Case Summary (G.R. No. 164740)
Procedural Posture
Petitioners seek relief by a Petition for Review under Rule 45 to annul and set aside the CA’s Decision and Resolution that affirmed the RTC’s confirmation of a sheriff’s sale of petitioners’ house and lot. The underlying civil action was a Complaint for Sum of Money filed by private respondent against Ledesma, petitioners, and Asiatrust. Following judgment in favor of private respondent and subsequent appellate proceedings, execution was pursued against the property now in petitioners’ names, culminating in judicial sale and confirmation which petitioners challenged.
Factual Background — Loan, Sale, and Agreement
Dr. Ong Oh loaned Dolores Ledesma P1,000,000, secured only by Ledesma’s delivery of the owner’s duplicate copy of TCT No. RT-51142 and Ledesma’s promise to execute a mortgage; a deed of mortgage was not executed. Ledesma later sold the property to petitioners for P2,500,000 with a P1,000,000 downpayment and installment obligations. Petitioners sought a P2,000,000 loan from Asiatrust to pay the balance. A tripartite arrangement among petitioners, Ledesma, and Dr. Ong Oh (with Asiatrust participating) contemplated (a) additional loan proceeds by Dr. Ong Oh to Ledesma (P450,000) to make P1,450,000 to be credited as full settlement, (b) a deed of sale from Ledesma to petitioners, (c) delivery of the duplicate title to Asiatrust, (d) registration of a real estate mortgage in favor of Asiatrust by petitioners, and (e) release of Asiatrust’s loan proceeds with direct payment of P1,500,000 to private respondent after annotation of Asiatrust’s mortgage lien.
Factual Background — Defects, Dishonors, and Litigation
Although the deed of sale was registered and a new TCT No. 83104 was issued in petitioners’ names and Asiatrust approved the loan, Asiatrust found an annotated notice of levy on the title for a P214,284 obligation of Ledesma to Miladay’s Jewels, preventing registration of Asiatrust’s mortgage and release of the P2,000,000 loan. Checks presented for payment to Dr. Ong Oh (by Ledesma and by petitioners) were dishonored (account closed; stop payment). Private respondent thus did not receive the P1,500,000 she claimed and sued to recover that amount in the RTC.
Trial Court and Court of Appeals Judgments on the Underlying Obligation
The RTC rendered judgment for private respondent against petitioners ordering payment of P1,500,000 plus interest, moral/exemplary damages, and attorney’s fees. On appeal, the CA affirmed but deleted the awards of moral and exemplary damages and attorney’s fees, ordering payment only of P1,500,000 with legal interest. That CA judgment became final and executable.
Execution and Judicial Sale
Private respondent filed for execution; the property (TCT No. 83104) was levied and scheduled for public auction. Petitioners filed an “Urgent Motion to Suspend Auction Sale” and an “Objection/Exception to the Sheriff’s Sale” but the court treated the former as a “mere scrap of paper” (no notice of hearing) and the sheriff proceeded with the sale on 19 September 2000. The property was sold to private respondent at P2,835,000 (allocated as P1,500,000 principal and P1,335,000 interest), and a Sheriff’s Final Deed of Sale was issued on 19 March 2002. Private respondent moved ex parte for confirmation of the judicial sale; petitioners opposed on multiple grounds, chiefly invoking Family Code protections for the family home.
Petitioners’ Principal Legal Contentions
Petitioners asserted that their house and lot constituted their family home and thus was exempt from execution under the Family Code (Arts. 152–160), relying on (a) the mandatory nature of the Family Code provisions in relation to constitutional due process guarantees (Article III, Section 1), and (b) Article 160’s requirement that a creditor must apply to the court and the court must determine the actual value of the family home before ordering its sale. They also alleged procedural defects in the execution sale, including the sheriff’s reliance on the RTC’s dispositive portion rather than the CA’s modified judgment and the sheriff’s inaction on petitioners’ objections.
