Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83809:56580&catid=1579&Itemid=566
Timestamp: 2019-04-25 01:49:27+00:00

Document:
G.R. No. 190106, January 15, 2014 - MAGDALENA T. VILLASI, Petitioner, v. SPOUSES FILOMENO GARCIA AND ERMELINDA HALILI-GARCIA, Respondents.
MAGDALENA T. VILLASI, Petitioner, v. SPOUSES FILOMENO GARCIA AND ERMELINDA HALILI-GARCIA, Respondents.
This is a Petition for Review on Certiorari1 filed pursuant to Rule 45 of the Revised Rules of Court, assailing the 19 May 2009 Decision2 rendered by the Sixth Division of the Court of Appeals in CA-G.R. SP No. 92587. The appellate court affirmed the Order3 of the Regional Trial Court (RTC) of Quezon City, Branch 77, directing the Deputy Sheriff to suspend the conduct of the execution sale of the buildings levied upon by him.
Sometime in 1990, petitioner Magdalena T. Villasi (Villasi) engaged the services of respondent Fil-Garcia Construction, Inc. (FGCI) to construct a seven-storey condominium building located at Aurora Boulevard corner N. Domingo Street, Cubao, Quezon City. For failure of Villasi to fully pay the contract price despite several demands, FGCI initiated a suit for collection of sum of money before the RTC of Quezon City, Branch 77. In its action docketed as Civil Case No. Q-91-8187, FGCI prayed, among others, for the payment of the amount of P2,865,000.00, representing the unpaid accomplishment billings. Served with summons, Villasi filed an answer specifically denying the material allegations of the complaint. Contending that FGCI has no cause of action against her, Villasi averred that she delivered the total amount of P7,490,325.10 to FGCI but the latter accomplished only 28% of the project. After the pre-trial conference was terminated without the parties having reached an amicable settlement, trial on the merits ensued.
WHEREFORE, premises considered, the present appeal is hereby GRANTED and the appealed decision in Civil Case No. Q-91-8187 is hereby REVERSED and SET ASIDE and judgment is hereby rendered ordering the [FGCI] to return to [Villasi] the sum of P1,244,543.33 as overpayment under their contract, and the further sum of P425,004.00 representing unpaid construction materials obtained by it from [Villasi]. [FGCI] is likewise hereby declared liable for the payment of liquidated damages in the sum equivalent to 1/10 of 1% of the contract price for each day of delay computed from March 6, 1991.
Unrelenting, FGCI filed a Petition for Review on Certiorari before this Court, docketed as G.R. No. 147960, asseverating that the appellate court erred in rendering the 20 November 2000 Decision. This Court, however, in a Resolution dated 1 October 2001, denied the appeal for being filed out of time. The said resolution became final and executory on 27 November 2001, as evidenced by the Entry of Judgment8 made herein.
To enforce her right as prevailing party, Villasi filed a Motion for Execution of the 20 November 2000 Court of Appeals Decision, which was favorably acted upon by the RTC.9 A Writ of Execution was issued on 28 April 2004, commanding the Sheriff to execute and make effective the 20 November 2000 Decision of the Court of Appeals.
To satisfy the judgment, the sheriff levied on a building located at No. 140 Kalayaan Avenue, Quezon City, covered by Tax Declaration No. D-021-01458, and built in the lots registered under Transfer Certificates of Title (TCT) Nos. 379193 and 379194. While the building was declared for taxation purposes in the name of FGCI, the lots in which it was erected were registered in the names of the Spouses Filomeno Garcia and Ermelinda Halili-Garcia (Spouses Garcia). After the mandatory posting and publication of notice of sale on execution of real property were complied with, a public auction was scheduled on 25 January 2006.
To forestall the sale on execution, the Spouses Garcia filed an Affidavit of Third Party Claim10 and a Motion to Set Aside Notice of Sale on Execution,11 claiming that they are the lawful owners of the property which was erroneously levied upon by the sheriff. To persuade the court a quo to grant their motion, the Spouses Garcia argued that the building covered by the levy was mistakenly assessed by the City Assessor in the name of FGCI. The motion was opposed by Villasi who insisted that its ownership belongs to FGCI and not to the Spouses Garcia as shown by the tax declaration.
Arguing that the RTC gravely abused its discretion in ordering the suspension of the sale on execution, Villasi timely filed a Petition for Certiorari before the Court of Appeals. In a Decision15 dated 19 May 2009, the appellate court dismissed the petition. In a Resolution16 dated 28 October 2009, the Court of Appeals refused to reconsider its decision.
Claiming that the sheriff mistakenly levied the building that lawfully belongs to them, the Spouses Garcia availed themselves of the remedy of terceria under Section 16, Rule 39 of the Revised Rules of Court. To fortify their position, the Spouses Garcia asserted that as the owners of the land, they would be deemed under the law as owners of the building standing thereon. The Spouses Garcia also asserted that the construction of the building was financed thru a loan obtained from Metrobank in their personal capacities, and they merely contracted FGCI to construct the building. Finally, the Spouses Garcia argued that the tax declaration, based on an erroneous assessment by the City Assessor, cannot be made as basis of ownership.
For her part, Villasi insists that the levy effected by the sheriff was proper since the subject property belongs to the judgment debtor and not to third persons. To dispute the ownership of the Spouses Garcia, Villasi pointed out that the levied property was declared for tax purposes in the name of FGCI. A Certification issued by the Office of the City Engineering of Quezon City likewise showed that the building permit of the subject property was likewise issued in the name of FGCI.
