G.R. No. L-19369 December 27, 1963
NARCISO PERU, plaintiff-appellant, vs. NICANOR C. SARMIENTO and PEDRO CONGZON, as Deputy Sheriff of Samar, defendants-appellees.

FACTS

A final judgment in Civil Case No. 4422 ordered Narciso Peru to pay damages. To satisfy this judgment, a writ of execution was issued, leading to the levy and public auction sale on May 7, 1956, of a parcel of land declared in Peru’s name. The property was awarded to Nicanor Sarmiento as the highest bidder. After the one-year redemption period lapsed without redemption, the Sheriff executed a definitive deed of conveyance in favor of Sarmiento on May 25, 1957.
On December 24, 1957, Peru filed the present action for rescission of that deed. His sole ground was that the same property was the subject of a separate pending litigation, Civil Case No. 4506, which he had initiated on March 6, 1956, against other parties for ownership of the land. Peru contended that Sarmiento, knowing of this pending case, acted in bad faith by purchasing the property at auction without the consent of the other litigants.

ISSUE

Whether the pendency of an action for ownership over a property, and the purchaser’s knowledge thereof, invalidates a sheriff’s execution sale of that property to satisfy a money judgment against the judgment debtor, thereby granting the debtor a cause of action for rescission of the subsequent deed of conveyance.

RULING

The Supreme Court affirmed the dismissal of the complaint, holding that Peru had no cause of action. The legal logic is clear: an execution sale is a valid means to enforce a final money judgment against property of the judgment debtor. The pendency of another case where the debtor himself claims ownership does not impair this validity or provide the debtor with grounds to annul the sale. If Peru is indeed the owner, as he claims in the pending case, then the levy and sale to satisfy a judgment against him are perfectly justified. His knowledge argument is irrelevant; a purchaser at an execution sale is not required to investigate beyond the judgment debtor’s title as it appears of record, and knowledge of a separate suit does not constitute bad faith in this context.
Conversely, if the pending case results in the property being adjudged to the other parties therein, then those prevailing parties—not Peru—would be the proper persons to question the conveyance, as their rights would be directly affected. Peru, having lost all rights to the property after the execution sale and expiration of the redemption period, lacks standing to seek rescission based on a potential adverse claim by third parties. The deed of conveyance, issued after an unchallenged execution sale and an expired redemption period, was final and binding against him.