Trial Court Findings on Procedural and Proof Failings
The RTC rejected petitioners’ defenses. The court found the “Urgent Motion” defective and disregarded it as it lacked a notice of hearing (thus a “mere scrap of paper”). The sheriff’s day-before objection likewise failed because petitioners did not set forth or present evidence to substantiate the claim that the property was a family home. The court concluded that petitioners raised the family-home claim belatedly (only vigorously asserting it after almost two years and after issuance of the Final Deed of Sale), and that the sale computation and statement of accounts showed the auction proceeded on the basis of the CA judgment. The court characterized petitioners’ late claim as an afterthought.
Legal Principles Applied by the Court
The court applied settled doctrines: the family home is constituted by occupation as family residence (no extrajudicial or judicial constitution required), but the exemption is a personal privilege that must be asserted and proved by the judgment debtor to the sheriff before the sale. Mere allegations are insufficient; a timely and substantiated claim to the sheriff is essential, and failure to do so estops later assertions. The court cited controlling jurisprudence (Manacop; Honrado) holding that reasonable time to claim exemption does not extend beyond statutory redemption perio
Case Syllabus (G.R. No. 164740)
Nature of the Case and Relief Sought
- Petition for Review under Rule 45 of the Rules of Court filed by petitioners spouses Eduardo and Elsa Versola.
- The petition seeks to nullify and set aside the 28 April 2004 Decision and 28 July 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 79300, which affirmed the RTC Orders dated 6 January 2003 and 14 July 2003 in Civil Case No. Q-93-16003 (RTC, Quezon City, Branch 217).
- Central relief sought: annulment of confirmation of judicial sale of petitioners' property (their asserted family home) and reversal of appellate and lower court rulings confirming the sale.
Parties
- Petitioners: Spouses Eduardo and Elsa Versola.
- Private respondent / judgment creditor: Dr. Victoria T. Ong Oh.
- Other respondents named in case caption: Hon. Court of Appeals, Sheriff Reynaldo B. Madolaria, Judge Lydia Querubin Layosa (RTC Branch 217), Register of Deeds of Quezon City.
- Additional parties in underlying litigation: Dolores Ledesma (original borrower/seller), Asiatrust Bank, Inc. (bank to which petitioners applied for loan).
Underlying Transaction and Factual Background
- Private respondent Dr. Victoria T. Ong Oh granted a P1,000,000.00 loan to Dolores Ledesma; as security, Ledesma issued a check for P1,000,000.00 dated 10 February 1993 and promised to execute a deed of real estate mortgage over her house and lot in Tandang Sora, Quezon City (covered by TCT No. RT-51142).
- The deed of mortgage was not executed; Ledesma delivered the owner's duplicate copy of TCT No. RT-51142 to Dr. Ong Oh.
- Ledesma subsequently sold the house and lot to petitioners for P2,500,000.00. Petitioners paid P1,000,000.00 down and agreed to pay the remaining P1,500,000.00 in monthly installments of P75,000.00 starting 15 March 1993.
- Before installments were due, Ledesma demanded full payment; petitioners paid only P50,000.00. To meet the demand, petitioners applied to Asiatrust Bank, Inc. for a P2,000,000.00 loan.
Agreement Among Parties to Secure Financing (Scheme)
- Petitioners, private respondent, Ledesma and Asiatrust met and agreed to a scheme to settle obligations:
- (1) Dr. Ong Oh would grant Ledesma an additional loan of P450,000.00, raising Ledesma’s indebtedness to P1,450,000.00; this P1,450,000.00 would be credited to petitioners as full settlement of the purchase price.
- (2) Ledesma would execute a Deed of Sale transferring the subject property (TCT No. RT-51142) to petitioners.
- (3) Dr. Ong Oh would deliver the duplicate copy of TCT No. RT-51142 to Asiatrust.
- (4) Once petitioners secured title in their names, they would execute a real estate mortgage over the property in favor of Asiatrust to secure their P2,000,000.00 loan.
