FIRST DIVISION
G.R. No. 186322, July 08, 2015
ENRICO S. EULOGIO AND NATIVIDAD V. EULOGIO, Petitioners, v. PATERNO C. BELL, SR., ROGELIA CALINGASAN-BELL, PATERNO WILLIAM BELL, JR., FLORENCE FELICIA VICTORIA BELL, PATERNO FERDINAND BELL III, AND PATERNO BENERAÑO BELL IV, Respondents.
D E C I S I O N
SERENO, C.J.:
This is a Petition for Review on Certiorari assailing the Court of Appeals (CA) Decision1 in CA-G.R. SP No. 87531 which granted the Petition for Certiorari filed by respondents and enjoined the execution sale of their family home for the satisfaction of the money judgment awarded to petitioners in Civil Case No. 4581, and the Resolution2 which denied petitioners' Motion for Reconsideration.
WHEREFORE, prescinding from all the foregoing, the Court hereby declares:chanRoblesvirtualLawlibraryBoth petitioners and respondents appealed to the CA, but the trial court's Decision was affirmed en toto. Spouses Bell later brought the case to this Court to question their liability to petitioners in the amount of P1 million plus interest. The Court, however, dismissed their Petition for failure to show any reversible error committed by the CA.4 Thereafter, entry of judgment was made.5
1. That the sale of the subject house and lot under Deed of Sale marked as Exhibit "F" is only an equitable mortgage in favor of the defendants Enrico Eulogio and Natividad Eulogio. However, the mortgage cannot bind the property in question for being violative of Chapter 2, Title 4 of the Family Code, its encumbrance not having been consented to in writing by a majority of the beneficiaries who are the plaintiffs herein;
2. The said equitable mortgage is deemed to be an unsecured mortgage [sic] for which the Spouses Paterno C. Bell, Sr. and Rogelia Calingasan Bell as mortgagors are liable to the defendants-spouses Enrico Eulogio and Natividad Eulogio in the amount of P1,000,000 plus interest of 12% per annum. However, under the Fourth Party Complaint Sps. Paterno C. Bell, Sr. and Rogelia Calingasan Bell have the right of reimbursement from fourth party defendants Nicolas Moraña and Julieta Moraña for whom their loan of P1,000,000 was secured by Sps. Paterno C. Bell, Sr. and Rogelia Calingasan Bell. Accordingly, the fourth party defendants Nicolas Moraña and Julieta Moraña are hereby ordered to reimburse Paterno C. Bell, Sr. and Rogelia Calingasan Bell the loan of P1,000,000 plus interest of 12% per annum to be paid by the latter to defendants Enrico and Natividad Eulogio;
3. The house and lot in question is free from any and all encumbrances by virtue of said equitable mortgage or the purported sale; and
4. The Deed of Sale (Exhibit "F") is null and void for being contrary to law and public policy.
Accordingly, (1) the Register of Deeds of Batangas City is hereby ordered to cancel Transfer Certificate of Title No. T-131472 in the name of defendants Enrico S. Eulogio and Natividad Eulogio and to reconstitute (sic) Transfer Certificate of Title No. RT-680-(5997) as "family home" of the plaintiffs Florence Felicia Victoria C. Bell, Paterno William C. Bell Jr., Paterno Ferdinand C. Bell III, Paterno Benerano C. Bell IV and fourth party plaintiffs Paterno C. Bell Sr. and Rogelia Calingasan Bell; or in the alternative to issue a new Transfer Certificate of Title under the same tenor;
2. The City Assessor of Batangas City is hereby directed to issue a tax declaration covering the said subject property as family home for the said plaintiffs and fourth party plaintiffs Paterno C. Bell and Rogelia Calingasan Bell; and
3. Defendants Enrico Eulogio and Natividad Eulogio are ordered to pay the plaintiffs attorney's fees and litigation expenses of P35,000.00, as the plaintiffs have been compelled to litigate to protect their property rights, and costs.3ChanRoblesVirtualawlibrary
We rule that there is no res judicata.The Court disagrees with the CA.
At the outset, let it be emphasized that the decision of the trial court dated July 15, 1998, which has become final and executory, only declares the subject property as a family home. As a matter of fact, private respondents never questioned that such property is a family home, and consequently, the issue as to whether or not the property is family home is settled and res judicata lies only with respect to this issue.
