G.R. No. 97898 - Manacop vs. Court of Appeals

Petitioner Florante F. Manacop and his wife Eulaceli purchased a 446-square-meter residential lot with a bungalow located in Commonwealth Village, Commonwealth Avenue, Quezon City.
The property was acquired on March 10, 1972 with a consideration of ₱75,000.00 and is evidenced by Transfer Certificate of Title No. 174180.

On March 17, 1986, private respondent E & L Mercantile, Inc. filed a complaint against petitioner and F.F. Manacop Construction Co., Inc. before the Regional Trial Court of Pasig, Metro Manila to recover a debt amounting to ₱3,359,218.45.
Instead of filing an answer, the parties entered into a compromise agreement wherein the defendants undertook to pay ₱2,000,000.00 as their means permitted and as soon as possible as their collectibles were collected.
On April 20, 1986, the trial court rendered judgment in favor of the compromise agreement and enjoined the parties to comply with it in good faith.

A motion for execution was filed by the private respondent on July 15, 1986, which the trial court granted on September 23, 1986.
Execution was delayed initially; however, the sheriff eventually levied on several vehicles and other personal properties of petitioner that were later sold at public auction.
On August 1, 1989, petitioner and his company filed a motion to quash the alias writs of execution, arguing that the judgment was not yet executory because the compromise agreement had not matured (no showing of sufficient means to pay or collection of receivables).
Private respondent opposed the motion with several arguments, including that more than two years had elapsed since the issuance of the order and that partial implementation had already taken place.
On September 26, 1989, the lower court denied the motion to quash the writ; finding the indebtedness remained unpaid despite substantial collections, the court held the case final and executory.
Additionally, the lower court ruled that petitioner’s residence, covered by TCT No. 174180, was not exempt from execution as it had not been judicially or extrajudicially constituted as a family home under the Civil Code.

Petitioner and his company filed a petition for certiorari with the Court of Appeals, assailing the lower court’s decisions and ordering.
The Court of Appeals (on February 21, 1990) dismissed the petition, confirming:

The judgment based on the compromise had become final and executory due to non-payment despite large collections.
The lack of evidence that the subject property had been duly constituted as a family home, noting that under Article 153 of the Family Code, such designation depends on actual occupancy by a beneficiary.

On March 21, 1991, a motion for reconsideration by petitioner was denied by the Court of Appeals. The ruling anchored its conclusion on the Modequillo v. Breva decision, explaining that:

All family residences existing when the Family Code took effect are considered family homes prospectively, and
The case did not fall under the exemptions provided by Article 155 of the Family Code because the indebtedness and judgment predated the effectivity of the Code.

Petitioner contended that his property, having been occupied by his family, should be deemed a family home even without judicial or extrajudicial constitution as required by the Civil Code.
He further argued that his residence status remained unchanged because he claimed continuous occupation from the time the property was levied until the present, and that his temporary absence (residing abroad) should not affect its status as a family home.
The Court, however, noted that actual occupancy by a beneficiary as defined by the Family Code (and not by overseers or maids) is mandatory to avail of the exemption.

Whether a writ of execution issued on a final and executory judgment rendered before the effectivity of the Family Code can be executed against a house and lot which has later become a family home under the provisions of the said Code.

Whether the mere fact of occupancy by the petitioner (or his family) is sufficient to recognize the property as a family home, notwithstanding the absence of judicial or extrajudicial constitution under the Civil Code.
Whether the Family Code’s provision regarding the constitution of a family home has retroactive effect to shield properties from execution for obligations incurred before its effectivity.
The proper interpretation of Article 155 and Articles 153/154 of the Family Code in protecting the family home from execution.