Cagayan de Oro Coliseum, Inc. vs. Court of Appeals

A valid levy on real property requires the filing with the Register of Deeds of a copy of the order of execution, a description of the property, and a notice of execution, and the service of the same upon the occupant; non-compliance with either requirement is fatal, and an execution sale not preceded by a valid levy is void and conveys no title to the purchaser. Where an amendatory order of execution substantially increases the judgment debt and thereby supersedes the original order, it is that amended order which must be filed with the Register of Deeds before the auction sale.

Cagayan de Oro Coliseum, Inc., a domestic corporation domiciled in Cagayan de Oro City, was the judgment debtor of Commercial Credit Corporation of Cagayan de Oro, which had acquired by assignment a loan originally extended by Santiago Maceren and secured by a mortgage over the corporation's assets, including a 4,025-square-meter parcel in the city's poblacion registered under Transfer Certificate of Title No. T-3383. The property had already been the subject of prior litigation — Special Civil Action No. 6811, terminated by a compromise judgment on March 11, 1980, and CA-G.R. SP No. 10888, resolved by this Court in G.R. Nos. 79100 and 78315 — and the present controversy concerns the validity of the execution proceedings conducted to satisfy that compromise judgment.

In 1977, Cagayan de Oro Coliseum, Inc., a domestic corporation domiciled in Cagayan de Oro City, obtained a loan of P149,253.73 from Santiago Maceren. As security, the corporation executed a promissory note and a mortgage over all its assets and properties, including a 4,025-square-meter parcel of land in the poblacion registered in its name under Transfer Certificate of Title No. T-3383, on which stood two commercial buildings measuring 1,606 and 379 square meters. Maceren later assigned the loan, together with the promissory note and the mortgage, to the Commercial Credit Corporation of Cagayan de Oro. When the corporation failed to pay the loan upon maturity, Commercial Credit commenced foreclosure proceedings on the land.

On October 23, 1979, five stockholders of the corporation instituted before the then Court of First Instance of Misamis Oriental, Branch IV, a petition for injunction against Commercial Credit, the City Sheriff of Cagayan de Oro, and the corporation itself, docketed as Special Civil Action No. 6811. The stockholders sought to enjoin the public sale, alleging that the loan had been contracted by Diego Imperio, the corporation's president, without authority from the stockholders, and that the creditor Santiago Maceren had been the corporate treasurer and a member of the board of directors at the time the loan was obtained. The parties, assisted by counsel, eventually entered into a compromise agreement which became the basis of a judgment rendered on March 11, 1980. Under the compromise, the stockholders ratified the loan, now computed at P249,263.23 as of February 15, 1980; the corporation bound itself to pay in equal monthly installments of P11,000.00; and failure to pay any installment would render the judgment immediately executory, with a penalty of three percent (3%) per month on overdue and unpaid installments plus five percent (5%) of the outstanding balance as additional attorney's fees. Commercial Credit, for its part, agreed to withdraw its application for extrajudicial foreclosure.

On March 4, 1983, Commercial Credit filed with the trial court an ex-parte motion for the issuance of a writ of execution, alleging that the corporation had failed to pay several installments and had left an outstanding balance of P70,152.68, excluding sheriff's expenses. The trial court granted the motion on March 9, 1983; the following day, the Branch Clerk of Court issued the writ of execution over the corporation's personal and real properties, and on March 11, 1983, the deputy sheriff filed a notice of levy on petitioner's title with the Register of Deeds of Cagayan de Oro City. Petitioner forthwith filed a motion for reconsideration of the order of execution, alleging that the ex-parte issuance of the order violated its right to due process, that a hearing should have been conducted because it had already made payments totaling P419,429.95, resulting in an overpayment of P94,028.12. In an order dated November 26, 1986, the trial court denied the motion but reduced the principal obligation from P70,152.68 to P64,956.19, while ordering payment of the three percent (3%) monthly penalty until full payment and five percent (5%) of the outstanding balance as additional attorney's fees. A writ of execution issued on December 4, 1986.

