G.R. No. L-5691 - Martinez vs. Buskirk

Plaintiff-appellee Fua Cam Lu obtained a judgment in civil case No. 42125 of the Court of First Instance of Manila against defendants-appellants Yap Fauco and Yap Singco for the sum of P1,538.04, together with legal interest and costs.
A writ of execution was issued based on the judgment, leading to the levy of a parcel of land owned by the appellants in Donsol, Sorsogon, which was assessed at P3,550.

On November 15, 1933, the provincial sheriff of Sorsogon posted a notice in three conspicuous places in the municipalities of Donsol and Sorsogon and published it in the Mamera Press, informing the public that the land would be sold at public auction on December 12, 1933.
The notice was issued in compliance with the procedures for executing judgments through public auction.

On December 16, 1933, prior to the scheduled auction, the appellants executed a mortgage in favor of the appellee which contained a stipulation expressly stating that the judgment in civil case No. 42125 was settled, reducing the obligation to P1,200.
Under the terms of the mortgage:

The new obligation was to be paid in four installments of P300 from February 8, 1934, to August 8, 1935.
A camarin built on the mortgaged land was offered as security.
It included a clause that upon default in any installment, the appellants would pay 10% of the unpaid balance as attorney’s fees plus costs of any resulting action, and an additional amount of P338 representing a discount.

As a result of this agreement, the originally advertised sale of the land did not proceed.

Despite the settlement, an alias writ of execution was subsequently issued by the Court of First Instance of Manila on March 31, 1934, in connection with the same civil case.
The provincial sheriff proceeded to sell the land at a public auction on May 28, 1934, without publishing a new notice, and the sale was conferred to the appellee for P1,923.32.
On June 13, 1935, a final deed was executed in favor of the appellee, solidifying his purported title to the land.

On August 29, 1939, the appellee instituted an action in the Court of First Instance of Sorsogon seeking a declaration of ownership and demanding that the appellants vacate the land, as they refused to recognize the title conferred upon the appellee.
The appellants raised two main defenses:

That the mortgage agreement constituted an implied novation, thereby extinguishing their liability under the original judgment.
That the sheriff’s sale was void due to the failure to issue a new publication notice as required by law.

The trial court ruled against the appellants, declaring the appellee as the owner of the land and ordering the appellants to deliver possession to him.

Whether the mortgage executed on December 16, 1933, constituted an implied novation extinguishing the original judgment obligation of P1,538.04.
Whether the terms of the mortgage, which reduced the amount to P1,200 payable in installments and introduced provisions for attorney’s fees and security, were fundamentally incompatible with the original judgment and thereby extinguished it.

Whether the public auction sale conducted on May 28, 1934, was valid despite the absence of a new publication notice after the suspension of the originally advertised sale.
The extent to which the presumption of regular official action applies when evidence shows that no new notice was issued and whether such omission vitiates the sale.

Whether the appellants’ defenses, particularly the claim of novation and the challenge to the auction procedure, were properly raised and substantiated in the pleadings.
The impact of the previous case law, notably Zapanta vs. De Roraeche, on interpreting the effects of settlement agreements vis-à-vis the execution of judgments.