G.R. No. 190106 - Villasi vs. Garcia

Case Summary (G.R. No. 190106)

Petitioner and Respondent Positions

Villasi: Asserted that the levied building belongs to FGCI (the judgment debtor) as shown by tax declaration and building permit, and that the sheriff’s levy and the scheduled execution sale were proper. Spouses Garcia: Filed an Affidavit of Third-Party Claim and motion to set aside the notice of sale, maintaining they own the lots and, by virtue of ownership of the land, are owners of the building; they asserted that the tax declaration in FGCI’s name resulted from an erroneous assessment and sought suspension of sale.

Key Dates and Procedural Posture

Original construction contract and dispute arose circa 1990.
RTC Decision (26 June 1996) favored FGCI; CA reversed (20 November 2000) awarding Villasi return of overpayment and other reliefs; Supreme Court denied FGCI’s late appeal, finalizing CA judgment on 27 November 2001.
Writ of Execution issued 28 April 2004; sheriff levied a building at No. 140 Kalayaan Avenue; public auction set 25 January 2006.
RTC ordered suspension of sale (24 February 2005); RTC denied reconsideration (11 October 2005). CA dismissed Villasi’s certiorari petition (19 May 2009; reconsideration denied 28 October 2009). Villasi filed a Rule 45 petition to the Supreme Court, which rendered the challenged decision.

Applicable Law and Governing Rules

1987 Philippine Constitution (applicable as decision date is 2014).
Revised Rules of Court, Rule 39, Section 16 (proceedings where property levied on is claimed by third person — procedures for terceria and requirements for bond).
Established jurisprudence on third-party claims (terceria), ownership presumptions, evidentiary weight of tax declarations and possession, and the limited scope of courts in summary proceedings to determine whether the sheriff acted rightly in levying property.

Facts Relevant to Ownership and Levy

FGCI was declared as the owner of the building for taxation purposes; tax declarations and payments were in FGCI’s name. Multiple court processes in the earlier collection suit were served at the building’s address, consistent with FGCI’s declared ownership. The lots on which the building was erected were registered under TCT Nos. 379193 and 379194 in the names of the Spouses Garcia. The Spouses claimed financing of the construction and contended that the City Assessor erroneously assessed the building to FGCI.

Issues Presented to the Court

I. Whether the Court of Appeals erred in upholding the RTC’s suspension of the execution sale on the basis of the Spouses’ affidavit of third-party claim; II. Whether the Court of Appeals erred in refusing to pierce FGCI’s corporate veil; III. Whether the sheriff should be directed to file a notice of levy with the Register of Deeds of Quezon City.

Legal Standards on Third-Party Claims (Terceria)

The right to a terceria is founded on title or a right of possession; a third-party claimant seeking release of property from levy must unmistakably establish ownership or possession. In summary supervisory proceedings under Rule 39, Section 16, the court’s inquiry is limited: it must determine whether the sheriff rightly or wrongly took hold of property not belonging to the judgment debtor. The court cannot finally adjudicate title in such summary proceedings beyond what is necessary for that determination. Tax declarations and tax payments, while not conclusive, are credible indicia of a claim of title and possession; actual possession coupled with tax declarations strengthens a claimant’s ownership claim.

Court’s Analysis and Application of Law to Facts

The Supreme Court examined the record and found the Spouses Garcia did not produce credible evidence proving bona fide ownership of the building. Their primary contention—that land ownership alone makes them owners of the building—was unsupported by evidence of ownership or possession of the building itself. Conversely, Villasi presented documentation indicating the building was declared for taxation in FGCI’s name, FGCI’s actual possession of the building, and the service of court processes to FGCI’s representative at the building’s address. These facts constitute persuasive proof of a claim of title by FGCI. The Court noted the Spouses’ belated attempt to correct the tax assessment and considered that delay suspect, suggesting an intent to put the property beyond reach of the judgment creditor. Because the Spouses failed to establish ownership or possession sufficient to show the sheriff acted wrongly, the RTC’s suspension of the execution sale lacked justification under Rule 39, Section 16.

On Piercing the Corporate Veil and Its Relevance

The Court found the issue of piercing FGCI’s corporate veil irrelevant to the disposition. The Spouses’ position sought

Case Syllabus (G.R. No. 190106)

