Taruc vs. Maximo

The right to exemption from execution of a family home under Article 153 of the Family Code is a personal privilege of the judgment debtor, who bears the burden of setting it up and proving, by evidence, that the property complies with the requisites for exemption; a building permit and utility bills do not satisfy that burden. For family homes constructed after the effectivity of the Family Code on August 3, 1988, no judicial or extrajudicial constitution under the Civil Code is necessary, the family home being deemed constituted from the time it is actually occupied as a family residence.

Petitioner Cesar D. Taruc was the respondent in a labor case docketed as NLRC Case Nos. RAB-IV-07-00806-09-C and RAB-IV-07-00807-09-C, filed by respondents Angelina D. Maximo, Maricel Buenaventura, George Jordan, and Jennifer Burgos, which resulted in a monetary award in the respondents' favor. The dispute concerns the interplay between two statutory regimes governing family homes: the Civil Code, which requires judicial or extrajudicial constitution and registration, and the Family Code, which took effect on August 3, 1988 and deems a family home constituted from the time it is occupied as a family residence. The distinction matters because the levy and eventual public sale of the judgment debtor's land turn on whether the property is exempt from execution.

Cesar D. Taruc was the respondent in a labor case docketed as NLRC Case Nos. RAB-IV-07-00806-09-C and RAB-IV-07-00807-09-C, filed by Angelina D. Maximo, Maricel Buenaventura, George Jordan, and Jennifer Burgos. The labor case produced a monetary award in the complainants' favor, and on October 21, 2013, Labor Arbiter Enrico Angelo C. Portillo of NLRC Regional Arbitration Branch No. IV issued an Alias Writ of Execution for the recovery, by way of distraint, of the total sum of P1,737,400.00, representing the monetary award including execution fees.

Pursuant to that writ, Sheriff Apolinario D. Del Rosario of RAB IV, Calamba City, sent Taruc a demand letter dated June 30, 2014, notifying him that a levy had been effected against the 240-square-meter parcel of land covered by Transfer Certificate of Title No. T-221363 and registered under his name. The letter demanded payment of the monetary award, failing which the land would be sold at public auction.

Taruc responded with a Motion to Lift Levy, asserting that the land formed part of his family home where he and his family resided and was therefore exempt from execution. As proof that he had constructed his family home on the land, he presented a Building Permit dated May 27, 1998. The Labor Arbiter dismissed the motion in an Order dated October 14, 2014, ruling that apart from the bare attachment of the Building Permit, there was no showing that Taruc actually utilized the family home constructed on the land as his dwelling house. Taruc then filed a petition to annul the order before the NLRC, this time attaching electricity and water bills.

The NLRC denied the petition in a Resolution dated November 13, 2014, holding that the Labor Arbiter correctly dismissed the Motion to Lift Levy because Taruc failed to prove that he constituted the land as part of his family home in accordance with the Family Code. It reasoned that the Building Permit showed nothing more than that an improvement was allowed to be constructed on the parcel during that year, and that the utility bills proved only that water and electricity were consumed at the address indicated, without establishing due constitution of the house as a family home or that the address in the bills corresponded to the lot covered by the title. Taruc's Motion for Reconsideration was denied in a Resolution dated December 29, 2014.

Aggrieved, Taruc filed a Petition for Certiorari under Rule 65 before the Court of Appeals, arguing that the NLRC committed grave abuse of discretion and that the Labor Arbiter would have found the land exempt had it followed the procedure laid down in Josef. The Court of Appeals denied the petition in a Decision dated March 30, 2016. It held that because Taruc alleged he had been occupying the land as part of his family home since May 1988, the Civil Code applied, and that he failed to prove compliance with the Civil Code's requirements for constitution of a family home, there being no evidence of extrajudicial constitution by registration of a public instrument or of judicial constitution by registration of the court's order. The appellate court nevertheless observed that the result would have differed had the property been constituted under the Family Code, in which case registration would have been unnecessary and the house and the portion of land on which it stands would be deemed a family home from the time Taruc began occupying it as a family residence in May 1988; it added that it would have been more prudent for the NLRC to make a preliminary determination of the exemption claim in accordance with Josef. Taruc's Motion for Reconsideration was denied in a Resolution dated October 5, 2016.

