DSM Construction and Development Corporation vs. Court of Appeals and Megaworld Globus

Execution of a final and executory judgment of the Supreme Court may not be restrained by a lower court or tribunal on baseless grounds, and an alias writ enforcing a CIAC monetary award affirmed to finality is valid where it states the principal amount and interest rates without any perpetual limit to six condominium units imposed as a provisional remedy.

DSM Construction and Development Corporation stood as contractor and Megaworld Globus Asia, Inc. as owner of the Salcedo Park condominium project, bound by construction agreements providing for compulsory arbitration of billing disputes before the Construction Industry Arbitration Commission. The contractor's lien under construction law and the protective regime for subdivision and condominium buyers under Presidential Decree No. 957 formed the regulatory backdrop for the competing claims over levied units.

DSM Construction and Development Corporation, as contractor, and Megaworld Globus Asia, Inc., as owner, entered into agreements for construction of a condominium project called The Salcedo Park. In the course of construction, differences over billings arose, prompting DSM Construction to file a complaint for compulsory arbitration before the CIAC claiming approximately ₱97 Million as outstanding balance. On 19 October 2001, the CIAC partially granted both sides' claims with a net award of ₱62,760,558.49 in favor of DSM Construction.

The award was affirmed by the Court of Appeals, which however made permanent a writ of preliminary mandatory injunction ordering DSM Construction to withdraw its contractor's lien on all except six condominium units of its choice. The limitation followed Megaworld's manifestation, noted in the 17 January 2002 Resolution as clarified 18 January 2002, that the ₱62 Million claim could be covered by the value of six units, priced at ₱11 Million to ₱13 Million each, after DSM Construction had caused annotation of Entry No. 62921/T as contractor's lien on all titles and published a paid advertisement on 20 November 2001 in the Philippine Daily Inquirer that all units were subject to the lien. Seven units were eventually levied upon after Megaworld, by letter dated 6 May 2004 to the Makati Register of Deeds, substituted Condominium Certificates of Title Nos. 65389 and 65395 (Units 14C and 16C) for Title No. 65320 (Unit 25A) to free the latter, already paid for by buyer-spouses Shaul and Rina Golan, from liens. The execution sale did not proceed after the Supreme Court issued a TRO on 12 July 2002 upon Megaworld's petition in G.R. No. 153310.

Thereafter, the Supreme Court promulgated its Decision dated 2 March 2004 affirming the Court of Appeals and lifting the TRO, denied Megaworld's first motion for reconsideration with finality on 19 May 2004, denied its second motion denominated as motion to suspend procedural rules and refer the case en banc on 2 August 2004, and noted without action its third motion dated 7 August 2004, with entry of judgment made on 12 August 2004. With the judgment final and executory, the CIAC issued an Order dated 3 November 2004 giving ten working days to agree on satisfaction, failing which a writ would issue, and then issued the alias writ of execution on 22 November 2004 commanding satisfaction of ₱62,760,558.49 with 6% interest on any balance until the award became executory and 12% per annum thereafter. On 26 November 2004 Megaworld sought clarification whether execution was limited to six units, which the CIAC answered in the negative in its Order dated 3 December 2003, explaining that the six-unit reference concerned only the interim provisional remedy securing the debt. In addition to the initial seven units, Sheriffs Villamor R. Villegas and Norberto R. Magsajo of the Makati Regional Trial Court levied three additional units on 20 December 2004, and a Notice of Sheriff's Sale set auction of all ten units on 1 March 2005.

According to Megaworld, the sheriffs exceeded authority by including in the sale five units fully paid for by buyers whose unrecorded contracts to sell allegedly prevailed under Presidential Decree No. 957, and by excessively levying three additional units beyond six. DSM Construction, for its part, maintained that the six-unit reference never limited execution to principal sans interest and that Megaworld itself had increased the levy to seven. On 25 January 2005 Megaworld filed a petition for certiorari and prohibition with the Court of Appeals to restrain the sale and nullify the CIAC Orders of 3 November 2004 as clarified 3 December 2004, the alias writ of 22 November 2004, and the Order of 11 January 2005. The trial-level factual findings material to review were that the levied units remained registered in Megaworld's name, the alleged buyers filed no third-party affidavits, and the substitution increasing the levy from six to seven was instigated by Megaworld.

