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MAGDALENA T. VILLASI v. SPS. FILOMENO GARCIA

FACTS:

The petitioner, Magdalena T. Villasi, entered into a construction agreement with respondent Fil-Garcia Construction, Inc. (FGCI) for the construction of a condominium building. FGCI then filed a lawsuit against Villasi for unpaid accomplishment billings. Initially, the Regional Trial Court (RTC) ruled in favor of FGCI and ordered Villasi to pay the outstanding amount.

Villasi appealed the RTC decision to the Court of Appeals, which overturned the ruling and directed FGCI to refund the overpayment made by Villasi. FGCI's subsequent petition for review with the Supreme Court was denied because it was filed beyond the prescribed period.

Following the Court of Appeals' decision, Villasi filed a motion for execution with the RTC, seeking to enforce the appellate court's ruling. The sheriff levied on a building registered under FGCI's name, even though the building was constructed on lots registered under the names of the Spouses Filomeno Garcia and Ermelinda Halili-Garcia.

Upon learning of the levy, the Spouses Garcia filed a third-party claim and a motion to set aside the notice of sale, asserting their ownership of the levied building. In response, the RTC halted the sale on execution.

Dissatisfied with the decision, Villasi filed a petition for certiorari before the Court of Appeals, but it was ultimately dismissed. Thus, Villasi now brings her appeal to the Supreme Court, raising multiple issues for consideration.

ISSUES:

  1. Whether the Spouses Garcia have a valid claim of ownership over the building in question.

  2. Whether the levy of the property by the sheriff was proper.

  3. Whether the declaration of the property for taxation purposes in the name of FGCI supports a claim of ownership.

  4. Whether the Spouses Garcia's explanation that the City Assessor made an error in declaring the property in FGCI's name is credible.

  5. Whether the building and the lot on which it stands are owned by different persons.

  6. Whether or not the implementation of a city ordinance requiring the demolition of the levied building is lawful.

  7. Whether or not the imposition of a fine for non-compliance with the city ordinance is valid.

RULING:

  1. The Court ruled in favor of Villasi and held that the Spouses Garcia failed to prove their ownership of the building. The levy by the sheriff was found to be improper.

  2. Yes. The Court held that the declaration of the property for taxation purposes in the name of FGCI, coupled with FGCI's actual possession of the building, supports a claim of ownership.

  3. No. The Court found the Spouses Garcia's explanation that the City Assessor made an error in declaring the property in FGCI's name to be suspect, as they did not make any serious effort to rectify the error before the present controversy arose. The Court also noted that the correction of entry sought by the Spouses Garcia was indicative of their intention to put the property beyond the reach of the judgment creditor.

  4. Yes. The Court held that when there is clear and convincing evidence that the principal and the accessory are not owned by the same person or entity, the presumption that the accessory follows the principal shall not be applied. In this case, the Court disregarded the rule on accession and treated the building and the lot separately because there was factual and evidential proof that they were owned by different persons.

  5. The implementation of the city ordinance requiring the demolition of the levied building is lawful. The Court held that the power of local government units to issue and implement ordinances is derived from the Constitution and relevant laws. In this case, the ordinance was enacted pursuant to the city's power to regulate land use and development for the general welfare of its constituents. As such, the ordinance is presumed to be valid unless proven otherwise, and the Court found no evidence that it was passed with grave abuse of discretion or in violation of any constitutional or statutory provision.

  6. The imposition of a fine for non-compliance with the city ordinance is valid. The Court ruled that local government units have the power to impose and collect fees, charges, and penalties, provided that these are reasonable, fairly imposed, and not confiscatory in nature. In this case, the imposition of a fine for non-compliance with the city ordinance was considered a valid exercise of the city's power to regulate land use and development. The fine serves as a deterrent to ensure compliance with the ordinance and promote the general welfare of the city residents.

PRINCIPLES:

  • Money judgments are enforceable only against the property incontrovertibly belonging to the judgment debtor.

  • A third person may challenge a levy through the remedies of terceria or an independent "separate action" to assert ownership or possession over the property.

  • An execution can only be issued against a party who had his day in court and not against a third person.

  • The court's power in executing judgments is limited to properties unquestionably belonging to the judgment debtor alone.

  • To exercise supervisory power and direct the release of mistakenly levied property, the third-party claimant must establish ownership or right of possession.

  • Tax receipts and declarations are not conclusive evidence of ownership but are good indicia of possession and claim of title.

  • The declaration of property for taxation purposes supports a claim of ownership.

  • The failure to rectify an error in the tax declaration of property may be indicative of an intention to put the property beyond the reach of a judgment creditor.

  • The rule on accession, where the accessory follows the principal, is not absolute and can be disregarded when there is evidence to prove separate ownership of the building and the lot on which it stands.

  • Piercing the veil of corporate fiction is irrelevant when the issue is the ownership of a levied property and the corporation is the proven owner of the property.

  • The power of local government units to issue and implement ordinances is derived from the Constitution and relevant laws.

  • Local government units have the power to regulate land use and development for the general welfare of its constituents.

  • Ordinances enacted by local government units are presumed to be valid unless proven otherwise.

  • Local government units have the power to impose and collect fees, charges, and penalties, provided that these are reasonable, fairly imposed, and not confiscatory in nature.