GR 214303; (January, 2017) (Digest)
G.R. No. 214303 . January 30, 2017. DELFIN C. GONZALES, JR., Petitioner, vs. MAGDALENO M. PEÑA, ALABANG COUNTRY CLUB, INC., and MS. ARSENIA VERA, Respondents.
FACTS
Petitioner Delfin C. Gonzales, Jr. was held liable by the RTC of Bago City in 1999 to pay respondent Magdaleno Peña. Pending appeal, execution was granted, leading to the auction sale of petitioner’s shares in Alabang Country Club, Inc. (ACCI) to Peña on October 16, 2000. Peña subsequently sold these shares to respondent Arsenia Vera via private sale on May 2, 2001. In 2011, the Supreme Court in Urban Bank, Inc. v. Peña vacated the 1999 RTC Decision, declaring the execution pending appeal null and void. The Court ordered the restoration of all properties, including petitioner’s ACCI shares, to their original owners.
The restitution proceedings were transferred to the RTC of Makati City. Petitioner moved for execution to recover his actual ACCI shares. The RTC, in its Omnibus Resolution, denied the restoration of the specific shares. It ruled that Peña’s sale to Vera was valid, making Vera an innocent purchaser for value. Consequently, the court held actual restitution impossible and, applying the Urban Bank Decision’s guidelines, directed Peña to pay petitioner the value of the shares instead.
ISSUE
Whether the Regional Trial Court correctly denied the restoration of the actual ACCI shares to petitioner and ordered payment of their value on the ground that they were validly transferred to an innocent third-party purchaser.
RULING
No. The Supreme Court reversed the RTC’s ruling. The legal logic is anchored on the nullity of the execution pending appeal. Since the foundational 1999 Bago City Judgment was vacated with finality in Urban Bank, the execution sale derived from it was void ab initio. A void sale transmits no title; Peña acquired no ownership right to the shares that he could validly transfer to Vera. The principle of an “innocent purchaser for value” cannot apply where the seller (Peña) had no valid title to convey in the first place. The transfer to Vera, though recorded in ACCI’s books, did not cure the fundamental defect of the void execution sale.
The Court clarified that the Urban Bank Decision’s dispositive portion, particularly paragraph (d) cited by the RTC, applies only when title has been “validly and timely transferred” to a third party. A transfer stemming from a void execution sale cannot be considered “valid.” Therefore, the governing provision is paragraph (b), which mandates the judgment creditor (Peña) to fully restore the property. Since the shares are identifiable personal property still existing, their actual restitution is legally and physically possible. The RTC erred in declaring restitution impossible based on an invalid transfer. The Supreme Court ordered the cancellation of the transfer to Vera and the restoration of the specific ACCI shares to petitioner.