MAGDALENA T.

VILLASI
vs.
FILOMENO GARCIA, substituted by his heirs, namely, ERMELINDA H. GARCIA, LIZA GARCIA-GONZALEZ, THERESA GARCIA-TIANGSON,
MARIVIC H. GARCIA, MARLENE GARCIA-MOMIN, GERARDO H. GARCIA, GIDEON H. GARCIA and GENEROSO H. GARCIA, and ERMELINDA H.
GARCIA
G.R. No. 190106 January 15, 2014
By Richard Troy A. Colmenares
USA College of Law
Start: 7/6/14 3:12:09 PM
Finish: 7/6/14 5:11:53 PM
Nature of the Case
A petition for review on Certiorari assailing judgment of the Court of Appeals (CA) affirming decision of the Regional Trial Court (RTC) directing the Sheriff to
suspend execution of sale on levied building.

Facts
The issue revolves around a foreclosed property levied upon by the Sheriff for an unpaid sum of money due to services contracted by petitioner in the
construction of a building somewhere in Quezon City. The foreclosure was due to the lower courts order against petitioner-debtor to pay the contractor-
creditor [Fil-Garcia Construction, Inc.; FGCI for brevity], which was however reversed on appeal in view that petitioner-debtor made overpayments changing
the relationship between the parties to that of judgment petitioner-creditor and judgment contractor-debtor. Contractor-debtors untimely petition for certiorari
did not elicit from the Supreme Court favourable judgment. Thus, petitioner-creditor moved for Execution of the CAs judgment with the RTC, which in turn
ordered the Sheriff to execute the CAs judgment. The Sheriff levied on a building only registered to contractor-debtor [FGCI] for tax purposes, erected at a
property belonging to respondent spouses [substituted by their heirs in this Petition]. After complying with the procedural requirements [mandatory posting and
publication of notice of sale on execution of the real property], a public auction ensued. Respondents received favourable judgment from the RTC which
ordered the Sheriff to suspend execution of sale on the building levied upon. Petitioner-creditors motion for reconsideration [before the RTC], appeal [before
the CA], and motion for reconsideration [before the CA] were denied. Thus, this petition for review on Certiorari.

Issue(s)
(1). Did the Sheriff wrongly levy the property belonging to respondents?
(2). Did the CA err in holding that there is no reason to pierce the veil of contractor-debtors corporate fiction?

Held
(1). No.

True that respondents were able to prove the land belongs to them. Respondents however failed to show proof that the building belongs to them,
whereas petitioner established, by way of a tax declaration and tax receipts, that the said building is registered under the name of contractor-debtor
which is sufficient to prove that the holder [contractor-debtor FGCI] has claim of the said title. A tax declaration or realty tax payments, although
inconclusive proofs to ownership, are indicative of the possession in the concept of owner xxx for no one in his right mind would be paying taxes
for a property that is not in his actual or at least constructive possession xxx [Buduhan vs. Pakurao, 518 Phil. 285 (2006)] proof that the holder has
claim over the title. This voluntary declaration to pay the taxes manifests: (1) ones honest and sincere desire to obtain title to the property; (2)
announce adverse claim to the title against the State and all partities-in-interest; and (3) contribution to needed Government revenues. This, in
effect, strengthen ones bon fide claim for acquisition of ownership.

Not only that, contractor-debtor is also in actual possession of the building which overall support contractor-debtors ownership over said properties
[land and building].

Futhermore, respondents claim that the City Assessor erred in declaring the property under the contractor-debtor for tax purposes is also suspect
and indicative of manifest intent to put the property beyond the reach of judgment petitioner-creditor. The same could have been rectified before the
onset of this Petition.

On top of that, it is true, as respondents contend, that accessory follows the principal. The same is however subject to an exception. In cases were
there is no clear and convincing evidence that the principal [building] and accessory [land] does not belong to one and the same person [natural or
juridical], there is no doubt there is separate ownership, and should be treated as such. In the case at Bar, clearly the ownership of the land and the
building belong to different persons.

(2). No.

This premise is irrelevant. The respondents are trying to protect contractor-debtor from liability by asserting they are the owners of the building. The
contractor-debtor is the proven owner of the building. Piercing FGCIs corporate veil will not protect it from its judgment debt. Piercing will result in
the identification of the Spouses Garcia as FGCI itself and will make them liable for FGCIs judgment debt

Henceforth, the Petition is granted. The assailed decision of the CA is reversed and set aside. The Sheriff is directed to proceed with the conduct of the sale
on execution of the levied building.