G.R. No. L-12812 & L-12813; September 29, 1959
Case Parties/Title: FILIPINAS COLLEGES, INC., plaintiff-appellee, vs. MARIA GARCIA TIMBANG, ET AL., defendants. (L-12812) / MARIA GARCIA TIMBANG, ET AL., plaintiffs. MARIA GARCIA TIMBANG, plaintiff-appellant, vs. MARIA GERVACIO BLAS, defendant-appellee. (L-12813)

FACTS

This is an appeal from an order of the Court of First Instance of Manila dated May 10, 1957, issued during the execution of a final judgment of the Court of Appeals. The judgment adjudicated the rights of the parties: (1) Filipinas Colleges, Inc. was to acquire the rights of spouses Maria Garcia Timbang and Marcelino Timbang to a lot (Lot No. 2-a) by paying them P15,807.90 plus other amounts, and was to deposit the land’s value (P32,859.34) with the court within 90 days after the decision became final; (2) Maria Gervacio Blas, declared a builder in good faith of a school building on the lot, was entitled to be paid P19,000.00 for the building by Filipinas Colleges, Inc., which was to deliver stock certificates worth P10,800.00 and pay P8,200.00 in cash; (3) If Filipinas Colleges, Inc. failed to deposit the land’s value within the 90-day period, it would lose all rights to the land, the Timbang spouses would become owners, and they would then have to exercise their option under Article 448 of the Civil Code (either to appropriate the building by paying P19,000.00 to Filipinas Colleges, Inc. or to compel Filipinas Colleges, Inc. to buy the land).
Filipinas Colleges, Inc. failed to deposit the P32,859.34. The Timbang spouses chose not to appropriate the building but to compel Filipinas Colleges, Inc. to pay the land value. A writ of execution was issued. Blas also obtained a writ of execution for her unpaid P8,200.00. The Sheriff levied on the building and sold it at public auction on March 5, 1957, with the Timbang spouses as the highest bidders for P5,750.00. Personal properties of Filipinas Colleges, Inc. were also auctioned for P245.00 in favor of the Timbangs.
Subsequently, three motions were filed: (1) by Blas, praying that the Sheriff and/or the Timbangs be ordered to pay her the P5,750.00 from the auction sale, as she had a lien on the building for the unpaid balance; (2) by Blas, praying that the lot be sold at public auction to satisfy the two unsatisfied executions; and (3) by Filipinas Colleges, Inc., praying that it be declared part-owner of the lot to the extent of the amount realized from the execution sale of its properties (P5,750.00 + P245.00). The Timbangs opposed all motions.
The lower court ordered: (a) the Sheriff’s certificate of sale to be null and void unless the Timbangs paid Blas the P5,750.00 bid amount; (b) Filipinas Colleges, Inc. declared owner of an undivided interest in the lot proportional to the amount its properties were sold for; and (c) the sale at public auction of that undivided interest to satisfy the remaining balance of Blas’s judgment. The Timbangs appealed.

ISSUE

1. Whether the Timbang spouses, as successful bidders at the auction sale of the building, are obligated to pay their bid of P5,750.00 to appellee Blas, who claims a preferential lien on the building for the unpaid balance of its purchase price.
2. Whether the lower court correctly declared Filipinas Colleges, Inc. a part-owner of the land and ordered the sale of that interest to satisfy Blas’s claim.

RULING

1. Yes. The Court rejected the Timbangs’ argument that because Blas, as the builder in good faith, failed to pay for the land after the owners exercised their option under Article 448, she lost her right of retention under Article 546, and by operation of Article 445, the Timbangs automatically became owners of the building, making the auction sale superfluous and their bid unenforceable. The Court held that Articles 448 and 546 of the Civil Code do not support this conclusion. The builder’s right of retention persists until indemnified. The cited case of Bernardo vs. Bataclan is not authority for the automatic ownership claim. Since the building was sold at auction to satisfy Blas’s judgment, her preferential lien under Article 2242 attached to the proceeds. The Timbangs, as successful bidders, are obligated to pay their bid. The Court modified the order to provide that if the Timbangs fail to pay the P5,750.00 within 15 days from notice of final judgment, an execution shall issue against their properties for that amount.
2. Yes. The Court affirmed the lower court’s order declaring Filipinas Colleges, Inc. a part-owner of the land. The amount realized from the execution sale of its properties (P5,750.00 + P245.00) effectively constituted a partial payment of the land’s value to the Timbangs. Therefore, Filipinas Colleges, Inc. acquired a proportional undivided interest in the lot. To satisfy the difference between Blas’s claim of P8,200.00 and the P5,750.00 to be paid by the Timbangs, the sale of this undivided interest at public auction was justified.
The appealed order was affirmed in all other respects, with costs against the appellants.