Dizon vs. Dizon

An auction sale is perfected when the auctioneer announces its perfection by the fall of the hammer or in other customary manner, and once perfected, no supplemental sale at a higher consideration may be validly executed at the instance of only one party.

Domingo A. Dizon (petitioner) purchased a house and lot located on Limay St., Tondo, Manila from his nephew Elpidio R. Dizon (respondent). Respondent failed to deliver the property, apparently because his co-owner and brother Ricardo had not given him written authority to sell his ½ share. The property subject of the rescinded sale and the subsequent execution sale involved parcels of land owned by respondent that were levied to satisfy the trial court's monetary judgment.

Domingo A. Dizon purchased a house and lot located on Limay St., Tondo, Manila from his nephew, Elpidio R. Dizon. Respondent failed to deliver the property because his co-owner and brother Ricardo had not given him written authority to sell his ½ share. Petitioner consequently filed a complaint for specific performance and sum of money with damages against respondent before the Regional Trial Court, Branch 41, Manila, docketed as Civil Case No. 90-51838.

On March 20, 1992, the trial court rendered a decision rescinding the contract of sale and ordering respondent to pay petitioner ₱207,000.00 with legal interest from January 29, 1990, ₱350,000.00 with interest at 3% per month from the same date, and ₱50,000.00 as attorney's fees and litigation expenses. On January 13, 1997, the trial court issued a writ of execution, implemented by Deputy Sheriff Cesar Q. Cabildo, who scheduled the auction sale of respondent's properties for April 3, 1997 at 10:00 a.m.

Petitioner's attorney-in-fact, respondent, and their respective counsels appeared and participated in the auction sale. The proceedings were duly recorded in the Minutes of Sheriff's Sale, signed by the parties and their counsels. The sale was completed at 10:25 a.m., with petitioner declared the highest bidder at ₱180,000.00 for two parcels of land owned by respondent. In the afternoon of the same date, the sheriff went to respondent's house and presented a "Supplemental Minutes on Sheriff's Sale" specifying that petitioner's counsel had arrived at 10:45 a.m. — after the auction sale at 10:25 a.m. — and offered a new bid of ₱1,690,074.41 covering the same properties in lieu of the earlier bid of ₱180,000.00.

Respondent refused to sign the supplemental sale, contending that it would be difficult for him to redeem the property and that the auction sale had already been perfected, making the subsequent sale "a new or second sale." He filed a motion to quash the "Supplemental Minutes on Sheriff's Sale," alleging it was void because it was prepared after the auction sale had been perfected. The trial court denied the motion on May 5, 1997, reasoning that the supplemental sale redounded to respondent's benefit by obviating execution or garnishment of his other property. The trial court likewise denied respondent's motion for reconsideration on August 12, 1997. Respondent then filed a petition for certiorari and prohibition with the Court of Appeals, which granted the petition and set aside the RTC's orders, finding that the amended bid at 10:45 a.m. was made after the perfection of the auction sale and therefore invalid. Petitioner's motion for reconsideration was denied, prompting the present petition.

• Right to Amend Bid: Petitioner contended that as the highest bidder, he had the option to amend his bid in order to conform to the amounts awarded in his favor by the trial court.

• Perfection of Auction Sale: Respondent maintained that since the auction sale had already been perfected, its consideration could no longer be modified.
• Difficulty of Redemption: Respondent argued that it would be difficult for him to redeem his properties valued at ₱1,690,074.41 instead of only ₱180,000.00.

• Validity of Supplemental Sale: Whether a supplemental sale at a higher bid may be validly executed after the auction sale has already been perfected.

• Validity of Supplemental Sale: No. The auction sale was perfected at 10:25 a.m. when the sheriff declared petitioner the highest bidder, and a supplemental sale with higher consideration at the instance of only one party could no longer be validly executed thereafter.

• Validity of Supplemental Sale: Article 1476(2) of the Civil Code provides that a sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer or in other customary manner, and until such announcement is made, any bidder may retract his bid. During the public auction conducted on April 3, 1997, which ended at 10:25 a.m., the sheriff declared petitioner the highest bidder at ₱180,000.00. The auction sale having thus been perfected, the subsequent supplemental sale reflecting a higher bid of ₱1,690,074.41 — offered by petitioner's counsel at 10:45 a.m. — could no longer be validly executed, particularly as it was made at the instance of only one party. The trial court therefore gravely abused its discretion in denying respondent's motion to quash and declaring the supplemental sale valid.

• Perfection of Auction Sales — Under Article 1476(2) of the Civil Code, a sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer or in other customary manner. Until such announcement is made, any bidder may retract his bid, and the auctioneer may withdraw the goods from the sale unless the auction has been announced to be without reserve. Once the announcement of perfection is made, the sale is binding and the bid may no longer be modified or retracted. The Court applied this doctrine to hold that the sheriff's declaration of petitioner as the highest bidder at 10:25 a.m. perfected the auction sale, rendering the subsequent supplemental sale at 10:45 a.m. invalid.

• "Considering that the auction sale had already been perfected, a supplemental sale with higher consideration at the instance of only one party (herein petitioner) could no longer be validly executed." — This passage states the ratio decidendi: once an auction sale is perfected, no supplemental sale at a higher bid may be validly executed at the instance of only one party.
• "A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in other customary manner. Until such announcement is made, any bidder may retract his bid; and the auctioneer may withdraw the goods from the sale unless the auction has been announced to be without reserve." — This is the Court's quotation of Article 1476(2) of the Civil Code, the controlling statutory provision on which the ruling rests.

• Article 1476(2), Civil Code of the Philippines — Governs the perfection of sales by auction, providing that a sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer or in other customary manner, and that until such announcement is made, any bidder may retract his bid. The Court applied this provision to hold that the sheriff's declaration of petitioner as the highest bidder at 10:25 a.m. perfected the auction sale, after which no supplemental sale could be validly executed.

Puno, C.J. (Chairperson), Corona, Azcuna, and Garcia, JJ., concurred.