CAGAYAN DE ORO v.

CA
G.R. No. 129713
December 15, 1999
By: Lubag, Hurjae S.

Petitioner: CAGAYAN DE ORO COLISEUM, INC.

Respondents: COURT OF APPEALS, MAXIMIANO MABANAG, JR. and RICHARD GO KING

Doctrine: To effect a levy upon a realty, the sheriff is required to do two specific things: (1) file with the register of
deeds a copy of the order of attachment or execution, together with the description of the attached property and
notice of attachment or execution; and (2) leave with the occupant of the property copy of the same order, description
and notice. These are prerequisites to a valid levy, non-compliance with any of which is fatal.

Facts:
1. Petitioner Cagayan de Oro Coliseum, Inc., a domestic corporation obtained from one Santiago Maceren a
loan. As security for the loan, petitioner executed a promissory note and a mortgage over all its assets and
properties, including a parcel of land situated in the poblacion of the City and registered in its name.
2. The loan, together with the promissory note and the mortgage, were later assigned by Maceren to the
Commercial Credit Corporation of Cagayan de Oro (Commercial Credit).
3. Petitioner failed to pay the loan when it became due, hence, the Commercial Credit commenced foreclosure
proceedings on the said parcel of land.
4. Five stockholders of petitioner corporation instituted a petition for injunction against Commercial Credit, the
City Sheriff of Cagayan de Oro and herein petitioner corporation. The five stockholders sought to enjoin the
public sale of the corporate property alleging that the loan was contracted by Diego Imperio, the president of
the corporation, without authority from the stockholders; and that the creditor, Santiago Maceren, was
corporate treasurer and a member of the Board of Directors of petitioner corporation at the time the loan was
obtained.
5. The parties entered into a compromise agreement which became the basis of a judgment rendered by the
trial court, whereby the five stockholders ratified the loan of the corporation to Commercial Credit; the
corporation bound itself to pay the loan in equal monthly installments of P11,000.00 and agreed that failure
to pay any of the installments shall render the judgment immediately executory, with penalty on overdue and
unpaid installments.
6. Commercial Credit filed with now RTC Cagayan De Oro City, an ex-parte motion for the issuance of a Writ
of Execution on the ground of the failure of Coliseum to pay several installments on its loan.
7. Branch Clerk of Court issued a Writ of Execution the following day. The deputy sheriff filed a notice of levy
on Coliseum’s title with the Register of Deeds of CDO.
8. Coliseum filed a MR of the Order of Execution alleging that the issuance of the order of execution ex parte
violated their right to due process; and that a hearing should have been conducted on the said motion.
(DENIED)
9. Coliseum filed with the CA an action for annulment of judgment on the ground of fraud and
misrepresentation discovered only in 1983. (DENIED)

Issue: Whether the execution proceedings and the auction sale were null and void for failure to comply with the levy
and notice requirements of the Rules of Court.

Ruling:
Execution under Rule 39 of the Revised Rules of Court is a remedy afforded by law for the enforcement of a
judgment, its object being to obtain satisfaction of the judgment on which the writ is issued. It issues by order of the
court a quo, on motion of the judgment obligee, upon finality of a judgment or order sought to be enforced, and is
directed to an officer authorizing and requiring him to execute the judgment of the court.

If the judgment is for money, the sheriff or other authorized officer must execute the same pursuant to the provisions
of Section 15 of Rule 39 of the Rules of Court, viz:
 Sec. 15. Execution of money judgments. - - The officer must enforce an execution of a money judgment by
levying on all the property, real and personal of every name and nature whatsoever, and which may be
disposed of for value, of the judgment debtor not exempt from execution, or on a sufficient amount of such
property, if there be sufficient, and selling the same, and paying to the judgment creditor, or his attorney, so
much of the proceeds as will satisfy the judgment. Any excess in the proceeds over the judgment and
accruing costs must be delivered to the judgment debtor, unless otherwise directed by the judgment or order
of the court. When there is more property of the judgment and accruing costs, within the view of the officer,
he must levy only on such part of the property as is amply sufficient to satisfy the judgment and costs.

Real property, stocks, shares, debts, credits, and other personal property, or any interest in either real or personal
property, may be levied on in like manner and with like effect as under a writ of attachment.

