FACTS:

Petitioner Magdalena Villasi engaged the services of respondent Fil-Garcia Construction, Inc. (FGCI) to construct a seven-storey condominium building located in Cubao, QC. For failure of Villasi to fully pay the contract price despite several demands, FGCI initiated a suit for collection of sum of money before the RTC. FGCI prayed, among others, for the payment of the amount of ₱2,865,000.00, representing the unpaid accomplishment billings. 

Villasi filed an answer specifically denying the material allegations of the complaint. Contending that FGCI has no cause of action against her, Villasi averred that she delivered the total amount of ₱7,490,325.10 to FGCI but the latter accomplished only 28% of the project.

The RTC rendered a Decision in favor of FGCI. It upheld the claim of FGCI to the unpaid amount of the contract price.

On appeal, the CA ruled that an overpayment was made by Villasi and thereby directed FGCI to return the amount that was paid in excess.

FGCI filed a Petition for Review on Certiorari before this Court which was however denied the appeal for being filed out of time. The Court resolution denying the appeal became final and executory on 27 November 2001, as evidenced by the corresponding Entry of Judgment.

Villasi filed a Motion for Execution of the 20 November 2000 CA Decision, which was favorably acted upon by the RTC, and a Writ of Execution was accordingly issued.

To satisfy the judgment, the sheriff levied on a building which was  declared for taxation purposes in the name of FGCI, but the lots in which it was erected were registered in the names of the Spouses Garcia. 

Spouses Garcia filed an Affidavit of Third Party Claim and a Motion to Set Aside Notice of Sale on Execution, claiming that they are the lawful owners of the property which was erroneously levied upon by the sheriff. 

Spouses Garcia argued that the building covered by the levy was mistakenly assessed by the City Assessor in the name of FGCI. The motion was opposed by Villasi who insisted that its ownership belongs to FGCI.

The RTC issued an Order directing the Sheriff to hold in abeyance the conduct of the sale on execution.

Arguing that the RTC gravely abused its discretion in ordering the suspension of the sale on execution, Villasi timely filed a Petition for Certiorari before the CA.

The CA dismissed the petition.

Hence, this Petition for Review on Certiorari.

ISSUE:

Whether or not the CA erred in upholding the Decision of the trial court to suspend and hold in abeyance the sale on execution of the buildings levied upon on the basis of respondents’ Affidavit of Third-Party Claim

RULING:

We grant the petition.

It is a basic principle of law that money judgments are enforceable only against the property incontrovertibly belonging to the judgment debtor, and if the property belonging to any third person is mistakenly levied upon to answer for another man’s indebtedness, such person has all the right to challenge the levy through any of the remedies provided for under the Rules of Court. Section 16, Rule 39 specifically provides that a third person may avail himself of the remedies of either terceria, to determine whether the sheriff has rightly or wrongly taken hold of the property not belonging to the judgment debtor or obligor, or an independent “separate action” to vindicate his claim of ownership and/or possession over the foreclosed property. However, the person other than the judgment debtor who claims ownership or right over levied properties is not precluded from taking other legal remedies to prosecute his claim.

Indeed, the power of the court in executing judgments extends only to properties unquestionably belonging to the judgment debtor alone. An execution can be issued only against a party and not against one who did not have his day in court. The duty of the sheriff is to levy the property of the judgment debtor not that of a third person. For, as the saying goes, one man’s goods shall not be sold for another man’s debts.

The right of a third-party claimant to file a terceria is founded on his title or right of possession. 

Corollary thereto, before the court can exercise its supervisory power to direct the release of the property mistakenly levied and the restoration thereof to its rightful owner, the claimant must first unmistakably establish his ownership or right of possession thereon. 

In Spouses Sy v. Hon. Discaya, we declared that for a third-party claim or a terceria to prosper, the claimant must first sufficiently establish his right on the property:

[A] third person whose property was seized by a sheriff to answer for the obligation of the judgment debtor may invoke the supervisory power of the court which authorized such execution. Upon due application by the third person and after summary hearing, the court may command that the property be released from the mistaken levy and restored to the rightful owner or possessor. 

The court does not and cannot pass upon the question of title to the property, with any character of finality. It can treat of the matter only insofar as may be necessary to decide if the sheriff has acted correctly or not. It can require the sheriff to restore the property to the claimant’s possession if warranted by the evidence. However, if the claimant’s proofs do not persuade the court of the validity of his title or right of possession thereto, the claim will be denied.

Our perusal of the record shows that, as the party asserting their title, the Spouses Garcia failed to prove that they have a bona fide title to the building in question. 

Aside from their postulation that as title holders of the land, the law presumes them to be owners of the improvements built thereon, the Spouses Garcia were unable to adduce credible evidence to prove their ownership of the property. In contrast, Villasi was able to satisfactorily establish the ownership of FGCI thru the pieces of evidence she appended to her opposition. 

Worthy to note is the fact that the building in litigation was declared for taxation purposes in the name of FGCI and not in the Spouses Garcias’. While it is true that tax receipts and tax declarations are not incontrovertible evidence of ownership, they constitute credible proof of claim of title over the property.