The records before the Supreme Court showed that Taruc claimed, as evidenced by the Building Permit, that he constructed his alleged family home on the subject land in May 1998, and not in May 1988 as the Court of Appeals had stated. Both the Labor Arbiter and the NLRC found that the Building Permit established only that a residential structure was permitted to be constructed on the land, and that the utility bills established only consumption of electricity and water at the stated address; neither document showed that the land had been duly constituted as a family home, that it was constituted jointly by husband and wife or by an unmarried head of a family, that it was resided in by Taruc's family or any beneficiary, that it formed part of the absolute community, conjugal partnership, or exclusive properties, or that it met the statutory value ceiling.

• Applicable Law on Constitution of the Family Home: Petitioner argued that the Court of Appeals erred in dismissing his petition on the basis of the provisions on constitution of family homes under the Civil Code, maintaining that the exemption of the subject land should not have been resolved under the Civil Code's judicial and extrajudicial modes of constitution.
• Non-Observance of the Josef Procedure: Petitioner faulted the Labor Arbiter and the NLRC for not observing the procedure laid down in Josef for handling executions affecting family homes, contending that the Labor Arbiter would have found the subject land exempt from execution had that procedure been followed.
• Grave Abuse of Discretion: Petitioner contended that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the Resolutions dated November 13, 2014 and December 29, 2014.

• Delay of Execution: Respondent Angelina D. Maximo countered that the petition was filed merely to delay the execution of the NLRC decision in the labor case.

• Exemption from Levy and Execution: Whether the subject land is exempt from levy and execution under the law.
• Applicable Law: Whether the exemption of the subject land as a family home is governed by the Civil Code or by the Family Code.
• Sufficiency of Evidence: Whether petitioner adduced sufficient evidence to establish compliance with the requisites for exemption of a family home from execution.
• Applicability of the Josef Procedure: Whether the procedure laid down in Josef for executions affecting family homes applies to petitioner's case.

• Exemption from Levy and Execution: No. The subject land is not exempt from levy and execution, petitioner having failed to prove compliance with the requisites for exemption of a family home under the Family Code.
• Applicable Law: The Family Code governs. The alleged family home was constructed in May 1998, after the Family Code took effect on August 3, 1988, so no judicial or extrajudicial constitution under the Civil Code was required.
• Sufficiency of Evidence: No. The Building Permit showed only that construction of a residential structure was permitted, and the utility bills showed only consumption of electricity and water; neither established the requisites for exemption under the Family Code.
• Applicability of the Josef Procedure: No. Josef finds no application, the Labor Arbiter having given petitioner every opportunity to present evidence in the hearings set, unlike the trial court in Josef which ignored the claim of exemption.

• Exemption from Levy and Execution: Under Article 155 of the Family Code, a family home is generally exempt from execution, forced sale, or attachment, but it may be held answerable for nonpayment of taxes, debts incurred prior to its constitution, debts secured by mortgages on the premises before or after such constitution, and debts due to laborers, mechanics, architects, builders, materialmen, and others who rendered service or furnished material for the construction of the building. One claiming exemption must therefore establish that the property was actually a family home and is not liable for any of those obligations. The exemption further requires that the family home be duly constituted as such, and Article 153 deems it constituted on a house and lot from the time it is occupied as a family residence. Because petitioner failed to establish these matters, the land remained answerable for the judgment award.