But the issue as to whether or not a family home could be the subject of an execution sale was not resolved by the trial court. This issue[was] raised only when the writ of execution was issued and hence, [was not] resolved with finality. Thus, the issue before this Court is whether or not the [f]amily [h]ome of petitioners under the facts and circumstances of the case could be the subject of a writ of execution and sold at public auction.33ChanRoblesVirtualawlibrary
The second issue is about the allegation of the plaintiffs that the family home which has been constituted on the house and lot in question is exempt from alienation and that its value does not exceed P300,000. Paterno Bell, Sr. testified that the two-storey house was built in 1947 and was made of wood and hollow blocks. He inherited it in 1976 from his parents and has been living there with his family. In 1976, when an extra-judicial settlement was made of the estate of his parents, the fair market value of the house was P70,000.The foregoing points plainly show that the issue of whether the property in dispute exceeded the statutory limit of P300,000 has already been determined with finality by the trial court. Its finding necessarily meant that the property is exempt from execution. Assuming for the sake of argument that causes of action in the main proceedings and in the execution proceedings are different, the parties are still barred from litigating the issue of whether respondents' family home may be sold on execution sale under the principle of conclusiveness of judgment.
City Assessor Rodezinda Pargas testified and presented Tax Declaration and others, (Exhibit "J", Tax Declaration No. 005-047) beginning 1985 showing that the subject lot with an area of 329 sq. m. had a fair market value of P76,000.00 and the residential house located thereon of P50,000.00, for a total value of P126,000.00. She testified that during the prior years the assessed values were lower. This shows that the limit of the value of P300,000.00 under Article 157, Title 5 of the Family Code has not been exceeded. The testimonies of the plaintiffs who are children of Sps. Paterno Bell, Sr. and Rogelia Calingasan Bell show that they had lived in that house together with their said parents. The Court therefore concludes that the said house is a family home under Chapter 2, Title 5 of the Family Code. Its alienation by the said Spouses without the written consent of the majority of the children/plaintiffs is null and void for being contrary to law and public policy as enunciated in Art. 158 of the Family Code.38 [Underscoring supplied]
ARTICLE 155. The family home shall be exempt from execution, forced sale or attachment except:chanRoblesvirtualLawlibraryRelated to the foregoing is Article 157 of the Family Code, which provides:
(1) For nonpayment of taxes;
(2) For debts incurred prior to the constitution of the family home;
(3) For debts secured by mortgages on the premises before or after such constitution; and
(4) For debts due to laborers, mechanics, architects, builders, materialmen and others who have rendered service or furnished material for the construction of the building.
ARTICLE 160. When a creditor whose claims is not among those mentioned in Article 155 obtains a judgment in his favor, and he has reasonable grounds to believe that the family home is actually worth more than the maximum amount fixed in Article 157, he may apply to the court which rendered the judgment for an order directing the sale of the property under execution. The court shall so order if it finds that the actual value of the family home exceeds the maximum amount allowed by law as of the time of its constitution. If the increased actual value exceeds the maximum allowed in Article 157 and results from subsequent voluntary improvements introduced by the person or persons constituting the family home, by the owner or owners of the property, or by any of the beneficiaries, the same rule and procedure shall apply.
At the execution sale, no bid below the value allowed for a family home shall be considered. The proceeds shall be applied first to the amount mentioned in Article 157, and then to the liabilities under the judgment and the costs. The excess, if any, shall be delivered to the judgment debtor.
ARTICLE 157. The actual value of the family home shall not exceed, at the time of its constitution, the amount of three hundred thousand pesos in urban areas, and two hundred thousand pesos in rural areas, or such amounts as may hereafter be fixed by law.The minutes of the deliberation by the drafters of Family Code on Article 160 are enlightening, to wit:
In any event, if the value of the currency changes after the adoption of this Code, the value most favorable for the constitution of a family home shall be the basis of evaluation.