• Jurisdiction and Grave Abuse of Discretion: Petitioner argued that the Court of Appeals committed a patently unlawful act amounting to lack or excess of jurisdiction when it entertained an obviously dilatory petition amounting to obstruction of justice and restrained the CIAC without valid ground, thereby trifling with execution of a final and executory Supreme Court decision.
• Six-Unit Limit: Petitioner maintained that there was no ambiguity that the ₱62 Million could be covered by six units, but such pronouncement related merely to the provisional remedy of securing the debt and never intended perpetual recovery of principal sans 6% and 12% legal interest.
• Estoppel: Petitioner argued that respondent itself breached the purported six-unit limit by substituting two units for Unit 25A, increasing the levy from six to seven, and was thus estopped from faulting petitioner and the CIAC for assuming other units could be levied.
• Validity of Alias Writ: Petitioner maintained that the alias writ substantially complied with Section 8(e), Rule 39 by stating the principal award, interest percentages, and sheriffs' lawful fees, and that petitioner was required as movant to specify amounts sought.
• Interest Rate Forum: Petitioner argued that clarification of the 6% interest belonged to the CIAC which imposed it, not the Court of Appeals, and nowhere had legal interest been imposed as a flat rate rather than per annum.

• Procedural Objections: Respondent countered that with the main case resolved by the Court of Appeals, petitioner's remedy was a petition for review under Rule 45, and that prematurity, multiplicity of suit, and disrespect for hierarchy of courts required dismissal.
• Six-Unit Limit: Respondent argued that the Court of Appeals Decision as affirmed limited satisfaction to six condominium units, so the CIAC gravely abused discretion in issuing an unqualified alias writ enabling levy on three additional units and varying an affirmed judgment.
• Indefiniteness of Writ: Respondent maintained that the alias writ failed to state the specific amount due under Section 8(e), Rule 39, vesting sheriffs with the judicial function of determining the total, as shown by petitioner's own computation allegedly followed by the sheriffs.
• Interest Application: Respondent asserted controversy over whether the 6% interest applied on a per annum basis or flat rate, supporting nullification of the writ.
• Buyers' Rights and Excessive Levy: Respondent argued that five levied units fully paid for by buyers should be excluded because unrecorded contracts to buy and sell took precedence over the recorded levy under Presidential Decree No. 957, and that levy on ten units was excessive and void.

• Execution of Final Judgment and Appellate Jurisdiction: Whether the Court of Appeals committed grave abuse of discretion amounting to lack of jurisdiction in entertaining the petition and restraining execution of a final and executory Supreme Court judgment.
• Six-Unit Limitation: Whether the alias writ should have been expressly qualified to limit execution to just six condominium units.
• Specificity of Amount: Whether the alias writ conformed to Section 8(e), Rule 39 requiring the specific amount due to be stated.
• Interest Rate: Whether the 6% interest specified in the alias writ should be applied on a per annum basis or on a flat rate.
• Levy on Ten Units and Buyers' Claims: Whether the Makati RTC sheriffs acted correctly in levying ten condominium units, including units claimed to have been fully paid by buyers under unregistered contracts.

• Execution of Final Judgment and Appellate Jurisdiction: Yes. Grave abuse was committed because the appellate court entertained a baseless dilatory action and restrained execution of a final Supreme Court judgment without basis in fact and law.
• Six-Unit Limitation: No. The six-unit reference governed only the interim provisional remedy securing the debt, not perpetual execution for principal plus legal interest.
• Specificity of Amount: Yes. The writ substantially complied with Section 8(e), Rule 39 by stating principal, interest percentages, and fees, with the movant properly specifying amounts.
• Interest Rate: Per annum. Clarification belonged to the CIAC, and no jurisprudence imposed legal interest as a flat rate rather than per annum.
• Levy on Ten Units and Buyers' Claims: Yes, the levy was proper. Units remained registered to the judgment obligor, no third-party affidavits were filed under Section 16, Rule 39, unregistered contracts bound only the parties, and judgment creditors were not equated with mortgage creditors.