Pursuant to that writ, Deputy Provincial Sheriff Maximiano Mabanag, Jr. published a notice of auction sale scheduled for January 23, 1987. The sale did not proceed on that date due to internal problems in the sheriff's office. Meanwhile, petitioner filed with the Court of Appeals an action for annulment of the trial court's judgment, docketed as CA-G.R. SP No. 10888, seeking to set aside the compromise judgment on the ground of fraud and misrepresentation discovered only in 1983. Petitioner pleaded four causes of action: (a) that of its total obligation of P325,401.83, it had already paid P303,758.15, leaving a balance of only P21,647.79, not P70,152.68; (b) that two stipulations in the compromise judgment violated Presidential Decree No. 116 amending the Usury Law and Central Bank Circular No. 721 issued on February 25, 1980; (c) that the trial judge gravely abused his discretion in applying portions of the installment payments to past due charges instead of to the principal debt; and (d) that the writ of execution and the notice of auction sale were issued before petitioner received a copy of the order denying its motion for reconsideration. On February 13, 1987, the Court of Appeals rendered a decision holding that since petitioner had made payments totaling P303,758.15, it was equitable under Article 1229 of the Civil Code to reduce the penalty of three percent (3%) per month to one-half of one percent (1/2%) per month on overdue and unpaid installments, and the five percent (5%) additional attorney's fees to two percent (2%) of the outstanding balance, both effective March 16, 1983. The petition was denied due course and dismissed.

Meanwhile, on January 19, 1987, Sheriff Mabanag had issued an amended sheriff's notice of sale setting the auction on February 13, 1987 — the very day the Court of Appeals promulgated its decision. At that auction, the property was sold to the highest bidder, respondent Richard Go King, for P170,000.00. Both parties moved for reconsideration. Petitioner argued that the penalty should be applied only after payment of principal and interest and that the reduced penalty should apply from the time it was to be imposed; that Commercial Credit had concealed the promulgation of Central Bank Circular No. 721 before rendition of the compromise judgment, causing petitioner's obligation to balloon to P170,000.00; and that the auction sale had been conducted on the day of promulgation of the Court of Appeals' decision. In a Resolution dated May 19, 1987, the Court of Appeals denied petitioner's motion but granted it with respect to the public auction sale, declaring the writ of execution, the sheriff's notice of sale, the public auction sale and the certificate of sale null and void insofar as they were in excess of the judgment as modified by its decision.

Both parties filed separate petitions for review before this Court. Petitioner's petition, docketed as G.R. No. 79100, was denied in the Resolution of August 31, 1987 for having been filed late, with the Court adding that the Court of Appeals had committed no reversible error. Commercial Credit's petition, docketed as G.R. No. 78315, was granted; in a decision dated January 2, 1989, the First Division set aside the decision and resolutions of the Court of Appeals and affirmed in toto the compromise judgment of the trial court dated March 11, 1980, with costs against private respondent, and declared the decision immediately executory. Petitioner's motion to consider and resolve the motion for reconsideration en banc was denied on March 15, 1989, and judgment was entered on April 3, 1989. During the pendency of G.R. No. 78315, on August 17, 1988, Sheriff Mabanag issued to respondent Go King a Final Deed of Conveyance over the subject property; TCT No. T-3383 of petitioner was cancelled and TCT No. T-51704 was issued in the name of respondent Go King.

On April 11, 1989, after finality of the decision in G.R. No. 78315, petitioner instituted Civil Case No. 89-098 against Sheriff Mabanag and Richard Go King for "Remedies from Falsification and Damages" before Branch 24 of the Regional Trial Court of Cagayan de Oro. In its amended complaint, petitioner alleged that the execution proceedings were null and void for failure to comply with the Rules of Court; that the cancellation of its title and the issuance of another in the name of respondent Go King violated the Court of Appeals' Resolution in CA-G.R. SP No. 10888; and that, assuming the auction sale was valid, it was exercising its right of redemption by consigning with the court the purchase price of P170,000.00 plus interest. The following day, April 12, 1989, petitioner filed before Branch 19 of the Regional Trial Court — the same branch where Special Civil Action No. 6811 had been instituted in 1979 — an Omnibus Motion to Declare the Judgment Satisfied, Reimburse Bidder or Pay as in Redemption, Etc., praying that the auction sale be declared null and void and that the title in the name of Go King be cancelled, while manifesting that on the assumption that the execution proceedings were valid, it was exercising its right to redeem by consigning the redemption money in court. The Omnibus Motion was initially denied on June 19, 1999 in view of the pendency of Civil Case No. 89-098; on July 11, 1989, the order of denial was lifted and the resolution of the motion was made to await the outcome of the civil case, unless the parties consolidated the two cases. On July 14, 1989, the two cases were ordered consolidated.

