Siari Valley Estates, Inc. vs. Lucasan

A levy on registered land is void where the notice of levy contains no reference to the number of the certificate of title and the volume and page in the registration book where it is registered, and the consequent execution sale passes no title. Strict compliance with Section 14, Rule 39 in relation to Section 7(a), Rule 59 of the Rules of Court was required so that the debtor and third persons would be properly informed of the particular property placed under the custody of the court.

Siari Valley Estates, Inc. stood as judgment creditor of Filemon Lucasan for a money judgment arising from cattle and damages. The governing framework included the Rules of Court on levy and attachment of real property, distinguishing registered from unregistered land, and Article 243(2) of the new Civil Code exempting an extrajudicially formed family home from execution except for debts incurred before recordation of the declaration.

On January 30, 1952, the Court of First Instance of Zamboanga del Norte ordered Filemon Lucasan to deliver to Siari Valley Estates, Inc. the cattle inside his pasture or pay its P40,000.00 value plus another P40,000.00 as damages. The judgment was affirmed in toto by the Supreme Court and, upon becoming final and executory, a writ of execution issued. In enforcement, the sheriff levied certain parcels belonging to Lucasan and sold them at public auction on January 14, 1956 to the corporation as highest bidder. Lucasan failed to redeem within one year, whereupon the sheriff issued a final certificate of sale on January 26, 1957, registered in the Office of the Register of Deeds of Zamboanga, and on February 16, 1957, on petition of the corporation, a writ of possession issued directing the sheriff to place it in possession.

Notwithstanding the writ, the corporation failed to take possession and filed a motion reiterating its petition. Lucasan opposed as to one parcel, alleging that he was in possession thereof, had erected a house thereon, and had extrajudicially constituted house and lot as a family home, while the rest were in possession of third parties. Parcel 1 was registered land covered by Certificate of Title No. OCT-2492, Patent No. 50967, in Lucasan's name, bearing a big house of mixed materials assessed at P23,270.00 under Tax Declaration No. 7653. Lucasan and his wife had constituted the house and lot into a family home, the document having been registered on June 21, 1955.

The trial court initially overruled the opposition on April 30, 1957 and ordered delivery of possession, denied reconsideration on August 7, 1957 while reiterating its order with little amendment, but on August 23, 1957 allowed the corporation to take all lands sold except parcel 1, holding the levy and sale thereof not in accordance with law and therefore null and void. The evidence found material to that conclusion was that the notice of levy described parcel 1 merely as unregistered land registered under Act 3344, and the notice of sale described it only by boundaries and area in the tax declaration rather than by its certificate of title.

• Defective Levy on Registered Land: Respondent contended that the lot and house were beyond execution because the sheriff's levy was legally ineffective, not having been effected in accordance with Section 14, Rule 39 in relation to Section 7, Rule 59 of the Rules of Court.
• Family Home Exemption: Respondent contended that the lot and house, having been extrajudicially constituted as a family home, were beyond the reach of judicial execution.

• Validity of Levy on Registered Land: Whether the levy and consequent execution sale of parcel 1, a registered land, were valid where the notice described it as unregistered land under Act 3344 and omitted reference to its certificate of title, volume and page.
• Family Home Exemption and Antecedent Debt: Whether the family home extrajudicially constituted on the lot and house was exempt from execution where the money judgment against respondent was still on appeal when the declaration was recorded, and thus claimed not yet to be a debt under Article 243(2) of the new Civil Code.

• Validity of Levy on Registered Land: No. The notice was legally ineffective and did not bind the property, so the sale by virtue thereof was invalid and of no legal effect, for failure to strictly comply with the title-reference requirement for registered land.
• Family Home Exemption and Antecedent Debt: No. The family home was not exempt because the money judgment constituted a debt incurred before recordation within Article 243(2), even though appeal was then pending and the obligation was still inchoate.