For purposes of this Article, urban areas are deemed to include chartered cities and municipalities whose annual income at least equals that legally required for chartered cities. All others are deemed to be rural areas. [Underscoring supplied]
Justice Puno inquired if the above Article [160] is still necessary. In reply, Judge Diy opined that the above Article is intended to cover a situation where the family home is already worth P500,000 or P1M. Justice Reyes stated that it is possible that a family home, originally valued at P300,000. later appreciated to almost P1M because of improvements made, like roads and plazas. Justice Caguioa, however, made a distinction between voluntary and involuntary improvements in the sense that if the value of the family home exceeded the maximum amount because of voluntary improvements by the one establishing the family home, the Article will apply; but if it is through an involuntary improvement, like the conversion into a residential area or the establishment of roads and other facilities, the one establishing the family home should not be punished by making his home liable to creditors. He suggested that the matter be clarified in the provision.To summarize, the exemption of the family home from execution, forced sale or attachment is limited to P300,000 in urban areas and P200,000 in rural areas, unless those maximum values are adjusted by law. If it is shown, though, that those amounts do not match the present value of the peso because of currency fluctuations, the amount of exemption shall be based on the value that is most favorable to the constitution of a family home. Any amount in excess of those limits can be applied to the payment of any of the obligations specified in Articles 155 and 160.
x x x x
Prof. Bautista objected to the phrase "is worth" since if they will specify that the family home is worth more than the maximum amount at the time it was constituted, they will avoid the suit because the creditor will be given proper warning. Justice Puno opined that this is a question of fact. Justice Caguioa added that, under the second sentence, there will be a preliminary determination as to whether the family home exceeds the maximum amount allowed by law.x x x xProf. Bautista objected to the above provision, because it will in effect penalize the owner for improving the family home. On the other hand, Justice Puno opined that the provision covers only the excess in actual value over that allowed by law. Judge Diy added that the owner may improve the family home up to P300,000. Justice Caguioa stated that without the above provision, one can borrow money, put it all on improvement of the family home even beyond the maximum value of a family home and, thereby, exempt it from levy on the part of the creditor. He added that anyway, if one voluntarily improves his family home out of his money, nobody can complain because there are no creditors.
Justice Caguia accordingly modified the last sentence as follows:chanRoblesvirtualLawlibrary
If the excess in actual value over that allowed in Article 157 is due to subsequent voluntary improvements by the person or persons constituting the family home or by the owner or owners of the property, the same rules and procedure shall apply.
Justice Puno posed the question: What is "due to the subsequent improvement?" Is it the "excess" or is it the "increase", or is it the "increase", which constitutes the "excess"? In reply. Justice Reyes opined that it is the "increase" which constituted the "excess". Justice Puno, Justice Reyes and Justice Caguioa modified the last sentence as follows:If the increase in actual value exceeds that maximum allowed in Article 157 and results from subsequent voluntary improvements introduced by the person or persons constituting the family home or by the owner or owners of the property, the same rule and procedure shall apply.Prof. Bautista commented that the phrase "increase in actual value" does not include the original value. Justice Puno suggested that they just say "increased actual value", which the Committee approved.44 [Underscoring supplied]
Endnotes:
1Rollo, pp. 31-45; penned by Associate Justice Monina Arevalo-Zenarosa with Associate Justices Regalado E. Maambong and Normandie B. Pizarro concurring.
2 Id. at 46-47; penned by Associate Justice Monina Arevalo-Zenarosa with Associate Justices Japar B. Dimaampao and Normandie B. Pizarro concurring.
3 CA rollo, pp. 85-86.
4 Id. at 87.
5 Id. at 35.
6 Id. at 11-12.
7 Id. at 48-51.
8 Id. at 36.
9 Id. at 56-61.
10 Id. at 37.
11 Id. at 38.
12 Id. at 2-90.
13 Id. at 112.
14 Id. at 98-112.
15 Id. at 92-97 (Temporary Restraining Order dated 21 December 2004), 141-146 (Writ of Preliminary Injunction dated 23 February 2005).
16 Id. at 139-140.
17 Id. at 43.
18Rollo, pp. 46-47.
19Sps. Villanueva v. Court of Appeals, G.R. No. 163433, 22 August 2011, 655 SCRA 707.
20Saludaga v. COMELEC, G.R. Nos. 189431 & 191120, 7 April 2010, 617 SCRA 601; Duvaz Corp. v. Export and Industry Bank, 551 Phil. 382 (2007).