On February 26, 1991, respondent Go King filed a Motion for the Issuance of a Writ of Possession, and on November 13, 1991, a Petition for the Appointment of a Receiver, both of which petitioner opposed. On August 5, 1993, the trial court rendered a decision declaring the deed of sale, the final deed of conveyance, and TCT No. T-51704 in the name of respondent Go King null and void, and denying the motion for writ of possession and the petition for receiver, after finding that the property subject of execution was not levied upon, that notices of sale were not posted, and that there was no return of the writ of execution of March 10, 1983. On appeal, the Court of Appeals reversed the trial court and dismissed Civil Case No. 89-098, finding that the case was a relitigation of the issues raised in CA-G.R. SP No. 10888 and that the notice requirements for the execution sale had been validly complied with. Petitioner's motion for reconsideration was denied in the Resolution of July 4, 1997.

• Validity of the November 26, 1986 Order: Petitioner argued that the order of November 26, 1986, which was appealable, was prematurely executed before petitioner was served with a copy thereof and in disregard of the requirements of Section 2, Rule 39 of the Rules of Court, rendering both the order and the auction sale held pursuant thereto null and void.
• Absence of Prior Levy: Petitioner maintained that, assuming the execution of the November 26, 1986 order could proceed, the public auction sale conducted by the sheriff on February 13, 1987 to satisfy the judgment debt was null and void because there was no prior levy, as supported by public records and judicial admissions.
• Unjust Enrichment: Petitioner argued that the Court of Appeals ignored the equity of the case and the doctrine against unjust enrichment when it upheld the validity of the auction sale notwithstanding that the bid price of only P170,000.00, as against the property's value of P100 million, was so unconscionable and so shocking to the conscience of impartial men as to invalidate the sale.
• Suspension of the Redemption Period: Petitioner contended that, assuming a valid auction sale, the proceedings in CA-G.R. SP No. 10888, G.R. No. 79100, and G.R. No. 78315 suspended the period of redemption, and that the consignation of the redemption amount on April 11, 1989, well within the redemption period, discharged the judgment debt and rendered the auction sale without force and effect.

• Res Judicata: Private respondent argued that Civil Case No. 89-098, the second action, was barred by the first action, CA-G.R. SP No. 10888, which this Court had disposed of with finality in G.R. Nos. 79100 and 78315.
• Inconsistency of Redemption with Claim of Invalidity: Private respondent argued that petitioner's exercise of the right of redemption was inconsistent with its claim of invalidity of the levy and the execution sale.

• Finality of the November 26, 1986 Order: Whether the order of execution dated November 26, 1986 may still be assailed as null and void for lack of due process on the ground that it was prematurely executed before petitioner was served with a copy thereof.
• Res Judicata: Whether Civil Case No. 89-098 is barred by res judicata by the final judgment in CA-G.R. SP No. 10888, as reviewed in G.R. Nos. 79100 and 78315.
• Validity of the Execution Sale — Prior Levy: Whether the execution sale of February 13, 1987 was null and void for failure to comply with the levy and notice requirements of the Rules of Court.
• Redemption: Whether petitioner's consignation of the redemption money was inconsistent with its claim of invalidity of the execution proceedings.
• Effect of Nullity on Indebtedness: Whether the nullity of the execution proceedings discharged petitioner's indebtedness to Commercial Credit.

• Finality of the November 26, 1986 Order: No. The order became final for petitioner's failure to appeal therefrom, and the institution of CA-G.R. SP No. 10888, an original action in the Court of Appeals, did not stay the proceedings before the court a quo absent a restraining order or injunction.
• Res Judicata: No. Civil Case No. 89-098 is not barred by res judicata, there being no identity of parties, of subject matter, or of causes of action between it and CA-G.R. SP No. 10888.
• Validity of the Execution Sale — Prior Levy: No. The execution sale was void because no valid levy was effected, the November 26, 1986 order of execution not having been filed with the Register of Deeds before the February 13, 1987 auction sale.
• Redemption: No. The consignation was not inconsistent with the claim of invalidity, having been made on the express assumption, not admission, of the validity of the execution proceedings, and the Rules of Court permit alternative or hypothetical claims in one pleading.
• Effect of Nullity on Indebtedness: No. The nullity of the execution proceedings did not discharge petitioner's indebtedness to Commercial Credit; the execution order of November 26, 1986 subsists, and execution proceedings may issue unless petitioner fully discharges its obligation thereunder.

