G.R. No. 256720 - Maibarara Geothermal, Inc. vs. Commissioner of Internal Revenue

Petitioners – Jesus G. Crisologo, Nanette B. Crisologo, James Ian Yeung, and Marlina T. Sheng – filed a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure.
The petition sought to annul and set aside the Regional Trial Court (RTC) Decision dated November 17, 2014, and its subsequent Order dated January 9, 2015, which had declared void the Sheriff’s Certificates of Sale over a parcel of land in Davao City.

The subject property was originally covered by Transfer Certificate of Title (TCT) No. T-51636, registered in the name of So Keng Koc (So).
Over time, the property became subject to various levies and attachments arising from multiple collection cases against So.
In one case, Sy Sen Ben filed a complaint for a sum of money (Civil Case No. 26, 513-98) resulting in a writ of attachment recorded on September 8, 1998.

Petitioners Crisologo (spouses) also filed two collection suits against So and Robert Allan Limso on September 30, 1998 (Civil Case Nos. 26, 810-98 and 26, 811-98).
As part of these proceedings, a writ of preliminary attachment was issued and the subject property was levied on October 7, 1998, with the petitioners’ claim subsequently recorded on TCT No. T-51636 on October 8, 1998.

Respondents Alicia Hao and Gregorio Hao, through negotiations with Sy and other attaching creditors, acquired the subject property via a Deed of Absolute Sale executed by So on October 7, 1998.
Following the sale, the original title (TCT No. T-51636) was cancelled and replaced by TCT No. T-303026 in the respondents’ name.
The lot was later subdivided, giving rise to derivative titles TCT No. T-344592 and TCT No. T-344593.

In the underlying collection actions, after a final judgment and subsequent proceedings including the remand for execution and scheduling of auction sale, the Sheriff conducted an auction sale.
Despite respondents filing an urgent motion to exclude certain lots from the auction, the RTC denied the motion.
The auction was reset to October 7, 2010, and petitioners Crisologo, along with James Ian O. Yeung and Marlina T. Sheng, emerged as the highest or sole bidders for the respective parcels.
Certificates of Sale were issued on October 10, 2010, by Sheriff Robert M. Medialdea.

On November 18, 2010, respondents filed a Complaint for annulment of the issued Certificates of Sale, leading to the case docketed as Civil Case No. 33, 581-10 in RTC Branch 16, Davao City.
On November 17, 2014, RTC rendered a decision declaring both Certificates of Sale void and cancelled them based on:

The requirement that the winning bidder should have paid the bid in cash (as interpreted under Section 21, Rule 39).
The need for the Certificate of Sale to expressly state the existence of a third-party claim (as mandated by Section 26, Rule 39).

Requiring cash payment even if the bid did not exceed the judgment amount, citing Villavicencio v. Mojares.
Holding that the failure to mention the third-party claim rendered the Certificate of Sale void, despite the existence of an adequate protective measure (i.e., the filing of an Indemnity Bond).

They also contended that the respondents’ reliance on Sy v. Catajan was misplaced, as that case involved administrative sanctions against the sheriff rather than the validity of an execution sale.
Petitioners emphasized that there had been a proper levy on the property and that under the rules, the mode of payment should not affect the validity of the sale.

The instant controversy centers on the proper interpretation of Sections 21 and 26 of Rule 39 of the Rules on Civil Procedure.
The Court underscored the principle of statutory construction that clear and plain provisions must be given their literal meaning unless such interpretation would result in an absurdity or injustice.
It also stressed that execution sales should not be nullified unless a grave error or injustice is demonstrated.

Whether the Certificates of Sale over TCT Nos. T-344592 and T-344593 were invalidated solely due to:

The failure of the winning bidder to pay the bid in cash, as required by Section 21 of Rule 39.
The absence of an express declaration of the existence of a third-party claim in the Certificate of Sale, as mandated by Section 26 of Rule 39.

Whether the requirement for payment in cash and the express mention of third-party claims, as stipulated under Rule 39, should be strictly enforced to the extent that non-compliance renders the execution sale void.

Whether the protective measures already taken (such as the filing of an Indemnity Bond) suffice to protect the interests of the third-party claimants, thereby negating the need for strict compliance with the formalities of Section 26.

Whether the trial court erred in dismissing the petitioner spouses’ counterclaim for damages in light of the respondents’ challenge.