Case Summary (G.R. No. 252396)
Factual Background and Contractual Relationship
On August 7, 1996, 24-K Property Ventures, Inc. (petitioner) and Young Builders Corporation (respondent) entered a construction contract for a 20-storey building called Lansbergh Place for the contract price of ₱165,000,000.00. After the 1997 Asian Financial Crisis led to arrears by petitioner, respondent ceased construction unless secured. Petitioner accordingly executed a Deed of Real Estate Mortgage over two bare parcels of land covered by Transfer Certificate of Title (TCT) Nos. N-164112 and N-164113 in respondent’s favor. In 1999, respondent initiated arbitration for collection, culminating in a final award on December 19, 2005, ordering petitioner to pay respondent ₱91,084,206.43, with applicable interest rates. This award became final and executory on October 28, 2008.
Execution Sale Proceedings and Sheriff’s Actions
While the award was under appeal, respondent secured a writ of execution on May 2, 2006, enforced by Sheriff Villamor R. Villegas of the Regional Trial Court of Makati. The sheriff reported making diligent but unsuccessful attempts to personally serve the writ on petitioner’s officers, who allegedly refused receipt, and instead served petitioner’s counsel. Notices of garnishment were sent to five banks, but subsequent levy was made on petitioner’s real properties—specifically condominium units in Lansbergh Place and the two parcels of land where Torre Venezia was constructed—with the sale concluding at ₱110,504,888.05 in respondent’s favor.
Claims and Motions by Petitioner and Initial Rulings
Petitioner filed a Motion to Set Aside Execution Sale citing irregularities and grossly inadequate sale price, arguing violations of procedural rules. The Construction Industry Arbitration Commission (CIAC) denied this motion and the subsequent Motion for Reconsideration. Petitioner appealed to the Court of Appeals (CA), alleging grave abuse of discretion, erroneous presumptions, and improper application of the law concerning procedural irregularities and laches. The CA dismissed the petition, affirming the CIAC decision.
Issues Presented for Supreme Court Review
- Whether the CA erred in affirming the denial of the Motion to Set Aside Execution Sale despite alleged irregularities and procedural violations in executing money judgments.
- Whether gross inadequacy of the purchase price alone constitutes sufficient ground to nullify an execution sale.
- Whether the execution sale should be invalidated due to respondent’s failure to make full payment of the bid price during the sale.
Petition-in-Intervention and Third-Party Concerns
Certain buyers of condominium units in Torre Venezia filed a petition-in-intervention, asserting that despite valid deeds and certificates of ownership, the petioner failed to issue corresponding Condominium Certificates of Title. They claimed non-notification of the execution sale itself, arguing that issuance of a writ of possession in respondent’s favor unjustly deprives them of property rights. The intervenors thus joined petitioner in challenging the validity of the execution sale for failure to comply with Act 3135 and procedural safeguards protecting third-party rights.
Legal Principle on Validity of Levy and Execution Sale
It is a well-established principle that a lawful levy of execution is a prerequisite to a valid execution sale and the subsequent transfer of title. A valid levy requires a proper demand for immediate payment of the full amount stated in the writ of execution along with lawful fees, as mandated by Section 9, Rule 39 of the Revised Rules of Court. Without this essential demand, any levy and resulting execution sale are void, and the buyer acquires no title.
Deficiencies in the Sheriff’s Service of the Writ and Levy
The sheriff’s Report/Return was ambiguous, lacking critical details such as the identity of officers who allegedly refused receipt, dates of attempted service, and circumstances of refusal. The CIAC and CA relied on a presumption of regularity of official acts; however, the Supreme Court found this presumption inapplicable due to the vague and insufficient evidence concerning service. Furthermore, service on petitioner’s counsel occurred only on May 9, 2006—the same day the levy on petitioner’s real properties was conducted—denying petitioner a genuine opportunity to comply with the judgment prior to levy.
Procedural Requirements for Levy and Order of Property to be Levied
Section 9, Rule 39 sets the mechanism whereby after demand for immediate payment fails, the sheriff must levy on judgment debtor’s properties giving an option to choose the property to be levied upon. If no choice is made, the sheriff is required first to levy personal properties, then real properties only if personal properties are insufficient. The sheriff’s supposed attempt to garnish petitioner’s bank accounts was undermined by the fact that responses from banks were received only after the levy on real properties. Some banks were still validating petitioner’s accounts at the time of levy, depriving petitioner of the opportunity to exhaust the process on personal property before real property levy.
Invalidity of Execution Sale Due to Lack of Proper Levy
Because the levy on real properties occurred prematurely—before valid service and exhaustion of personal property garnishment—the execution sale was invalid. Jurisprudence and commentaries consistently hold that sales without valid levy are null, and no title passes. Since the Court found the lack of valid levy fatal to th
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Case Syllabus (G.R. No. 252396)
Facts of the Case
- On August 7, 1996, petitioner 24-K Property Ventures, Inc. and respondent Young Builders Corporation entered into a Construction Contract for the erection of a 20-storey office/residential building called Lansbergh Place located along Tomas Morato, Quezon City, at a contract price of ₱165,000,000.00.
- Petitioner incurred arrearages after the 1997 Asian Financial Crisis. Respondent refused to continue construction without security for unpaid obligations.
- Petitioner executed a Deed of Real Estate Mortgage in favor of respondent covering two parcels of bare land identified as TCT Nos. N-164112 and N-164113.
- In 1999, respondent filed a complaint for collection of money against petitioner before the Construction Industry Arbitration Commission (CIAC), initiating CIAC Case No. 32-1999.
- Petitioner started constructing another project called Torre Venezia on the mortgaged parcels, comprising a 27-storey building with 302 condominium units.
- On December 19, 2005, CIAC rendered a Final Award ordering petitioner to pay respondent ₱91,084,206.43 plus interest and arbitration costs. This award became final and executory on October 28, 2008.
- Respondent obtained a writ of execution dated May 2, 2006, which was enforced by Sheriff Villamor R. Villegas of RTC Makati.
- Despite the Sheriff's diligent efforts, petitioner’s officers refused to acknowledge receipt of the writ; service was made instead to petitioner’s counsel.
- A notice of garnishment was served by the Sheriff to various banks; concurrently, a levy was made on petitioner’s real properties, including sixteen condominium units at Lansbergh Place and the two parcels covered by the mortgaged TCTs where Torre Venezia stands.
- Petitioner filed a Manifestation with Motion to Suspend Enforcement and a Motion to Set Aside Execution Sale citing procedural and valuation irregularities but was denied by the CIAC and subsequently the Court of Appeals (CA).
- Petitioner’s appeal to the CA was dismissed, leading to the present petition before the Supreme Court.
Issues Presented
- Whether the Court of Appeals erred in affirming the CIAC's denial of petitioner’s Motion to Set Aside the Execution Sale despite claimed procedural irregularities.
- Whether gross inadequacy of the sale price is a sufficient ground to nullify the execution sale.
- Whether the executio