- (5) Asiatrust would grant the P2,000,000.00 loan with a written guarantee that P1,500,000.00 would be given directly to Dr. Ong Oh after Asiatrust’s mortgage lien was annotated on the title.
Implementation of the Agreement and Subsequent Problems
- Dr. Ong Oh granted Ledesma the P450,000.00 extension; Ledesma executed Deed of Sale to petitioners; Dr. Ong Oh delivered the title to Asiatrust.
- The Deed of Sale was registered; TCT No. RT-51142 in Ledesma’s name was cancelled and a new TCT No. 83104 was issued in petitioners’ names.
- Asiatrust approved petitioners’ loan; petitioners issued a check of P1,500,000.00 to Dr. Ong Oh.
- When Asiatrust attempted to register the Real Estate Mortgage in its favor, it discovered a notice of levy on the title in connection with Ledesma’s obligation to Miladay’s Jewels, Inc. amounting to P214,284.00.
- Due to this annotated encumbrance, Asiatrust refused to register the mortgage and refused to release the P2,000,000.00 loan to petitioners.
- Dr. Ong Oh’s presentation of Ledesma’s check resulted in dishonor because the account was closed; Dr. Ong Oh’s presentation of petitioners’ check was dishonored due to a stop payment order.
- As a result of dishonored checks and Asiatrust’s refusal to release funds, Dr. Ong Oh did not receive payment for the P1,500,000.00 loan she had effectively assumed would be paid.
Trial Court Proceedings (Civil Case No. Q-93-16003)
- Dr. Ong Oh filed a Complaint for Sum of Money against Ledesma, petitioners and Asiatrust before RTC Branch 217, Quezon City.
- RTC Decision dated 31 May 1996 ruled in favor of Dr. Ong Oh and against petitioners, ordering:
- (a) P1,500,000.00 plus legal interest from time of judicial demand;
- (b) P100,000.00 moral damages and P50,000.00 exemplary damages;
- (c) Attorney’s fees of P100,000.00.
- Petitioners appealed to the Court of Appeals (CA-G.R. CV No. 54399).
Court of Appeals Ruling on the Underlying Suit
- CA Decision dated 30 August 1999 affirmed RTC’s judgment but modified damages:
- Deleted awards of moral and exemplary damages and attorney’s fees.
- Ordered petitioners to pay Dr. Ong Oh P1,500,000.00 with legal interest from 24 March 1993.
- No further appeal was filed; CA decision became final.
Execution Proceedings and Sheriff’s Sale
- On 3 April 2000, Dr. Ong Oh filed a Motion for Execution with the trial court; the court granted it on 14 April 2000.
- Property under TCT No. 83104 (in petitioners’ names) was levied on 23 June 2000.
- Sheriff set public auction for 19 September 2000; petitioners were served with notice of sale.
- Petitioners filed various urgent papers:
- An "Urgent Motion to Suspend Auction Sale on the Property of Defendants under TCT No. 83104 located at Sunville Subdivision, Quezon City" dated 12 September 2000 (filed before the sale).
- An "Objection/Exception to the Sheriff’s Sale of Defendant Sps. Eduardo and Elsa Versola’s Family Home Pending Court Order or Clearance" filed with the sheriff on 18 September 2000 (one day prior to sale).
- Despite these filings, the sheriff proceeded with the sale on 19 September 2000; property was awarded to Dr. Ong Oh at a bid of P2,835,000.00.
- Petitioners failed to redeem during redemption period; Sheriff’s Final Deed of Sale issued in favor of Dr. Ong Oh on 19 March 2002.
Post-Sale Motions; Trial Court Confirmation of Sale
- On 5 August 2002, Dr. Ong Oh filed an Ex-parte Motion for Issuance of Confirmation of Judicial Sale of Real Property of Sps. Eduardo and Elsa Versola.
- Petitioners opposed confirmation o