In executing a money judgment against the property of the judgment debtor, the sheriff shall levy on all property
belonging to the judgment debtor as is amply sufficient to satisfy the judgment and costs, and sell the same paying to
the judgment creditor so much of the proceeds as will satisfy the amount of the judgment debt and costs. Any excess
in the proceeds shall be delivered to the judgment debtor unless otherwise directed by the judgment or order of the
court.

Levy means the essential act or acts by which an officer sets apart or appropriates a part or the whole of the property
of the judgment debtor for purposes of the prospective execution sale. The object of a levy is to take property into the
custody of the law, and thereby renders it liable to the lien of the execution, and put it out of the power of the
judgment debtor to divert it to any other use or purpose. [51] A valid levy on execution places the property subject of
execution under the jurisdiction and authority of the court. [52] It also creates a lien in favor of the judgment creditor
over the right, title and interest of the judgment debtor in such property at the time of the levy, subject to liens and
encumbrances then existing.

The second paragraph of Section 15, Rule 39 as aforequoted provides that a levy is effected in the same manner as
the levy under a writ of attachment. Rule 57 on Attachment provides:

Sec. 7. Attachment of real and personal property; recording thereof. - - Properties shall be attached by the officer
executing the order in the following manner:
(a) Real property, or growing crops thereon, standing upon the records of the registrar of deeds of the
province in the name of the party against whom attachment is issued, or not appearing at all upon such
records, by filing with the registrar of deeds a copy of the order, together with a description of the property
attached, and a notice that it is attached, and by leaving a copy of such order, description, and notice with
the occupant of the property, if any there be. Where the property has been brought under the operation of
the Land Registration Act, the notice shall contain a reference to the number of the certificate of title and the
volume and page in the registration book where the certificate is registered. The registrar must index
attachments filed under this paragraph in the names of both of the applicant and the adverse party.

To effect a levy upon a realty, the sheriff is required to do two specific things: (1) file with the register of deeds a copy
of the order of attachment or execution, together with the description of the attached property and notice of
attachment or execution; and (2) leave with the occupant of the property copy of the same order, description and
notice. These are prerequisites to a valid levy, non-compliance with any of which is fatal.

In the instant case, the execution sale of the subject property was made pursuant to the order of execution of
November 26, 1986 and the writ of execution of December 4, 1986. The November 26, 1986 execution order and the
corresponding writ of execution were not filed with the Register of Deeds before the auction sale of February 13,
1987. The order of November 26, 1986 was filed and inscribed on petitioners title only on December 7, 1988 - -
exactly one (1) year and ten (10) months after the execution sale of February 13, 1987. This is clear from the
annotation in TCT No. T-3383 of petitioner corporation.

Since this order was not filed with the Register of Deeds prior to the execution sale, it follows that the levy was not
effected and the execution sale of February 13, 1987 proceeded without a levy. [66] A lawful levy on execution is
indispensable to a valid sale on execution. In other words, a sale, unless preceded by a valid levy, is void, and the
purchaser acquires no title to the property sold. Without a proper levy, the property is not placed under the authority
of the court. The court does not acquire jurisdiction over the property subject of execution, hence, it could not transmit
title thereto at the time of the sale. Where in the instant case no jurisdiction was acquired over the subject property,
the execution sale was void and of no legal effect. And the trial court did not err in so ruling.

Private respondent argues that redemption is inconsistent with the claim of invalidity of the levy and sale. In the case
at bar, however, petitioner has expressly averred that the redemption was made purely on the assumption, not
admission, of the validity of the execution proceedings. [73] Petitioner has consistently questioned the validity of the
execution proceedings. It would be unjust to deprive it of the opportunity to recover its one and only real property by
the simple expedient of estoppel despite the express condition attached to its redemption. After all, the Rules of Court
provide that a party may in one pleading set forth two or more statements of a claim alternatively or hypothetically,
either in one or in separate cause of action.

Lastly, the nullity of the execution proceedings does not discharge petitioners indebtedness to Commercial Credit.
The execution order of November 26, 1986 subsists. Unless petitioner corporation pays the amount determined
under said order, execution proceedings may issue accordingly.

WHEREFORE, the petition is GRANTED and the Decision and Resolution of respondent Court of Appeals in CA-
G.R. CV No. 43782 are REVERSED and SET ASIDE. The Decision of the Regional Trial Court, Branch 19, Cagayan
de Oro City in Civil Case No. 89-098 and Special Civil Action No. 6811 is REINSTATED with the MODIFICATION
that execution proceedings may henceforth issue, unless petitioner fully discharges its indebtedness under the
execution order of November 26, 1986.