• Execution of Final Judgment and Appellate Jurisdiction: Every court has the positive duty to give full recognition to final and executory decisions, much less those of the Supreme Court. While judicial remedies against execution as sanctioned by the Rules remain available, they prosper only with basis in fact and law. Here the appellate court not only issued the 21 February 2005 TRO but decided the case for respondent in a four-page 19 April 2005 Decision without considering the other side, manifesting capricious exercise equivalent to lack of jurisdiction.
• Six-Unit Limitation: The dispositive portion making permanent the mandatory injunction to withdraw the lien on all except six units was preceded by reasoning that justice and fair play dictated limiting annotation of the lien, noting the ₱62 Million claim could be covered by six units. Viewed in context, the limit protected respondent's business standing from annotation on all 209 units after the November 2001 publication and Entry No. 62921/T, pursuant to respondent's own manifestation and willingness to let petitioner choose units. It made no allowance for 6% and 12% interest and was interim, not a perpetual cap on execution.
• Specificity of Amount: The writ commanded making ₱62,760,558.49 with 6% interest on any balance until executory and 12% per annum thereafter, plus lawful fees capped at 4% on the first ₱4,000.00 and 2% in excess under Section 9(10), Rule 141. This stated principal, percentages, and fees as required. Petitioner's computation was precisely what Section 8(e) required the movant to specify; any perceived lack of exact mathematical total could have been cured by motion to incorporate, not by certiorari to void the writ entirely.
• Interest Rate: Because the CIAC imposed the 6% rate, enlightenment should have been sought there, as respondent did for the six-unit issue but not for interest. In any event, no jurisprudence had imposed legal interest as a flat rate rather than per annum, supporting per annum application.
• Levy on Ten Units and Buyers' Claims: Under Section 16, Rule 39, only a third person other than the judgment obligor claiming levied property by affidavit of title or right to possession served on the officer and obligee triggers bond and release procedure; the obligor cannot claim on buyers' behalf, and the purported buyers never appeared. Under Section 51, Presidential Decree No. 1529, unregistered voluntary instruments operate only as contracts between parties, registration being the operative act as to third persons, so units still titled to respondent remained owned by it and leviable. Reliance on buyer-vs.-mortgagee cases was misplaced because a mortgage creditor expected to inquire as a prudent man is not synonymous with a judgment creditor merely seeking satisfaction. Moreover, respondent was estopped under Article 1431 of the Civil Code after instigating the increase from six to seven units to free Unit 25A for the Golans.

• Duty to Enforce Final and Executory Judgments — Every court must give full recognition and effect to final and executory decisions, especially those of the Supreme Court; lower courts entertaining baseless actions to thwart such execution commit grave abuse of discretion tantamount to lack of jurisdiction, as only actions with basis in fact and law may prosper.
• Grave Abuse of Discretion — Capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, exercised arbitrarily or despotically by passion or hostility, so patent and gross as to evade a positive duty or refuse to act in contemplation of law; mere abuse is insufficient.
• Provisional Remedy vs. Execution — A limitation imposed as a provisional remedy to secure a judgment debt, such as restricting annotation of a contractor's lien to six units whose value covers principal, is interim and does not perpetually cap execution which must include legal interest awarded.
• Estoppel under Article 1431, Civil Code — An admission or representation is rendered conclusive upon the person making it and cannot be denied as against one relying thereon; a party instigating substitution increasing levied units from six to seven cannot invoke a six-unit limit against the other party and executing tribunal.
• Writ of Execution; Section 8(e), Rule 39 — In all cases the writ must specifically state interest, costs, damages, rents or profits due as of issuance aside from principal, with the motion for execution specifying amounts; stating principal, interest percentages, and sheriffs' fees constitutes substantial compliance, the movant being required to specify relief sought.
• Third-Party Claims; Section 16, Rule 39 — If levied property is claimed by a non-obligor by affidavit of title or possessory right served on the officer and obligee, the officer need not keep it unless the obligee posts indemnity bond; the judgment obligor has no standing to assert third persons' claims, without prejudice to separate vindication actions.
• Registration as Operative Act; Section 51, Presidential Decree No. 1529 — No voluntary instrument purporting to convey or affect registered land binds the land as to third persons until registered; unregistered contracts to sell operate only between parties, leaving title in the seller-registered owner subject to levy by judgment creditors.
• Judgment Creditor vs. Mortgage Creditor — A mortgage creditor, expected to inquire into encumbrances as a reasonably prudent man, is not synonymous with a judgment creditor merely seeking satisfaction of an award; jurisprudence favoring unregistered condominium buyers over registered mortgagees does not extend to judgment creditors.
• Liberal Construction; Section 6, Rule 1 — Rules shall be liberally construed to secure just, speedy, and inexpensive disposition; excusable formal imperfections and non-jurisdictional lapses are overlooked where no public policy is involved, no prejudice is caused, and authority remains, to avoid circuitous relitigation of identical issues already before the Court.