• Finality of the November 26, 1986 Order: It was too late for petitioner to assail the validity of the order of November 26, 1986, which had become final for petitioner's failure to appeal therefrom. The institution of CA-G.R. SP No. 10888, a petition for annulment of judgment of the trial court, did not stay the proceedings before the court a quo, because that case was an original action in the Court of Appeals in the exercise of its exclusive original jurisdiction under Section 9(2) of B.P. 129. Since the Court of Appeals issued no restraining order or injunction, the trial court's order of execution lapsed into finality. The issue of whether a hearing should have been conducted by the trial court to determine petitioner's overpayment of its debt had been raised in CA-G.R. SP No. 10888; the Court of Appeals denied that claim in its decision of February 13, 1987, which this Court affirmed in G.R. No. 79100.

• Res Judicata: For res judicata to be an absolute bar to a subsequent action, four requisites must concur: (1) the former judgment or order must be final; (2) it must be on the merits; (3) it must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4) there must be, between the first and second actions, identity of parties, of subject matter, and of causes of action. The judgment in CA-G.R. SP No. 10888, reviewed in G.R. Nos. 78315 and 79100, was final, on the merits, and rendered by a court with jurisdiction; the crux was the fourth requisite. There is identity of parties where the parties in both actions are the same, or there is privity between them, or they are successors-in-interest by title subsequent to the commencement of the action, litigating for the same thing and under the same title and in the same capacity. Respondent Sheriff Mabanag was a respondent in CA-G.R. SP No. 10888 all the way to this Court, but private respondent Richard Go King was not a party in the previous cases; he was impleaded only in Civil Case No. 89-098 after finality of the decisions in G.R. Nos. 79100 and 78315. Although he obtained his title subsequent to the commencement of the action, his rights to the property arose as buyer at the execution sale, not as a creditor from any direct transaction with, or title obtained from, Commercial Credit, the judgment creditor. As the highest bidder, he was issued a certificate of sale and subsequently a final deed of conveyance, for which TCT No. T-3383 of petitioner was cancelled and TCT No. T-51704 was issued in his name. The second case was brought against him for the cancellation of his title due to irregularities in the execution sale, not from the merits of the compromise judgment; there was therefore no identity of parties.

Neither was there identity of subject matter. CA-G.R. SP No. 10888 did not directly involve the property subject matter of this case; it was concerned with the provisions of the compromise judgment and the claim that petitioner was denied due process by the trial court in granting execution. Civil Case No. 89-098, on the other hand, dealt with the validity of the execution proceedings after the validity of the compromise judgment had been upheld. The two cases likewise did not have the same causes of action, the test of identity lying not in the form of action but on whether the same facts or evidence would support and establish the former and present causes of action. The doctrine of res judicata extends to facts and conditions as they existed at the time judgment was rendered and to the legal rights and relations of the parties fixed by the facts so determined; the mere fact that the same relief is sought in the subsequent action will not render the judgment in the prior action operative as res judicata, such as when the two actions are brought on different statutes and rules. The causes of action in CA-G.R. SP No. 10888 involved the lack of due process, the invalidity of the compromise judgment itself — particularly the rates of interest and penalties vis-a-vis the Usury Law and C.B. Circular No. 721 — as well as the application of payments under the Civil Code. The cause of action in Civil Case No. 89-098 was anchored on the validity of the execution proceedings and the debtor's exercise of the right of redemption under Rule 39. In its motion for reconsideration in CA-G.R. SP No. 10888, petitioner assailed the validity of the writ of execution, the sheriff's notice of sale, the public auction sale and the certificate of sale, but only with respect to the computation of the amount of petitioner's debt subject of execution for not being in accordance with the decision of the Court of Appeals; the computation of petitioner's outstanding balance went into the substantive provisions of the compromise judgment. Petitioner did not squarely and directly challenge the procedural infirmity of the execution proceedings but pursued the merits of the compromise judgment itself. G.R. No. 79100 was dismissed for late filing and on the ground that the Court of Appeals committed no reversible error, while G.R. No. 78315 reversed the Court of Appeals and sustained the compromise judgment, with the factual finding that the execution proceedings "did not take place as scheduled due to some internal problems in the office of the sheriff." The facts in the instant case dealt with the execution proceedings themselves, and the cause of action in Civil Case No. 89-098 arose only after the merits of the compromise judgment had been passed upon with finality. It was therefore error for the Court of Appeals to declare that Civil Case No. 89-098 was a relitigation of the issues in CA-G.R. SP No. 10888.

