G.R. No. L-48689 August 31, 1987
Ciriaco Pacheco, Estrella Razo-Rey and Benvenuto Abitria, petitioners, vs. Honorable Court of Appeals, Daniel Hernandez and Anastacio Raneses, respondents.

FACTS

Emiliano Pacheco owned an unregistered parcel of land. In 1939, he sold a portion to Rafael Pacheco. Rafael mortgaged this portion to the Philippine National Bank (PNB), which foreclosed and acquired it at a public auction in 1959. Rafael repurchased the land from PNB on April 20, 1960, and later sold it to petitioner Ciriaco Pacheco in 1964. Ciriaco subsequently sold a portion to co-petitioner Estrella Razo-Rey. Separately, petitioner Benvenuto Abitria claimed he purchased another lot from Emiliano in 1950.
Meanwhile, in a civil case, Daniel Hernandez obtained a judgment against Emiliano Pacheco. To satisfy this judgment, properties including the land in question were levied upon and sold at public auction in 1963, with Hernandez as the purchaser. Hernandez later filed a complaint to recover possession of the lands occupied by the petitioners.

ISSUE

The primary issue is whether the petitioners are the lawful owners of the disputed properties, having acquired them either by purchase or by acquisitive prescription, such that these properties were no longer owned by the judgment debtor Emiliano Pacheco and thus not subject to the execution sale in favor of Hernandez.

RULING

The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision, declaring the petitioners as the lawful owners. The Court held that the petitioners Ciriaco Pacheco and Estrella Razo-Rey acquired ownership through acquisitive prescription. Their possession, tacked with that of their predecessor Rafael Pacheco, was public, peaceful, and in the concept of owner from 1939. The Court rejected the appellate court’s finding that prescription was interrupted by the PNB’s foreclosure possession in 1959-1960. The PNB’s possession was in the capacity of a mortgagee, not an adverse owner, and did not interrupt the petitioners’ adverse possession.
Crucially, the Court ruled that the execution sale to Hernandez could only convey whatever interest the judgment debtor, Emiliano Pacheco, still had at the time of the levy. By then, Emiliano had already validly alienated the disputed portions to the petitioners’ predecessors. Hernandez, as an execution purchaser, acquired no better right than the debtor and thus obtained no title over lands already belonging to others. Finally, Abitria’s failure to file a third-party claim during the levy did not bar him from asserting his ownership in this separate action, as expressly allowed by the Rules of Court.