• Applicable Law: The Court of Appeals erred in holding that the Civil Code applied on the premise that petitioner had occupied the land as part of his family home since May 1988; nothing in the records or pleadings stated such early occupancy. Records showed that petitioner contended, on the strength of the Building Permit, that he constructed his alleged family home on the land in May 1998, or after the effectivity of the Family Code on August 3, 1988. For family homes constructed after that date, there is no need to constitute them extrajudicially or judicially in accordance with the Civil Code, which requires under Articles 225 and 233 a verified petition and registration of the court's order for judicial constitution, and under Articles 240 to 242 the execution and registration of a public instrument for extrajudicial constitution. The applicable provisions are therefore those of the Family Code. Article 152 defines a family home as consisting not only of the dwelling house where the husband and wife, or an unmarried head of a family, and their family reside, but also the land on which it is situated. Article 156 requires that the family home be part of the properties of the absolute community or the conjugal partnership, or of the exclusive properties of either spouse with the latter's consent, or constituted by an unmarried head of a family on his or her own property. Article 157 caps its actual value at the time of constitution at P300,000.00 in urban areas and P200,000.00 in rural areas.

• Sufficiency of Evidence: A family home is a real right, gratuitous, inalienable, and free from attachment, constituted over the dwelling place and the land on which it is situated, which cannot be seized by creditors except in certain special cases. Case law mandates that occupancy of the family home must be actual, meaning real or actually existing, as opposed to something merely possible, presumptive, or constructive. It is not sufficient for the person claiming exemption to merely allege that the property is a family home; the claim must be set up and proved, the right being a personal privilege granted to the judgment debtor upon whom the law imposes the burden of proof. The claim must be backed with evidence showing that the home (i) was duly constituted as a family home, (ii) was constituted jointly by the husband and wife or by an unmarried head of a family, (iii) was resided in by the family or any of the family home's beneficiaries, (iv) forms part of the properties of the absolute community or the conjugal partnership, or of the exclusive properties of either spouse with the latter's consent, or property of the unmarried head of the family, and (v) has an actual value of P300,000.00 in urban areas and P200,000.00 in rural areas. The Building Permit merely stated that petitioner was granted permission for new construction of a residential type of structure on the land, while the utility bills only showed consumption of electricity and water at the land. Both fell short of proving the enumerated requisites. Factual findings of labor administrative officials, if supported by substantial evidence, are entitled not only to great respect but even to finality absent a showing that the Labor Arbiter and the NLRC arbitrarily disregarded evidence or misapprehended evidence of such nature as to compel a contrary conclusion, and no reason appeared to deviate from their findings. The claim that a property is exempt from execution for being the movant's family home is not a magic wand that will freeze the court's hand and forestall the execution of a final and executory ruling; whether premised on the old Civil Code or the Family Code, the claim must be set up and proved by the movant.

• Applicability of the Josef Procedure: In Josef, the petitioner brought the issue of exemption from execution to the fore as early as the proceedings prior to the issuance of the writ of execution, claiming insolvency, absence of property to answer for the judgment credit, and that the house and lot he resided in was his family home exempt from execution, yet the trial court totally ignored those allegations and granted the motion for execution on the basis of its ministerial duty under Section 1, Rule 39 of the Rules of Court. That order called for the observance of the procedure laid down in Josef, which requires the court to determine whether the obligation falls under any of the exceptions in Article 155 of the Family Code; to inquire into the veracity of the claim by ocular inspection, examination of the title, interviews of community members, submission of photographs, depositions or affidavits, or a solemn examination of the petitioner and witnesses, with the respondent given the opportunity to cross-examine and present contrary evidence; and, if the property is found to be a family home, to determine whether the obligation was contracted before or after the effectivity of the Family Code, whether the spouse is still alive and whether there are other beneficiaries, whether the petitioner has more than one residence, and the actual location and value of the property for purposes of Articles 157 and 160. Such is not the case here: the Labor Arbiter did not ignore petitioner's claims, and hearings were set giving him the opportunity to present evidence, which he failed to avail of, relying instead on a supposed presumption in favor of exemption and insisting that the respondents should present evidence that the land was not exempt.