Facts

In or about 1990, petitioner Magdalena T. Villasi (Villasi) engaged Fil-Garcia Construction, Inc. (FGCI) to construct a seven-storey condominium building at Aurora Boulevard corner N. Domingo Street, Cubao, Quezon City.
Villasi allegedly failed to fully pay the contract price despite several demands; FGCI filed a suit for collection of sum of money in the RTC of Quezon City, Branch 77, docketed as Civil Case No. Q-91-8187, seeking payment of P2,865,000.00 representing unpaid accomplishment billings, among other reliefs.
Villasi answered, specifically denying material allegations and asserting she delivered a total of P7,490,325.10 to FGCI while FGCI accomplished only 28% of the project.
After trial, the RTC (Judge Ignacio L. Salvador) found FGCI preponderantly established its right to unpaid accomplishment billings and rendered judgment on 26 June 1996 ordering Villasi to pay:
- P2,865,000.00 as actual damages and unpaid accomplishment billings;
- P500,000.00 representing value of unused building materials;
- P100,000.00 as moral damages; and
- P100,000.00 as attorney’s fees.
On appeal (CA-GR CV No. 54750), the Court of Appeals reversed on 20 November 2000, finding Villasi made an overpayment and ordering FGCI to return:
- P1,244,543.33 as overpayment; and
- P425,004.00 representing unpaid construction materials;
- and declaring FGCI liable for liquidated damages equivalent to 1/10 of 1% of the contract price for each day of delay computed from March 6, 1991.
FGCI filed a Petition for Review on Certiorari to the Supreme Court (G.R. No. 147960), which was denied by resolution dated 1 October 2001 for being filed out of time; this resolution became final and executory on 27 November 2001 (Entry of Judgment).
Villasi, as prevailing party, filed a Motion for Execution of the Court of Appeals Decision; the RTC issued a Writ of Execution on 28 April 2004 commanding the sheriff to execute the 20 November 2000 CA Decision.
The sheriff levied on a building at No. 140 Kalayaan Avenue, Quezon City (Tax Declaration No. D-021-01458), built on lots registered under TCT Nos. 379193 and 379194; the building was declared for taxation in the name of FGCI, whereas the lots were registered in the names of Spouses Filomeno Garcia and Ermelinda Halili-Garcia (Spouses Garcia).
A public auction (sale on execution) was scheduled for 25 January 2006 after posting and publication requirements were complied with.
To forestall sale, the Spouses Garcia filed an Affidavit of Third Party Claim and a Motion to Set Aside Notice of Sale on Execution, claiming lawful ownership and asserting the levy was erroneous; they argued that as owners of the land they are presumed owners of the building, that they financed construction through a Metrobank loan in their personal capacities and merely contracted FGCI to construct the building, and that the tax declaration was based on an erroneous City Assessor assessment.
Villasi opposed, asserting the levied property belonged to FGCI as shown by tax declaration, and relying on a City Engineering certification that the building permit was issued in FGCI’s name.
The RTC issued an Order on 24 February 2005 directing Deputy Sheriff Angel Doroni to suspend or hold in abeyance the sale on execution of the buildings levied upon until further orders; Villasi’s motion for reconsideration was denied by the trial court on 11 October 2005.
Villasi filed a Petition for Certiorari in the Court of Appeals alleging grave abuse of discretion by the RTC; the Court of Appeals, in a Decision dated 19 May 2009, dismissed the petition and later, in a Resolution dated 28 October 2009, denied reconsideration.
Villasi elevated the matter to the Supreme Court by Petition for Review on Certiorari under Rule 45, assailing the Court of Appeals’ Decision and Resolution.

Procedural History

RTC (Branch 77, Quezon City) — Civil Case No. Q-91-8187: Judgment in favor of FGCI dated 26 June 1996 awarding sums for unpaid billings, unused materials, moral damages, and attorney’s fees.
Court of Appeals — CA-GR CV No. 54750: Reversed RTC on 20 November 2000; ordered FGCI to return overpayment and unpaid materials amounts; imposed liquidated damages.
Supreme Court (G.R. No. 147960) — FGCI’s appeal denied by resolution dated 1 October 2001; resolution became final and executory on 27 November 2001 (Entry of Judgment).
Execution: Writ of Execution issued 28 April 2004; levy on building at No. 140 Kalayaan Avenue (Tax Declaration No. D-021-01458; TCT Nos. 379193, 379194).
Third-Party Proceedings: Spouses Garcia filed Affidavit of Third Party Claim and Motion to Set Aside Notice of Sale; RTC suspended sale by Order dated 24 February 2005; motion for reconsideration denied on 11 October 2005.
Court of Appeals (CA-G.R. SP No. 92587): Petition for Certiorari by Villasi dismissed in Decision dated 19 May 2009; reconsideration denied in Resolution dated 28 October 2009.
Supreme Court (G.R. No. 190106): Villasi’s Petition for Review on Certiorari under Rule 45 — this case.

Issues Presented to the Supreme Court

Whether the Court of Appeals gravely erred in upholding the RTC’s order to suspend and hold in abeyance the sale on execution of the buildings levied upon based on the Spouses Garcia’s Affidavit of Third-Party Claim.
Whether the Court of Appeals gravely erred in holding that there was no reason to pierce the veil of FGCI’s corporate fiction.
Whether the branch sheriff of the RTC of Quezon City, Branch 77, should be directed to file the appropriate notice of levy with the Register of Deeds of Quezon City.

Legal Framework and Standards Cited

Section 16, Rule 39, Revised Rules of Court (Proceedings where property claimed by third person):
- A third person claiming title or right of possession may file an affidavit of title/right of possession, served on the officer making the levy and the judgment obligee; the officer need not keep the property unless the judgment obligee files an indemnity bond approved by the court.
- Remedies available to the third person include terceria (summary determination whether the sheriff rightly took property not belonging to judgment debtor) or an independent separate action to vindicate ownership/possession.
- Officer not liable for damages if bond is filed; filing of bond not required when writ is in favor of the Republic.
Principle that money judgments are enforceable only against property incontrovertibly belonging t