[A] third person whose property was seized by a sheriff to answer for the obligation of the judgment debtor may invoke the supervisory power of the court which authorized such execution. Upon due application by the third person and after summary hearing, the court may command that the property be released from the mistaken levy and restored to the rightful owner or possessor. What said court can do in these instances, however, is limited to a determination of whether the sheriff has acted rightly or wrongly in the performance of his duties in the execution of judgment, more specifically, if he has indeed taken hold of property not belonging to the judgment debtor. The court does not and cannot pass upon the question of title to the property, with any character of finality. It can treat of the matter only insofar as may be necessary to decide if the sheriff has acted correctly or not. It can require the sheriff to restore the property to the claimant's possession if warranted by the evidence. However, if the claimant's proofs do not persuade the court of the validity of his title or right of possession thereto, the claim will be denied.22 (Emphasis and underscoring supplied).
It likewise failed to escape our attention that FGCI is in actual possession of the building and as the payment of taxes coupled with actual possession of the land covered by tax declaration strongly supports a claim of ownership.26 Quite significantly, all the court processes in an earlier collection suit between FGCI and Villasi were served, thru the former’s representative Filomeno Garcia, at No. 140 Kalayaan Avenue, Quezon City, where the subject property is located. This circumstance is consistent with the tax declaration in the name of FGCI.
While it is a hornbook doctrine that the accessory follows the principal,31 that is, the ownership of the property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially,32 such rule is not without exception. In cases where there is a clear and convincing evidence to prove that the principal and the accessory are not owned by one and the same person or entity, the presumption shall not be applied and the actual ownership shall be upheld. In a number of cases, we recognized the separate ownership of the land from the building and brushed aside the rule that accessory follows the principal.
The rule on accession is not an iron-clad dictum. On instances where this Court was confronted with cases requiring judicial determination of the ownership of the building separate from the lot, it never hesitated to disregard such rule. The case at bar is of similar import. When there are factual and evidentiary evidence to prove that the building and the lot on which it stands are owned by different persons, they shall be treated separately. As such, the building or the lot, as the case may be, can be made liable to answer for the obligation of its respective owner.
Finally, the issue regarding the piercing of the veil of corporate fiction is irrelevant in this case. The Spouses Garcia are trying to protect FGCI from liability by asserting that they, not FGCI, own the levied property. The Spouses Garcia are asserting their separation from FGCI. FGCI, the judgment debtor, is the proven owner of the building. Piercing FGCI’s corporate veil will not protect FGCI from its judgment debt. Piercing will result in the identification of the Spouses Garcia as FGCI itself and will make them liable for FGCI’s judgment debt.
WHEREFORE, premises considered, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 92587 are hereby REVERSED and SET ASIDE. The Deputy Sheriff is hereby directed to proceed with the conduct of the sale on execution of the levied building.
* Per Raffle dated 4 December 2013.
2 Penned by Associate Justice Ricardo R. Rosario with Associate Justices Jose L. Sabio, Jr. and Vicente S. E. Veloso, concurring. Id. at 43-51.
3 Presided by Judge Vivencio S. Baclig. Id. at 104-106.
4 Presided by Judge Ignacio L. Salvador. Id. at 54-61.
18Sec. 16. Proceedings where property claimed by third person. - If the property levied on is claimed by any person other than the judgment obligor or his agent, and such person makes an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title, and serves the same upon the officer making the levy and a copy thereof upon the judgment obligee, the officer shall not be bound to keep the property, unless such judgment obligee, on demand of the officer, files a bond approved by the court to indemnify the third-party claimant in a sum not less than the value of the property levied on. In case of disagreement as to such value, the same shall be determined by the court issuing the writ of execution. No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action therefor is filed within one hundred twenty (120) days from the date of the filing of the bond.
When the writ of execution is issued in favor of the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall not be required, and in case the sheriff or levying officer is sued for damages as a result of the levy, he shall be represented by the Solicitor General and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of such funds as may be appropriated for the purpose.
19Gagoomal v. Villacorta, G.R. No. 192813, 18 January 2012, 663 SCRA 444, 454-455.
20Corpus v. Pascua, A.M. No. P-11-2972, 28 September 2011, 658 SCRA 239, 248.
21 260 Phil. 401 (1990).
23 Director of Lands v. Intermediate Appellate Court, G.R. No. 68946, 22 May 1992, 209 SCRA 214, 227-228.
24 518 Phil. 285 (2006).
25 Id. at 296 citing Ganila v. Court of Appeals, 500 Phil. 212, 224 (2005).
26Heirs of Marcelina Arzadon-Crisologo v. Rañon, 559 Phil. 169, 187 (2007).
27Solar Resources, Inc. v. Inland Trailways, Inc., 579 Phil. 548, 560 (2008).
28 The reason is its soul.
29Florentino v. Rivera, 515 Phil. 494, 504 (2006).
31Torbela v. Rosario, G.R. Nos. 140528 and 140553, 7 December 2011, 661 SCRA 633, 675.
32 New Civil Code, Art. 440. The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially.
33 G.R. No. 177637, 26 July 2010, 625 SCRA 461.
35 108 Phil. 873 (1960).

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 Art. 440