• Family home as a real right — A family home is the dwelling place of a person and his family, and is a real right, gratuitous, inalienable, and free from attachment, constituted over the dwelling place and the land on which it is situated, conferring upon a particular family the right to enjoy such properties, which must remain with the person constituting it and his heirs. It cannot be seized by creditors except in certain special cases. The Court applied this characterization in denying the exemption, since the right presupposes a duly constituted family home, which petitioner failed to establish.
• Constitution of the family home under the Family Code — For family homes constructed after the effectivity of the Family Code on August 3, 1988, there is no need to constitute them extrajudicially or judicially in accordance with the Civil Code; the family home is deemed constituted on a house and lot from the time it is occupied as a family residence. The Court applied this rule to hold that the Family Code, not the Civil Code, governed petitioner's claim, the alleged family home having been constructed in May 1998.
• Requisites for exemption of a family home from execution — The claim for exemption from levy and execution must be backed with evidence showing that the home (i) was duly constituted as a family home; (ii) was constituted jointly by the husband and wife or by an unmarried head of a family; (iii) was resided in by the family or any of the family home's beneficiaries; (iv) forms part of the properties of the absolute community or the conjugal partnership, or of the exclusive properties of either spouse with the latter's consent, or property of the unmarried head of the family; and (v) has an actual value of P300,000.00 in urban areas and P200,000.00 in rural areas. Petitioner failed to prove any of these requisites.
• Actual occupancy — The law explicitly mandates that the occupancy of the family home, whether by the owner or by any of its beneficiaries, must be actual; this occupancy must be real or actually existing, as opposed to something merely possible, presumptive, or constructive. The Court relied on this requirement in rejecting the probative value of the utility bills, which showed only consumption of electricity and water at the stated address.
• Exemption as a personal privilege and burden of proof — The right to exemption from forced sale under Article 153 of the Family Code is a personal privilege granted to the judgment debtor and must be claimed not by the sheriff but by the debtor himself before the sale of the property at public auction; it is not sufficient to merely allege that the property is a family home, and failure to set up and prove the claim estops the party from later claiming the exemption. The Court applied this rule in holding that petitioner, who merely alleged the exemption and left the burden to the respondents, the Labor Arbiter, and the NLRC, failed to discharge his burden.
• Exceptions to the exemption — Under Article 155 of the Family Code, a family home may be held answerable for (1) nonpayment of taxes; (2) debts incurred prior to the constitution of the family home; (3) debts secured by mortgages on the premises before or after such constitution; and (4) debts due to laborers, mechanics, architects, builders, materialmen, and others who have rendered service or furnished material for the construction of the building. One claiming exemption must establish that the property was actually a family home and is not liable for payment of these obligations.
• Finality of factual findings of labor administrative officials — Factual findings of labor administrative officials, if supported by substantial evidence, are entitled not only to great respect but even to finality, unless there is a showing that the Labor Arbiter and the NLRC simply and arbitrarily disregarded evidence before them or had misapprehended evidence of such nature as to compel a contrary conclusion if properly appreciated. The Court found no reason to deviate from the concurring findings of the Labor Arbiter and the NLRC.
• The _Josef procedure_ — Where a judgment debtor seasonably raises the claim of exemption from execution and the trial court ignores it in favor of its ministerial duty to issue a writ of execution, the court must instead determine whether the obligation falls under any of the exceptions in Article 155 of the Family Code, inquire into the veracity of the claim through ocular inspection, examination of the title, interviews, photographs, depositions or affidavits, or a solemn examination of the petitioner and witnesses, with the respondent afforded the opportunity to cross-examine and present contrary evidence, and, if the property is found to be a family home, determine the matters bearing on Articles 157 and 160 of the Family Code. The Court held the procedure inapplicable where the Labor Arbiter did not ignore the claim and set hearings for the presentation of evidence.