21Guy v. Asia United Bank, 561 Phil. 103 (2007).
22Rollo, pp. 104-115 (respondents' Memorandum).
23 Executive Order No. 209 (As Amended), Article 158, provides:chanRoblesvirtualLawlibrary
ARTICLE 158. The family home may be sold, alienated, donated, assigned or encumbered by the owner or owners thereof with the written consent of the person constituting the same, the latter's spouse, and a majority of the beneficiaries of legal age. In case of conflict, the court shall decide.
24Cabang v. Sps. Basay, G.R. No. 180587, 20 March 2009, 582 SCRA 172.
25See Duvaz Corp. v. Export and Industry Bank, supra note 20.
26Puerto Azul Land, Inc. v. Pacific Wide Realty Development Corp., G.R. No. 184000, 17 September 2014, citing Union Bank of the Phil. v. ASB Development Corp., 582 Phil. 559, 579 (2008).
27 RULES OF COURT, Rule 39, Section 47(b).
28 RULES OF COURT, Rule 39, Section 47(c).
29Oropeza Marketing Corp. v. Allied Banking Corp., G.R. No. 129788, 3 December 2002, 393 SCRA 278.
30 Supra.
31 In Estate of Don Filemon Y. Sotto v. Palicte, G.R. No. 158642, 22 September 2008, 566 SCRA 142, the Court has explained that "there is identity of parties not only when the parties in the case are the same, but also between those in privity with them, such as between their successors-in-interest. Absolute identity of parties is not required, and where a shared identity of interest is shown by the identity of relief sought by one person in a prior case and the second person in a subsequent case, such was deemed sufficient."
32 In Sps. Ley v. Union Bank of the Philippines, 549 Phil 168 (2007), the Court has defined the subject matter of a case as "the item with respect to which the controversy has arisen, or concerning which the wrong has been done, and it is ordinarily the right, the thing, or the contract under dispute."
33 CA rollo, pp. 39-40.
34 RULES OF COURT, Rule 2, Sec. 2.
35Pilar Development Corp. v. Court of Appeals, G.R. No. 155943, 13 August 2013.
36Yap v. Chua, G.R. No. 186730, 13 June 2012, 672 SCRA 419.
37 Supra.
38 CA rollo, p. 84.
39 Executive Order No. 209 (As Amended), Article 153, provides:chanRoblesvirtualLawlibrary
ARTICLE 153. The family home is deemed constituted on a house and lot from the time it is occupied as a family residence. From the time of its constitution and so long as any of its beneficiaries actually resides therein, the family home continues to be such and is exempt from execution, forced sale or attachment except as hereinafter provided and to the extent of the value allowed by law.
40Taneo v. Conn of Appeals, 363 Phil 652 (1999).
41Gomez v. Gealone, G.R. No. 58281, 13 November 1991, 203 SCRA 474, citing Young v. Olivarez, 41 Phil. 391, 395 (1921).
42 Supra note 37.
43 35 C.J.S. Exemption §26, at 44 (1943).
44 Minutes of the 179th Meeting of the Civil Code and Family Law Committees held on Saturday, 4 April 1987, 9:00 a.m. at the First Floor Conference Room of Bocobo Hall, U.P. Law Complex, pp. 29-32.
45 40 Am. Jur. 2d, Homestead §40, at 285-286 (1999).
If the homestead property is less in amount or value that that which has been specified by the statute, it may be enlarged until it has reached the statutory quantity or value. Where a house and lot are duly selected and declared a homestead, the subsequent erection of an additional dwelling house on the lot does not vitiate the homestead or render any part of its subject to seizure and sale under execution, unless the value of the homestead has increased beyond the statutory limit.
46People v. Chavez, 120 Phil. 1019 (1964).
47Rollo, pp. 81-103 (petitioners' Memorandum).
48See Ramos v. Pangilinan, G.R. No. 185920, 20 July 2010, 625 SCRA 181 for the Court's discussion of the guidelines under which a family home may be sold on execution to satisfy the debts and obligations specified in Articles 155 and 160.
49 35 C.J.S. Exemption §92, at 144 (1943).
50Tan v. Matsuura, G.R. Nos. 179003 and 195816, 9 January 2013, 688 SCRA 263.