Villasi v. Garcia
REITERATIONFacts
1. The Antecedents: Petitioner Magdalena T. Villasi contracted respondent Fil-Garcia Construction, Inc. (FGCI) in 1990 to construct a seven-storey condominium. Villasi failed to fully pay the contract price, prompting FGCI to file a collection suit for P2,865,000.00 in unpaid billings. Villasi counter-alleged overpayment and incomplete work by FGCI. The Regional Trial Court (RTC) ruled in favor of FGCI, ordering Villasi to pay the outstanding amount, the value of unused building materials, moral damages, and attorney's fees. However, the Court of Appeals (CA) reversed this decision, finding that Villasi had overpaid and ordering FGCI to return P1,244,543.33 in overpayment and P425,004.00 for unpaid construction materials, along with liquidated damages for delay. 2. Procedural History: FGCI's petition for review to the Supreme Court (SC) was denied for being filed out of time, and the CA decision became final. Villasi then sought execution of the CA judgment. A writ of execution was issued, and the sheriff levied upon a building located on lots owned by Spouses Filomeno and Ermelinda Garcia-Halili. Although the building was declared for tax purposes in FGCI's name, the Spouses Garcia filed a third-party claim, asserting ownership of the building. The RTC, finding merit in the Spouses Garcia's claim, ordered the sheriff to suspend the execution sale. Villasi challenged this order via a petition for certiorari before the CA, arguing grave abuse of discretion. The CA dismissed Villasi's petition, upholding the RTC's suspension of the sale. 3. The Petition: This case reaches the Supreme Court through a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court. Petitioner Villasi assails the CA's decision, which affirmed the RTC's order to suspend the execution sale. Villasi raises three issues: (1) whether the CA erred in upholding the RTC's suspension of the sale based on the third-party claim; (2) whether the CA erred in holding that there was no reason to pierce FGCI's corporate veil; and (3) whether the sheriff should be directed to file the notice of levy with the Register of Deeds. Villasi contends that the Spouses Garcia failed to sufficiently prove their ownership of the building, while evidence, such as the tax declaration, points to FGCI as the owner.
Issue(s)
Whether the Court of Appeals gravely erred in upholding the trial court's decision to suspend and hold in abeyance the sale on execution of the buildings levied upon on the basis of respondents’ Affidavit of Third-Party Claim. Whether the Court of Appeals gravely erred when it held that there is no reason to pierce the veil of FGCI’s corporate fiction in the case at bar. Whether the Branch Sheriff of the Regional Trial Court of Quezon City, Branch 77 should be directed to file the appropriate notice of levy with the Register of Deeds of Quezon City.
Ruling
The petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 92587 are REVERSED and SET ASIDE. The Deputy Sheriff is directed to proceed with the conduct of the sale on execution of the levied building.
Ratio Decidendi
On the issue of the suspension of the execution sale based on the third-party claim: The Court held that money judgments are enforceable only against property incontrovertibly belonging to the judgment debtor. If property of a third person is mistakenly levied, that person has the right to challenge the levy. The Spouses Garcia, as third-party claimants, availed themselves of the remedy of terceria. However, to succeed, they must unequivocally establish their ownership or right of possession over the levied building. The Court found that the Spouses Garcia failed to adduce credible evidence to prove their ownership of the building. In contrast, Villasi presented evidence, such as the tax declaration in the name of FGCI and the building permit issued to FGCI, which satisfactorily established FGCI's ownership. While tax receipts and declarations are not conclusive proof of ownership, they are credible indicators of a claim of title, especially when coupled with actual possession, as supported by the fact that court processes in the earlier collection suit were served at the property's address, consistent with FGCI's tax declaration. The explanation of an erroneous assessment by the City Assessor, without prompt rectification efforts, was deemed suspect and indicative of an intent to place the property beyond the judgment creditor's reach. On the issue of piercing the veil of corporate fiction: The Court found this issue irrelevant to the case. The Spouses Garcia were attempting to protect FGCI from liability by asserting their separate ownership of the levied property. By asserting their separation from FGCI, they were essentially arguing against piercing the corporate veil. Piercing the veil of corporate fiction would make the Spouses Garcia liable for FGCI's debt, which is contrary to their objective of shielding FGCI and themselves from liability. Therefore, the issue of piercing the corporate veil was not the proper recourse for the Spouses Garcia in this context; rather, their claim was based on asserting separate ownership. On the issue of directing the sheriff to file the notice of levy: The Court's decision to reverse the CA and RTC and direct the sheriff to proceed with the execution sale implicitly resolves this issue. By granting the petition and ordering the sale, the Court is effectively allowing the execution process to continue, which would include the necessary steps like filing the notice of levy, if not already done or if required by the subsequent proceedings. The core of the dispute was the validity of the levy and the suspension of the sale, which the Court has now resolved in favor of proceeding with the execution.
Main Doctrine
A third-party claimant must unequivocally establish their ownership or right of possession over the levied property to avail of the remedy of terceria; tax declarations, while not conclusive, are credible proofs of claim of title when coupled with actual possession.