• "A family home is the dwelling place of a person and his family. It is said, however, that the family home is a real right, which is gratuitous, inalienable and free from attachment, constituted over the dwelling place and the land on which it is situated, which confers upon a particular family the right to enjoy such properties, which must remain with the person constituting it and his heirs. It cannot be seized by creditors except in certain special cases." — The Court's canonical statement of the nature of the family home, drawn from Taneo, Jr. vs. Court of Appeals, which frames the exemption as a real right that nevertheless presupposes a duly constituted family home.
• "In addition, residence in the family home must be actual. The law explicitly mandates that the occupancy of the family home, either by the owner thereof, or by any of its beneficiaries must be actual. This occupancy must be real, or actually existing, as opposed to something, merely possible, or that which is merely presumptive or constructive." — The Court's articulation of the actual-occupancy requirement, drawn from Salazar vs. Felias, which supplied the standard against which petitioner's utility bills were measured and found wanting.
• "The settled rule is that the right to exemption or forced sale under Article 153 of the Family Code is a personal privilege granted to the judgment debtor and as such, it must be claimed not by the sheriff, but by the debtor himself before the sale of the property at public auction. It is not sufficient that the person claiming exemption merely alleges that such property is a family home. This claim for exemption must be set up and proved to the Sheriff. Failure to do so would estop the party from later claiming the exception." — The Court's statement of the personal-privilege and burden-of-proof rule, drawn from Spouses Versola vs. Court of Appeals, which is the decisive ground for denying petitioner's claim.
• "On a final note, let it be emphasized that the claim that the property is exempt from execution for being the movant's family home is not a magic wand that will freeze the court's hand and forestall the execution of a final and executory ruling. It is not sufficient for the claimant to merely allege that such property is a family home." — The Court's closing formulation of the rule, emphasizing that the exemption does not operate automatically upon allegation but must be established by the movant.

• Albino Josef vs. Otelio Santos, 592 Phil. 438 (2008) — Distinguished. The Court held that the procedure laid down in Josef for executions affecting family homes finds no application because, unlike the trial court in that case which ignored the claim of exemption in favor of its ministerial duty to issue a writ of execution, the Labor Arbiter here set hearings and gave petitioner the opportunity to present evidence.
• Taneo, Jr. vs. Court of Appeals, 363 Phil. 652 (1999) — Followed. Cited for the definition of a family home as a real right, gratuitous, inalienable, and free from attachment, which cannot be seized by creditors except in certain special cases.
• Salazar vs. Felias, 825 Phil. 30 (2018) — Followed. Cited for the requirement that residence in the family home must be actual, real, or actually existing, and for the five requisites that a claim for exemption from levy and execution must satisfy.
• Spouses Versola vs. Court of Appeals, 529 Phil. 377 (2006) — Followed. Cited for the rule that the right to exemption from forced sale under Article 153 of the Family Code is a personal privilege of the judgment debtor that must be claimed and proved by him, and that failure to do so estops him from later claiming the exemption.
• Ramos vs. Pangilinan, 639 Phil. 192 (2010) — Followed. Cited for the propositions that family homes constructed after the effectivity of the Family Code need not be constituted extrajudicially or judicially under the Civil Code, that a family home consists of the dwelling house and the land on which it is situated, and that a family home must be duly constituted as such to be exempt from execution.
• Arriola vs. Arriola, 566 Phil. 654 (2008) — Followed. Cited for the rule that a family home is deemed constituted in the house and land from the time it is actually occupied as a family residence.
• Spouses Aballe vs. PCI Leasing and Finance, Inc., G.R. No. 225837 (Notice), June 23, 2021 — Cited. Invoked for the Civil Code's requirement that judicial constitution of a family home be effected by verified petition and registration of the court's order, and extrajudicial constitution by a registered public instrument, failure in either mode barring the judgment debtor from availing of the privilege.
• American Home Assurance Co. vs. National Labor Relations Commission, 328 Phil. 606 (1996) — Cited. Invoked for the rule that factual findings of labor administrative officials, if supported by substantial evidence, are entitled to great respect and even finality absent arbitrary disregard or misapprehension of evidence.
• Cordova and Cordova vs. Ty, G.R. No. 146155, February 3, 2021 — Cited. Invoked for the requirement that occupancy of the family home must be actual.
• FEB Mitsui Marine Insurance Co., Inc. vs. Manalastas, G.R. No. 236001, March 18, 2019 (Resolution) — Cited. Invoked, together with Cordova, for the actual-occupancy requirement.
• Manacop vs. Court of Appeals and E & L Mercantile, Inc., 342 Phil. 735 (1997) — Cited. Invoked, through Salazar, for the actual-occupancy requirement.
• Honrado vs. Court of Appeals, 512 Phil. 657 (2005) — Cited. Invoked, through Spouses Versola, for the rule that the exemption is a personal privilege of the judgment debtor.