• "Any lower court or tribunal that trifles with the execution of a final and executory judgment of the Supreme Court flirts with insulting the highest court of the land." — [States the ratio on abuse in restraining final execution and why the Court of Appeals should have exercised double caution against dilatory petitions.]
• "It is the positive duty of every court of the land to give full recognition and effect to final and executory decisions, much less those rendered by the Supreme Court." — [Defines the controlling duty that rendered the appellate cognizance and TRO grave abuse absent factual and legal basis.]
• "By grave abuse of discretion is meant capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction." — [Supplies the canonical test applied to void both the TRO Resolution and the subsequent Decision on the merits.]
• "However, justice and fair play dictate that the annotation of private respondent's lien should be limited to six (6) units of its choice and not to all of the condominium units." — [Quoted to show the six-unit limit addressed only interim lien annotation, not perpetual execution including interest.]

• Maqui vs. Court of Appeals, G.R. No. L-41609, 24 February 1976, 69 SCRA 368, 374 — Followed as authority for liberally construing procedure to overlook excusable imperfections and avoid circuitous dismissal where identical issues were already before the Court under Rule 65.
• PNB vs. Timbol, G.R. No. 157535, 11 February 2005 — Cited to define grave abuse of discretion as arbitrary, despotic, patent and gross evasion of duty equivalent to lack of jurisdiction.
• Siy vs. NLRC, G.R. No. 158971, 25 August 2005 — Cited as example of penalizing for contempt counsel employing dilatory tactics to resist execution of final judgments.
• Natalia Realty vs. Hon. Rivera, G.R. No. 164914, 5 October 2005 — Cited as example of referring counsel resisting final execution for administrative investigation with the Integrated Bar of the Philippines.

• Section 6, Rule 1, Rules of Court — Requires liberal construction to secure just, speedy, and inexpensive disposition; applied to quell procedural objections on Rule 45 remedy, multiplicity, and hierarchy where identical issues were already pending.
• Section 8(e), Rule 39, Revised Rules of Civil Procedure — Requires the writ to state interest, costs, damages, rents or profits due as of issuance aside from principal, with the movant specifying amounts; applied to sustain the alias writ stating ₱62,760,558.49 plus 6% and 12% interest and fees.
• Section 16, Rule 39, Revised Rules of Civil Procedure — Governs third-party claims by affidavit, bond, and separate vindication actions; applied to reject the obligor's assertion of buyers' rights where no buyer affidavits were filed.
• Section 51, Presidential Decree No. 1529 (Property Registration Decree) — Makes registration the operative act affecting registered land as to third persons; applied to hold unregistered buy-and-sell contracts ineffective against levy where titles remained in Megaworld's name.
• Presidential Decree No. 957 (Subdivision and Condominium Buyers' Protective Decree) — Invoked by respondent to claim unrecorded buyers' precedence; held inapplicable to defeat a judgment creditor's levy under the facts.
• Article 1431, Civil Code — Defines estoppel by admission or representation; applied against respondent after it instigated substitution increasing levied units from six to seven.
• Section 9(10), Rule 141, Revised Rules of Court, as amended by Supreme Court Administrative Circular No. 99-8-01-SC — Caps sheriffs' fees, noted as stated in the writ at 4% on first ₱4,000.00 and 2% in excess, now 2.5% in excess; supported substantial compliance.

Reynato S. Puno, Chairman, Ma. Alicia Austria-Martinez, Romeo J. Callejo, Sr., Minita V. Chico-Nazario. No separate concurring opinions with additional reasoning appear in the text.