CASE DIGEST: Spouses Eduardo and Elsa Versola vs. Hon. Court of Appeals

 

SPOUSES EDUARDO AND ELSA VERSOLA, petitioners, vs. HON. COURT OF APPEALS, SHERIFF REYNALDO B. MADOLARIA, JUDGE LYDIA QUERUBIN LAYOSA, BOTH OF THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 217, REGISTER OF DEEDS OF QUEZON CITY and DR. VICTORIA T. ONG OH, respondents

G.R. No. 164740. July 31, 2006.

 

FACTS:

Dr. Victoria T. Ong granted a P1,000,000.00 loan to a certain Dolores Ledesma. As a security for said loan, Ledesma issued to private respondent a postdated check for the same amount and promised to execute a deed of real estate mortgage over her house and lot located at Tandang Sora, Quezon City. The execution of the deed of real estate mortgage did not materialize, but Ledesma delivered the owner’s duplicate copy of the TCT to private respondent.

Thereafter, Ledesma sold the said house and lot to petitioners for P2,500,000.00. To raise the full amount that Ledesma demanded, petitioners applied for a loan with Asiatrust Bank, Inc. in the amount of P2,000,000.00. In the course of the application for said loan, petitioners, private respondent, and Ledesma convened with Asiatrust to arrive at a scheme to settle the obligation of Ledesma to private respondent and the obligation of petitioners to Ledesma.

In keeping with agreement, private respondent granted Ledesma an additional loan of P450,000.00. Ledesma, in turn, executed a Deed of Sale transferring the title of the subject property to petitioners. Private respondent then delivered the title of the said property to Asiatrust. The Deed of Sale was registered and TCT in the name of Ledesma was cancelled and a new one was issued in the names of petitioners. Thereafter, Asiatrust approved the loan application of petitioners, after which the latter issued a check in the amount of P1,500,000.00 to private respondent. However, when Asiatrust tried to register the Real Estate Mortgage covering the subject property executed in its favor by petitioners, it discovered a notice of levy on execution was annotated on the title in connection with Ledesma’s obligation to a certain Miladay’s Jewels, Inc. Because of this annotated encumbrance, Asiatrust did not register said Real Estate Mortgage and refused to release the P2,000,000.00 loan of petitioners. When private respondent presented Ledesma’s check for payment, the same was dishonored for the reason that the account was already closed. Subsequently, when private respondent presented for payment the check issued by petitioners, the said check was likewise dishonored because there was a stop payment order. With the dishonor of the checks and with Asiatrust’s refusal to release the P2,000,000.00 loan of petitioners, private respondent came away empty-handed as she did not receive payment for the P1,500,000.00 loan she granted to Ledesma that was assumed by petitioners. As a result, private respondent filed a Complaint for Sum of Money against Ledesma, petitioners, and Asiatrust before the RTC.

After trial, the RTC rendered a verdict in favor of private respondent and against petitioners. No appeal having been filed, the foregoing Decision attained finality.

On 3 April 2000, private respondent filed a Motion for Execution with the trial court, the latter granted the same. On 23 June 2000, the property in the names of petitioners was levied upon. On 18 September 2000, petitioners filed with the sheriff an “Objection/Exception to the Sheriff’s Sale of Defendant Sps. Eduardo and Elsa Versola’s Family Home Pending Court Order or Clearance.” Despite petitioners’ objections, however, the property was still sold at public auction on 19 September 2000 and was awarded to private respondent at the bid price of P2,835,000.00. For failure of petitioners to redeem the property during the redemption period, a Sheriff’s Final Deed of Sale was issued in favor of private respondent on 19 March 2002.

On 5 August 2002, private respondent filed with the trial court an Ex parte Motion for Issuance of Confirmation of Judicial Sale of Real Property of Sps. Eduardo and Elsa Versola.

Petitioners opposed the said motion on the following grounds: (1) the property sold at the public auction is the family home of petitioners which is exempt from execution pursuant to Article 155 of the Family Code; (2) no application was made by private respondent for the determination of the value of their family home to be subjected to execution, as required under Article 160 of the Family Code; and (3) there were serious defects in the conduct of the execution sale.

The trial court debunked petitioners’ arguments, and granted private respondent’s Ex parte Motion and confirmed the Sheriff’s Final Deed of Sale.

ISSUE:

WHETHER OR NOT THE PROVISION UNDER ARTICLE 160 REQUIRING AN APPLICATION TO THE COURT FOR AN ORDER DIRECTING THE AUCTION SALE OF A FAMILY HOME IS MANDATORY AND A CONDITION SINE QUA NON THAT MUST BE COMPLIED WITH PRIOR TO THE AUCTION SALE

RULING:

The settled rule is that the right to exemption or forced sale under Article 153 of the Family Code is a personal privilege granted to the judgment debtor and as such, it must be claimed not by the sheriff, but by the debtor himself before the sale of the property at public auction. It is not sufficient that the person claiming exemption merely alleges that such property is a family home. This claim for exemption must be set up and proved to the Sheriff. Failure to do so would estop the party from later claiming the exception.

It was only after almost two years from the time of the execution sale and after the “Sheriff’s Final Deed of Sale” was issued did petitioners rigorously claim in their Opposition to private respondent’s Ex parte Motion for Issuance of Confirmation of Judicial Sale of Real Property of Sps. Eduardo and Elsa Versola that the property in question is exempt from execution. Even then, there was no showing that petitioners adduced evidence to prove that it is indeed a family home.