• Article 152, Family Code — Defines a family home as consisting of the dwelling house where the husband and wife, or an unmarried head of a family, and their family reside, and the land on which it is situated. Applied to hold that the exemption extends to the land on which the dwelling stands, but only if the requisites for exemption are established.
• Article 153, Family Code — Provides that the family home is deemed constituted on a house and lot from the time it is occupied as a family residence, and remains exempt from execution, forced sale, or attachment except as provided and to the extent of the value allowed by law. Applied to hold that no judicial or extrajudicial constitution was required for a home constructed after August 3, 1988, but that actual occupancy must be shown.
• Article 154, Family Code — Enumerates the beneficiaries of a family home: the husband and wife, or an unmarried person who is the head of a family; and their parents, ascendants, descendants, brothers and sisters, whether legitimate or illegitimate, who are living in the family home and who depend upon the head of the family for legal support. Referenced in the Court's enumeration of the requisites for exemption.
• Article 155, Family Code — Enumerates the liabilities for which a family home may be held answerable: nonpayment of taxes; debts incurred prior to the constitution of the family home; debts secured by mortgages on the premises before or after such constitution; and debts due to laborers, mechanics, architects, builders, materialmen, and others who rendered service or furnished material for the construction of the building. Applied to hold that one claiming exemption must establish that the property was actually a family home and is not liable for these obligations.
• Article 156, Family Code — Requires that the family home be part of the properties of the absolute community or the conjugal partnership, or of the exclusive properties of either spouse with the latter's consent, or constituted by an unmarried head of a family on his or her own property. Cited as a requisite that petitioner failed to prove.
• Article 157, Family Code — Fixes the actual value of the family home at the time of its constitution at P300,000.00 in urban areas and P200,000.00 in rural areas, or such amounts as may thereafter be fixed by law. Cited as a requisite that petitioner failed to prove.
• Articles 225 and 233, Civil Code — Provide that the family home may be constituted by a verified petition to the Court of First Instance by the owner of the property and by approval thereof by the court, and that the order approving the establishment of the family home shall be recorded in the Registry of Property. Cited to describe the judicial mode of constitution, which was inapplicable because the family home was constructed after the effectivity of the Family Code.
• Articles 240 to 242, Civil Code — Provide for extrajudicial constitution of the family home by recording in the Registry of Property a public instrument declaring the establishment of a family home out of a dwelling place and the land on which it is situated, with the recording being the operative act that creates the family home. Cited to describe the extrajudicial mode of constitution, likewise inapplicable here.
• Section 1, Rule 39, Rules of Court — The provision on execution of judgments invoked by the trial court in Josef as the basis of its ministerial duty to issue a writ of execution. Referenced in the Court's discussion distinguishing Josef from the present case.
• Rule 45, Rules of Court — The mode of review invoked by petitioner in assailing the Court of Appeals Decision and Resolution. The petition was denied for lack of merit.
• Rule 65, Rules of Court — The mode of review petitioner invoked before the Court of Appeals, alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the NLRC.

• Leonen, SAJ. (Chairperson)
• Lazaro-Javier, J.
• J. Lopez, J.
• M. Lopez, J. — on official business