Meanwhile, on January 19, 1987, herein respondent Sheriff Mabanag

Both parties moved for reconsideration of the decision of the Court of

During the pendency of G.R. No. 78315, on August 17, 1988,

Issue: Whether the execution proceedings were void?

Execution under Rule 39 of the Revised Rules of Court is a remedy

In executing a money judgment against the property of the judgment

To effect a levy upon a realty, the sheriff is required to do two

A lawful levy on execution is indispensable to a valid sale on

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