Case Summary (G.R. No. 156364)
Key Dates
• Contract to Sell and promised completion by June 1995
• HLURB Decision rescinding contract: April 22, 1997
• Writ of Execution issued: August 21, 1997
• Initial levy set aside by CA: 1998
• Alias Writ of Execution: January 26, 1999
• Levy on 15 parcels: March 23, 1999
• Notice of Sale: March 27, 2000
• Motion to Quash Writ of Levy filed: April 26, 2000
• Public auction and sale proceeds remitted: April 28, 2000
• HLURB Order setting aside levy: August 28, 2000
• CA Decision dismissing certiorari petition: October 30, 2002
• Supreme Court Decision: September 3, 2007
Applicable Law
• 1987 Philippine Constitution, Article XII, Sections 2–3 (alien ownership proscription)
• Civil Code Arts. 1409–1419 (void contracts and restitution)
• Revised Rules of Court, Rule 39 Sec. 9 (execution by levy and sale)
• Revised Rules of Court, Rule 57 Sec. 7 (attachment procedures)
• Principles of equity jurisdiction to prevent unjust enrichment
Factual Background
The Hulsts (both Dutch nationals) entered into a Contract to Sell for a townhouse unit in Laurel, Batangas. PR Builders failed to complete the project by June 1995. The spouses filed a rescission complaint before the HLURB, which on April 22, 1997 rescinded the contract and awarded refund of P3,187,500 plus interest, actual damages (P297,000), moral damages (P100,000), exemplary damages (P150,000), attorney’s fees (P50,000) and costs. After divorcing, Ida Hulst assigned her rights to Jacobus Hulst, who alone pursued execution. A writ of execution issued in 1997 met procedural obstacles, leading to an alias writ in 1999. Sheriff Ozaeta levied on 15 parcels of land. Respondent moved to quash the levy for overvaluation; nevertheless, on April 28, 2000, the sheriff conducted a public auction, yielding net proceeds of P5,313,040 to petitioner. Later that day, the HLURB suspended and ultimately set aside the levy for alleged excessiveness. The CA affirmed; petitioner sought review under Rule 45.
Issues
- Whether the Contract to Sell is void under the 1987 Constitution’s alien land‐ownership proscription and, if so, what remedies the petitioner may claim.
- Whether the HLURB Order setting aside the levy—and the CA’s affirmation—constituted grave abuse of discretion.
- Correct disposition of funds disbursed from the auction sale.
Void Contract and Constitutional Proscription
Under Article XII, Sections 2–3 of the 1987 Constitution, aliens may not acquire private land. The Contract to Sell between Hulst and PR Builders is void ab initio, producing no civil effect. However, Civil Code Article 1414 allows recovery by a party who repudiates a void contract before its illegal purpose is consummated. Hulst timely sought rescission and is entitled to recover only the purchase price he paid (P3,187,500). He may not recover damages, interest, moral or exemplary damages, or attorney’s fees, because a void contract cannot generate obligations beyond restitution of the price paid.
Unjust Enrichment and Equity Jurisdiction
The HLURB’s April 22, 1997 decision is final and unalterable. Petitioner received P5,313,040 from the auction—exceeding the refundable purchase price by P2,125,540. Equity jurisdiction, under Civil Code Art. 22 (nemo ex alterius incommode debeat lucrari) and related provisions, requires return of benefits unjustly retained. The Supreme Court orders Hulst to restore P2,125,540, without interest, and to pay 6% interest thereon from finality of the judgment until full payment.
Validity of Levy and Auction Sale
Rule 39, Section 9 of the Revised Rules of Court mandates that a sheriff levying on property need only seize assets “sufficient to satisfy the judgment and lawful fees.” Once an execution sale is consummated—proc
...continue readingCase Syllabus (G.R. No. 156364)
Facts of the Case
- Petitioner Jacobus Bernhard Hulst and spouse Ida Johanna Hulst-Van Ijzeren, both Dutch nationals, entered into a Contract to Sell with PR Builders, Inc. for a 210-sqm residential unit in Barangay Niyugan, Laurel, Batangas.
- Respondent verbally promised project completion by June 1995 but failed to deliver.
- The spouses filed a complaint for rescission, interest, damages, and attorney’s fees before HLURB (HLRB Case No. IV6-071196-0618).
HLURB Arbiter Decision (April 22, 1997)
- Rescinded the Contract to Sell.
- Ordered respondent to reimburse P3,187,500 purchase price with 12% interest from filing date.
- Awarded P297,000 actual damages; P100,000 moral damages; P150,000 exemplary damages.
- Granted P50,000 attorney’s fees, litigation expenses, and costs.
Writs of Execution and Levy Proceedings
- After divorce, Ida assigned her rights to petitioner, who alone pursued enforcement.
- April 1998: Ex-Officio Sheriff attempted levy but was restrained by CA in a certiorari petition; initial over-levy challenge required personal properties to be levied first.
- January 26, 1999: HLURB Arbiter issued an alias writ of execution.
- March 23, 1999: Sheriff levied on 15 parcels covered by 13 titles in Barangay Niyugan.
- March 27, 2000: Notice of Sale set public auction for April 28, 2000.
Motion to Quash Levy and Conduct of Auction Sale
- April 26, 2000: Respondent filed Urgent Motion to Quash for over-levy—aggregate appraised value P83,616,000 (appraisal at P6,500/sqm) far exceeding judgment debt.
- April 28, 2000, 10:15 a.m.: Respondent’s counsel objected to sale; absent restraining order, sheriff proceeded.
- Holly Properties Realty Corp. was sole bidder, purchasing all parcels for P5,450,653.33.
- Net proceeds P5,313,040 turned over to petitioner that afternoon.
- 4:15 p.m.: HLURB Arbiter issued suspension order; certificates of sale pending signature.
HLURB Order Setting Aside the Levy (August 28, 2000)
- Set aside levy on 15 parcels for excessive valuation disparity (P83.6 M vs. ~P6 M debt).
- Held sheriff should have scrutinized fair market value before sale, considering tax declarations, acquisition cost, co