GR 216151; (December, 2020) (Digest)
G.R. No. 216151, December 02, 2020
JESUS G. CRISOLOGO, NANETTE B. CRISOLOGO, JAMES IAN YEUNG, AND MARLINA T. SHENG, PETITIONERS, VS. ALICIA HAO AND GREGORIO HAO, RESPONDENTS.
FACTS
The case involves a parcel of land originally owned by So Keng Koc. In 1998, multiple creditors, including Sy Sen Ben and petitioner-spouses Jesus and Nanette Crisologo, obtained writs of preliminary attachment against the property due to collection suits. On October 7, 1998, the same day the Crisologos’ writ was levied, respondents Alicia and Gregorio Hao purchased the property from So. The property was subsequently subdivided, and new titles were issued to the Haos. The Crisologos eventually obtained a final judgment against So. To satisfy this judgment, the sheriff levied upon the Haos’ derivative titles and conducted an execution sale in 2010, where the petitioners emerged as the highest bidders. The Haos had filed a third-party claim prior to the sale.
The Haos filed a complaint to annul the certificates of sale. The Regional Trial Court (RTC) ruled in their favor, declaring the certificates void. The RTC held that the sheriff violated Sections 21 and 26, Rule 39 of the Rules of Court by not requiring the petitioners to pay the winning bid in cash and by failing to annotate the existence of the third-party claim on the certificates of sale. The petitioners elevated the case to the Supreme Court via a Petition for Review on Certiorari.
ISSUE
Whether the RTC correctly declared the sheriffs’ certificates of sale void for alleged non-compliance with the procedural requirements of Rule 39 of the Rules of Court.
RULING
The Supreme Court REVERSED the RTC and REINSTATED the certificates of sale. The Court clarified that Section 21, Rule 39 does not mandate payment in cash when a third-party claim is filed. The provision states the sheriff “may” require a cash deposit, which is merely directory and discretionary, not mandatory. The Court cited Villavicencio v. Mojares, which held that the sheriff retains discretion to determine the mode of payment to protect the interests of all parties. The petitioners’ payment through a credit bid, offsetting their judgment credit, was valid.
Furthermore, the failure to annotate the third-party claim on the certificate of sale, while a deviation from Section 26, Rule 39, does not automatically render the sale void. The purpose of annotation is to protect the claimant’s interest by providing notice to potential buyers. However, the Haos, as the claimants themselves, were already fully aware of their claim. The sale’s validity is not defeated by this omission, as the substantive right of the judgment creditor to execute on the property, which was levied prior to the Haos’ purchase, prevails. The execution sale merely enforced a lien that attached before the Haos acquired their title. The Court also denied the petitioners’ counterclaim for damages.