• Validity of Levy on Registered Land: Real property must be levied on in like manner and with like effect as under an order of attachment, and attachment of real property requires filing with the register of deeds a copy of the order with property description and notice of attachment, plus leaving copies with the occupant, with the added requirement for land under the Land Registration Act that the notice refer to the certificate-of-title number and volume and page. Strict construction was required to inform the debtor and third persons of the particular land under court custody, whereas registration under Act 3344 suffices only for unregistered land. Applied here, parcel 1 was registered under OCT-2492 yet levied and noticed as unregistered land by tax-declaration boundaries and area, without the title reference, consistent with Gonzales Diez vs. Delgado and Imperial and De Ocampo vs. Treasurer of the Philippine Islands on the necessity of the title reference.
• Family Home Exemption and Antecedent Debt: Article 243(2) exempts an extrajudicially formed family home from execution except for debts incurred before the declaration was recorded. Debt was construed to include a pecuniary obligation even if not yet finally determined, because the exemption's purpose is to protect the creditor against a debtor acting in bad faith to defeat a claim by constituting a home before final decision. A good-faith debtor would wait until definite decision, and sustaining respondent's view would allow circumvention to the creditor's prejudice where, as here, the lower court's money judgment was later affirmed. Hence the money judgment fell within debt despite pendency of appeal at recordation on June 21, 1955.

• Levy and Attachment of Registered Real Property — Real property shall be levied on in like manner and with like effect as under an order of attachment. Attachment is made by filing with the register of deeds a copy of the order with property description and notice of attachment and leaving copies with the occupant, if any; where the property is under the Land Registration Act, the notice must contain reference to the certificate-of-title number and volume and page. Applied here, omission of that reference rendered the levy on OCT-2492 ineffective and the execution sale void, leaving petitioner to file a new execution in strict compliance.
• Exemption of Extrajudicial Family Home; Debts Incurred Before Recordation — An extrajudicially formed family home is exempt from execution except, under Article 243(2) of the new Civil Code, for debts incurred before the declaration was recorded in the Registry of Property. Debt includes a money judgment still pending appeal and therefore inchoate, because the exception aims to prevent bad-faith constitution of a home to defeat an existing claim. Applied here, the affirmed money judgment predated the June 21, 1955 registration and thus barred exemption.

• "the notice shall contain a reference to the number of the certificate of title and the volume and page in the registration book where the certificate is registered" — States the controlling additional requisite for attachment and levy of land under the Land Registration Act, non-compliance with which voided the levy on parcel 1.
• "The requirement that the notice of levy should contain a reference to the number of the certificate of title and the volume and page in the registration book where the certificate is registered is made in order that the debtor as well as a third person may be properly informed of the particular land or property that is under the custody of the court." — Explains the purpose demanding strict construction of the levy formalities.
• "The family home extra judicially formed shall be exempt from execution" — Recites the general exemption rule whose Article 243(2) exception for antecedent debts was held to defeat respondent's claim.
• "The reason why a family home constituted after a debt had been incurred is not exempt from execution is to protect the creditor against a debtor who may act in bad faith by resorting to such declaration just to defeat the claim against him." — Articulates the ratio for treating a judgment pending appeal as a pre-existing debt that prevents exemption.

• Gonzales Diez vs. Delgado and Imperial, 37 Phil., 389 — Cited for the proposition that an attachment on real estate not duly recorded in the registry is not an encumbrance and cannot support annulment of a sale at another creditor's request, supporting strict recording requirements.
• De Ocampo vs. Treasurer of the Philippine Islands, 50 Phil., 140, 141 — Cited and emphasized for holding a levy notice insufficient to the extent it lacked reference to the certificate-of-title number, volume and page under Section 71 of the Land Registration Act, directly supporting nullity of the levy on parcel 1.

• Section 14, Rule 39, Rules of Court — Provides that real property shall be levied on in like manner and with like effect as under an order of attachment; applied to test the sheriff's levy and found unsatisfied as to parcel 1.
• Section 7(a), Rule 59, Rules of Court — Governs attachment of real property by filing order, description and notice with the register of deeds and service on the occupant, with title-number and volume-and-page reference for registered land; applied as the measure of a valid levy.
• Article 243(2), New Civil Code — Exempts the extrajudicially formed family home from execution except for debts incurred before recordation; applied to deny exemption because the money judgment was incurred before June 21, 1955 despite pending appeal.
• Section 71, Land Registration Act; Act 3344 — Distinguishes registration of dealings with registered land, requiring title reference, from registration of unregistered land under Act 3344; applied to show that treating registered parcel 1 as unregistered was legally ineffective.

Paras, C.J., Bengzon, Padilla, Labrador, Reyes, J.B.L., Barrera, and Gutierrez David, JJ., concur. Concepcion, J., concurs in the result.