• Validity of the Execution Sale — Prior Levy: Execution under Rule 39 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 the judgment or order sought to be enforced, and is directed to an officer authorizing and requiring him to execute the judgment. If the judgment is for money, the sheriff must execute the same pursuant to Section 15 of Rule 39, which requires the officer to enforce the execution by levying on all the property of the judgment debtor not exempt from execution, or on a sufficient amount of such property, and selling the same, paying to the judgment creditor so much of the proceeds as will satisfy the judgment, with any excess delivered to the judgment debtor. 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; its object is to take the property into the custody of the law, thereby rendering it liable to the lien of the execution and putting it out of the power of the judgment debtor to divert it to any other use or purpose. A valid levy places the property under the jurisdiction and authority of the court and 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 existing liens and encumbrances.

The second paragraph of Section 15, Rule 39 provides that a levy is effected in the same manner as a levy under a writ of attachment. Under Section 7, Rule 57, real property is attached 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. To effect a levy upon realty, therefore, 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 a copy of the same order, description and notice. These are prerequisites to a valid levy, non-compliance with any of which is fatally defective.

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 were not filed with the Register of Deeds before the auction sale of February 13, 1987; the order was filed and inscribed on petitioner's title only on December 7, 1988 — exactly one year and ten months after the execution sale — as shown by Entry No. 132984 in TCT No. T-3383. The belated filing came after the execution of the Sheriff's Certificate of Sale, after the issuance of the Sheriff's Certificate of Final Deed of Conveyance, and after the cancellation of TCT No. T-3383 and the issuance of TCT No. T-51704 in the name of respondent Goking on October 20, 1988. Respondent Sheriff himself admitted on the witness stand that he did not file a copy of the November 26, 1986 order of execution with the Register of Deeds before the February 13, 1987 sale, on the belief that the property had already been levied upon by Sheriff Acero. An examination of TCT No. T-3383 showed that the court order and writ of execution filed by Sheriff Acero with the Register of Deeds before the auction sale was not the November 26, 1986 order but the March 9, 1983 order — Entry No. 103724, a Notice of Attachment or Levy executed by Deputy Provincial Sheriff Arturo B. Acero dated March 11, 1983, and Entry No. 105125, a Writ of Execution executed by Deputy Clerk of Court Segundo C. Roy dated March 10, 1983, both inscribed on March 11, 1983.

The March 9, 1983 order had been rendered ex-parte, for the amount prayed for by Commercial Credit, P70,152.68, excluding sheriff's fees and expenses. On reconsideration, the court on November 26, 1986 reduced the principal debt to P64,956.19 but added the monthly penalty of 3% and additional attorney's fees of 5%; with these charges, the judgment debt increased to P167,367.40, more than double the amount stated in the first execution order. The order of November 26, 1986 did not supplement the March 9, 1983 order; it amended the original. The substantial increase in the amount of debt necessarily affected the kind and number of property that was to be levied upon and sold, and the price the property was to command at the public auction sale. The amendment was of such proportion that it superseded that which it amended and gave rise to an entirely new order; the March 9, 1983 order was therefore extinguished and the November 26, 1986 order became the new order of execution. It was on the basis of the November 26, 1986 order that the execution sale actually took place on February 13, 1987. Since this order was not filed with the Register of Deeds prior to the execution sale, the levy was not effected and the execution sale proceeded without a levy.

A lawful levy on execution is indispensable to a valid sale on execution; 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, and hence could not transmit title thereto at the time of the sale. Where 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.

• Redemption: Petitioner had consigned redemption money to the court a quo as an alternative cause of action. Private respondent argued that redemption is inconsistent with the claim of invalidity of the levy and sale, but petitioner expressly averred that the redemption was made purely on the assumption, not admission, of the validity of the execution proceedings, and it had consistently questioned the validity of those proceedings. It would be unjust to deprive petitioner 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, especially since 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 causes of action.

