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JESUS G. CRISOLOGO v. ALICIA HAO

FACTS:

The case involves a dispute over a parcel of land initially registered in the name of So Keng Koc. The property had been subject to various levy and attachment as a result of collection cases filed against So. Among these cases is a complaint for sum of money filed by Sy Sen Ben against So and Robert Allan Limso. In the course of the proceedings, the property was levied and a writ of attachment was recorded on its title. Petitioner spouses Crisologo also filed collection suits against So and Limso, resulting in the issuance of a writ of attachment and the recording of their claim on the property's title.

The respondents then negotiated with the attaching creditors and entered into a Deed of Absolute Sale with So for the property. The property's title was cancelled and new titles were issued in the respondents' name.

In a separate case, a compromise agreement was reached between So and one of the creditors, resulting in the transfer of ownership of his properties. The court rendered a decision ordering the payment of the obligation. Meanwhile, the court in the collection cases filed by petitioner spouses Crisologo rendered a decision ordering So and Limso to pay their obligation. The decision was affirmed by the Court of Appeals and the Supreme Court denied the petition for review.

The case was remanded to the trial court for execution, resulting in the scheduling of an auction sale. The respondents opposed the sale and filed a complaint for annulment of the certificates of sale. The trial court declared the certificates of sale void, finding that the requirements under the Rules of Court were not complied with. The petitioners filed a petition for review on certiorari to question the trial court's ruling.

ISSUES:

  1. Whether the absence of cash payment for the bid and the failure to explicitly state the existence of a third-party claim in the certificate of sale renders the sale invalid.

  2. Whether the proper levy was made on the subject property.

  3. Whether the execution sale should be nullified due to the alleged failure of the purchaser to pay the bid in cash.

  4. Whether the case of Sy is applicable to the present case and can be considered as precedent for the validity of the execution sale or certificate of sale.

  5. Whether the certificates of sale should be nullified or invalidated.

  6. Whether the existence of a third-party claim should be indicated in the certificates of sale.

RULING:

  1. The absence of cash payment for the bid does not affect the validity of the execution sale. Section 21 of Rule 39 provides that if the purchaser in an execution sale is the judgment obligee and no third-party claim has been filed, he is not required to pay the bid amount if it does not exceed the amount of his judgment. If it exceeds the judgment amount, he shall only pay the excess. The mode of payment is not specified as cash, and therefore, non-payment in cash does not invalidate the sale.

  2. The failure to explicitly state the existence of a third-party claim in the certificate of sale does not affect its validity in this case. Section 26 of Rule 39 requires that when a property sold by virtue of a writ of execution has been claimed by a third person, the certificate of sale must make express mention of such third-party claim. However, if the third-party claim is adequately protected, as in this case where an Indemnity Bond was filed, and the interest of the third-party claimant is sufficiently safeguarded, the failure to expressly state the third-party claim does not invalidate the sale.

  3. The execution sale should not be nullified based on the alleged failure of the purchaser to pay the bid in cash. The Court emphasized that the general policy of the law is to sustain the validity of execution sales and that execution should not be frustrated except for serious reasons demanded by justice and equity.

  4. The case of Sy cited by the respondents is not applicable and cannot be considered as precedent for the validity of the execution sale or certificate of sale. The Court clarified that Sy is an administrative case against a Sheriff and does not delve into the issue of the validity of the certificate of sale. Moreover, the quantum of evidence required in an administrative case is different from that in civil cases.

  5. The certificates of sale should not be nullified or invalidated. The Court found no reason to nullify the certificates of sale. However, the existence of a third-party claim must be indicated in accordance with the express mandate of Section 26, Rule 39 of the Rules of Court.

  6. The existence of a third-party claim should be indicated in the certificates of sale. The Court ruled that the third-party claim must be annotated on the titles of the subject properties to protect the interest of the respondents should their claim prosper.

PRINCIPLES:

  • The words of a law or rule should be given their literal meaning and applied without interpretation if they are clear, plain, and free from ambiguity. Interpretation is resorted to only when a literal interpretation would be absurd, impossible, or lead to injustice.

  • Section 21 of Rule 39 does not require cash payment for the bid in an execution sale, and the mode of payment does not affect the validity of the sale.

  • Section 26 of Rule 39, which requires the certificate of sale to expressly state the existence of a third-party claim, falls under an exception to the general rule of literal interpretation. If the third-party claim is adequately protected, the failure to expressly state the claim does not invalidate the sale.

  • The general policy of the law is to sustain the validity of execution sales.

  • The case of Sy is not a precedent for the validity of the execution sale or certificate of sale, as it pertains to an administrative case against a Sheriff and does not delve into the issue of the validity of the certificate of sale.

  • The existence of a third-party claim should be indicated in the certificates of sale, in accordance with the express mandate of Section 26, Rule 39 of the Rules of Court.

  • Registration creates a lien upon the land and affords protection to the rights of third-party claimants.