G.R. No. 202531 , August 17, 2016.
GOMECO METAL CORPORATION, PETITIONER, VS. THE COURT OF APPEALS, AND PAMANA ISLAND RESORT HOTEL AND MARINA CLUB, INCORPORATED, RESPONDENTS.

FACTS

Petitioner Gomeco Metal Corporation (Gomeco) filed a Complaint for Collection of Sum of Money against respondent Pamana Island Resort Hotel and Marina Club, Inc. (Pamana) before the Regional Trial Court (RTC) of Valenzuela City, docketed as Civil Case No. 4349-V-94. The parties entered into a Compromise Agreement, approved by the RTC, requiring Pamana to pay Gomeco ₱1,800,000.00. Pamana paid only ₱450,000.00, leaving a balance of ₱1,350,000.00. The RTC issued a Writ of Execution. After garnishing Pamana’s bank accounts yielded no results, Sheriff Jaime T. Montes issued a Notice of Levy on May 22, 1998, on Pamana’s real estate property—the 53,285 square meter Pequeña Island in Subic, Zambales, identified by Tax Declaration No. 007-0001. The notice erroneously fixed the levy amount at ₱2,065,500.00 and referred to the island as “personal properties.” A Notice of Sheriff’s Sale was issued on December 11, 2000, setting a public auction for January 10, 2001, and referring to the property as “personal/real properties” with a levy amount of ₱2,065,000.00.
Pamana filed a Petition for Prohibition (CA-G.R. SP No. 62391) before the Court of Appeals (CA) to nullify the sale and enjoin the auction. The CA issued a Temporary Restraining Order (TRO) on January 9, 2001, but it was served after the auction proceeded on January 10, 2001, where Gomeco was the winning bidder for ₱2,065,000.00. A Sheriff’s Certificate of Sale was issued on March 22, 2001, and registered with the Register of Deeds of Iba, Zambales, under the Registry of Unregistered Properties.
On February 19, 2002, the CA declared the Notice of Sheriff’s Sale and the auction null and void due to the erroneous levy amount. Upon Gomeco’s motion for reconsideration, the CA modified its decision on July 9, 2002, declaring the levy and auction valid but only to the extent of Pamana’s ₱1,350,000.00 indebtedness plus lawful fees, excluding 12% legal interest. This was affirmed on January 16, 2003, and became final on February 10, 2003.
Pamana later filed a Motion for Clarification, leading to a CA Resolution on September 17, 2004, directing Sheriff Montes to specify which properties on Pequeña Island were levied and sold and to determine their exact value.
Meanwhile, Gomeco discovered that Pequeña Island was registered land under TCT No. T-38774 in Pamana’s name, not unregistered property. Gomeco filed a Motion for Cancellation of Title in the RTC. On January 5, 2005, the RTC granted the motion, ordering the cancellation of Pamana’s title and issuance of a new one to Gomeco, but mistakenly identified the title as TCT No. T-38744. Pamana filed an Urgent Motion for Reconsideration and a Motion for Correction. Gomeco filed a Motion to Order Annotation of the levy and sale documents on TCT No. T-38774. On March 3, 2011, the RTC denied Pamana’s motions and granted Gomeco’s motion for annotation.
Pamana filed a petition for certiorari with the CA (CA-G.R. SP No. 119053), which granted the petition on December 28, 2011, annulling the RTC’s January 5, 2005 and March 3, 2011 Orders. The CA held that the RTC committed grave abuse of discretion by disregarding the final and executory CA resolutions in CA-G.R. SP No. 62391, which limited the levy’s validity to ₱1,350,000.00 and required an accounting of properties sold. The CA also found the Sheriff’s Final Deed of Sale premature due to the pending accounting. Gomeco’s motion for reconsideration was denied on June 28, 2012, prompting this petition.

ISSUE

Whether the Court of Appeals erred in annulling the Regional Trial Court’s Orders dated January 5, 2005 and March 3, 2011, which directed the cancellation of Pamana’s title over Pequeña Island and the issuance of a new title to Gomeco, and ordered the annotation of the levy and sale documents on the title.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ Decision and Resolution. The Court held that the RTC committed grave abuse of discretion in issuing the January 5, 2005 and March 3, 2011 Orders. The CA’s resolutions in CA-G.R. SP No. 62391, which became final and executory, declared the levy and execution sale valid only to the extent of Pamana’s ₱1,350,000.00 indebtedness plus lawful fees and required an accounting of the specific properties sold and their values. The RTC Orders disregarded these final resolutions by recognizing Gomeco’s absolute ownership over the entire Pequeña Island without ensuring compliance with the accounting requirement. The Sheriff’s Final Deed of Sale was premature because the CA’s directive for an accounting had not been fulfilled. The levy, though initially defective for referring to the property as “personal” and for an excessive amount, was deemed valid for the correct amount due to the curative principle favoring execution sales. However, the RTC could not proceed with the cancellation of title without first implementing the CA’s final orders for an accounting and determination of whether the sale proceeds exceeded the judgment debt.