• Effect of Nullity on Indebtedness: The nullity of the execution proceedings did not discharge petitioner's indebtedness to Commercial Credit. The execution order of November 26, 1986 subsists, and unless petitioner corporation pays the amount determined under said order, execution proceedings may issue accordingly. In view of these findings, there was no necessity to pass upon petitioner's second assigned error concerning unjust enrichment.

• Res judicata — requisites — For res judicata to bar a subsequent action absolutely, four requisites must concur: (1) the former judgment or order must be final; (2) it must be on the merits; (3) it must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4) there must be, between the first and second actions, identity of parties, of subject matter, and of causes of action. The Court found the first three requisites present but held the fourth absent, because respondent Go King was not a party to the prior case, the subject matter of the prior case was the compromise judgment rather than the property, and the causes of action arose from different facts and rules — the prior case resting on the merits of the compromise judgment, the subsequent case on the validity of the execution proceedings and the right of redemption under Rule 39.

• Identity of causes of action — test — The test of identity of causes of action lies not in the form of action but on whether the same facts or evidence would support and establish the former and present causes of action. The mere fact that the same relief is sought in the subsequent action will not render the judgment in the prior action operative as res judicata, such as when the two actions are brought on different statutes and rules. The Court applied this test to hold that Civil Case No. 89-098 was not a relitigation of CA-G.R. SP No. 10888.

• Levy on real property — requisites — 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; its object is to take the property into the custody of the law, render it liable to the lien of the execution, and put it out of the power of the judgment debtor to divert it. To effect a levy upon realty, the sheriff must (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 a copy of the same order, description and notice. These are prerequisites to a valid levy, non-compliance with any of which is fatal.

• Amendment of an execution order — when it supersedes — An order of execution that does not merely supplement but amends the original, and whose amendment is of such proportion that it supersedes that which it is amended, gives rise to an entirely new order and extinguishes the original. The Court held that the November 26, 1986 order, which more than doubled the judgment debt from P70,152.68 to P167,367.40, superseded the March 9, 1983 order, so that it was the amended order that had to be filed with the Register of Deeds before the auction sale.

• Valid levy indispensable to a valid execution sale — A lawful levy on execution is indispensable to a valid sale on execution; 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, which therefore acquires no jurisdiction over the property subject of execution and cannot transmit title thereto at the time of the sale.

• Alternative and hypothetical causes of action — A party may in one pleading set forth two or more statements of a claim alternatively or hypothetically, either in one or in separate causes of action. The Court applied this rule to hold that petitioner's consignation of the redemption price, made on the express assumption rather than admission of the validity of the execution proceedings, was not inconsistent with its primary claim that the execution sale was void.

• Finality of an unappealed execution order — An order of execution that is not appealed becomes final, and an original action for annulment of judgment filed in the Court of Appeals does not stay the proceedings before the court a quo absent a restraining order or injunction. The Court applied this to bar petitioner's belated challenge to the November 26, 1986 order.

• "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." — This passage states the controlling requisites for a valid levy on real property, drawn from Section 7, Rule 57, and is the doctrinal core on which the nullity of the execution sale rests.

• "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." — This is the ratio decidendi on the merits: because no valid levy preceded the February 13, 1987 auction, the sale conveyed no title to respondent Go King.

• "The order of November 26, 1986 did not supplement the March 9, 1983 order. It amended the original. The substantial increase in the amount of debt necessarily affected the kind and number of property that was to be levied upon and sold, and the price the property was to command at the public auction sale." — This passage explains why the amended order superseded the original and why it, rather than the March 9, 1983 order, had to be filed with the Register of Deeds before the sale.

• "The nullity of the execution proceedings does not discharge petitioner's indebtedness to Commercial Credit. The execution order of November 26, 1986 subsists." — This passage preserves the creditor's substantive right notwithstanding the void execution sale, and explains the modification in the dispositive portion allowing execution proceedings to issue unless the debt is fully discharged.

• Commercial Credit Corporation of Cagayan de Oro vs. Court of Appeals, G.R. No. 78315, 169 SCRA 1 [1989] — The prior decision in this same litigation, which set aside the Court of Appeals' ruling in CA-G.R. SP No. 10888 and affirmed in toto the compromise judgment of March 11, 1980; cited by the Court for its factual finding that the execution proceedings "did not take place as scheduled due to some internal problems in the office of the sheriff," and as the judgment whose finality fixed the merits of the compromise.

• Llenares vs. Valdeavella, 46 Phil. 358 [1924] — Cited for the rule that a lawful levy on execution is indispensable to a valid sale on execution, and that a sale not preceded by a valid levy is void and conveys no title to the purchaser.

• Valenzuela vs. De Aguilar, 8 SCRA 212 [1963] — Cited for the propositions that a valid levy places the property subject of execution under the jurisdiction and authority of the court, and that without a proper levy the court acquires no jurisdiction over the property and cannot transmit title thereto.

• Philippine Surety & Ins. Co., Inc. vs. Zabal, 21 SCRA 682 [1967] — Cited for the requisites of a valid levy on real property and for the rule that non-compliance with any of them is fatal.

• Esquivel vs. Alegre, 172 SCRA 315 [1989] — Cited for the effect of an amendment that supersedes the original instrument, giving rise to an entirely new one; applied to the November 26, 1986 order of execution.

• Fiestan vs. Court of Appeals, 185 SCRA 751 [1990] — Cited for the definition of levy as the essential act or acts by which an officer sets apart or appropriates the property of the judgment debtor for the prospective execution sale.

• Nabus vs. Court of Appeals, 193 SCRA 732 [1991] — Cited among the authorities on the requisites of res judicata and on the rule that the mere fact that the same relief is sought in a subsequent action will not render the prior judgment operative as res judicata when the two actions are brought on different statutes and rules.

• Consolidated Bank & Trust Corp. vs. Court of Appeals, 193 SCRA 158 [1991] — Cited for the rule that a lawful levy is indispensable to a valid execution sale.

• Siari Valley Estates, Inc. vs. Lucasan, 109 Phil. 294 [1960] — Cited in support of the consequence that where no jurisdiction was acquired over the subject property, the execution sale is void and of no legal effect.

• Section 15, Rule 39, Rules of Court — Governs the execution of money judgments, requiring the officer to levy on all property of the judgment debtor not exempt from execution, or on a sufficient amount thereof, and to sell the same, paying the judgment creditor so much of the proceeds as will satisfy the judgment, with any excess delivered to the judgment debtor. Its second paragraph provides that real property may be levied on in like manner and with like effect as under a writ of attachment. The Court applied this provision to hold that the levy in this case was never effected because the operative order of execution was not filed with the Register of Deeds before the sale.

• Section 7, Rule 57, Rules of Court — Governs the attachment of real and personal property and its recording, requiring the filing with the registrar of deeds of a copy of the order, a description of the property attached, and a notice that it is attached, and the leaving of a copy of the same order, description and notice with the occupant of the property. The Court applied this provision, by reference from Section 15 of Rule 39, to define the requisites of a valid levy on realty and to hold non-compliance fatal.

• Section 2, Rule 8, Rules of Court — Permits a party to set forth in one pleading two or more statements of a claim alternatively or hypothetically, either in one or in separate causes of action. The Court applied this provision to sustain petitioner's alternative consignation of the redemption price notwithstanding its primary claim that the execution sale was void.

• Section 49(b), Rule 39, Revised Rules of Court (now Section 47(b), Rule 39, 1997 Rules of Civil Procedure) — Defines the concept of a successor-in-interest by title subsequent to the commencement of the action for purposes of identity of parties under res judicata. The Court applied this provision to hold that respondent Go King, who acquired title as the highest bidder at the execution sale rather than from the judgment creditor, was not a successor-in-interest of Commercial Credit.

• Section 9(2), B.P. 129 — Vests in the Court of Appeals exclusive original jurisdiction over petitions for annulment of judgments of Regional Trial Courts. The Court cited this provision to hold that the filing of CA-G.R. SP No. 10888 did not stay the proceedings before the court a quo.

• Rule 47, 1997 Rules of Civil Procedure — Governs the annulment of judgments, cited by the Court in connection with the character of CA-G.R. SP No. 10888 as an original action that did not toll the finality of the trial court's order of execution.

Davide, Jr., C.J., Puno, Kapunan and Pardo, JJ., concur.