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Separate ownership

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Property rules

Separate ownership

Maggie engaged the services of FG Construction Inc. (FGCI) to construct a seven-storey condominium building located at Aurora Boulevard corner N. Domingo Street, Cubao, Quezon City.

Their contractual relationship turned sour when Maggie refused to fully pay the contract price despite FGCI’s several demands. This prompted FGCI to initiate a suit for the collection of sum of money before the Regional Trial Court of Quezon City.

In her defense, Maggie contended that FGCI has no cause of action against her. She averred that she delivered more than P7 million to FGCI, but the latter accomplished only 28 percent of the project.

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Trial on the merits ensued. The Regional Trial Court thereafter ruled in favor of FGCI.

On appeal, however, the Court of Appeals ruled that Maggie overpaid and thereby directed FGCI to return the amount that was paid in excess. The appellate court’s decision became final and executory.

Maggie, as the prevailing party, filed a Motion for Execution of the Court of Appeals Decision before the Regional Trial Court. The trial court granted the same. Consequently, a writ of execution was issued to implement the Decision of the Court of Appeals.

The court sheriff, to satisfy the judgment, levied on a building which was declared for taxation purposes in the name of FGCI. The lot on which the building was erected, however, is owned by spouses Imon and Emily, majority stockholders of FGCI.

To forestall the sale on execution, the spouses Imon and Emily 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.

They argued that:

the building covered by the levy was mistakenly assessed by the City Assessor in the name of FGCI, and

following the principle of the accessory follows the principle, then the building, being a mere accessory to the land, the ownership of the land gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially.

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Naturally, Maggie insisted that its ownership of the building belongs to FGCI and not to the spouses Imon and Emily as shown by the tax declaration.

Q: What is a writ of execution?

A: A writ of execution is a direct command of the court to the sheriff to carry out the mandate of the writ, which is normally the enforcement of a judgment.

Q: Can the property of a person be made to answer for the debt of another?

A: 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.

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.

Q: May the building, the tax declaration of which was registered under the name of FGCI, but erected on the property owned by the spouses be levied upon to satisfy the debt due Maggie?

A: Yes. As the party asserting their title, it was incumbent upon spouses Imon and Emily to prove that they have a bona fide title to the building in question.

Yet, spouses Imon and Emily were unable to adduce credible evidence to prove their ownership of the property.

In contrast, Maggie was able to satisfactorily establish the ownership of FGCI through the pieces of evidence she submitted. 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 Imon and Emily.

Q: Are tax receipts and tax declarations are incontrovertible evidence of ownership?

A: Although tax declarations or realty tax payment of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner 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.

They constitute at least proof that the holder has a claim of title over the property.

The voluntary declaration of a piece of property for taxation purposes manifests not only one’s sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government. Such an act strengthens one’s bona fide claim of acquisition of ownership.

Q: How come the principle that the accessory follows the principal does not apply in this case?

A: The rule on accession is not an iron-clad dictum.

When there are factual and evidentiary evidence to prove that the building and the lot on which it stands are owned by different persons, they shall be treated separately. As such, the building or the lot, as the case may be, can be made liable to answer for the obligation of its respective owner. (Sources: Villasi v. Garcia, G.R. No. 190106, January 15, 2014; City of Makati vs. Odeña, G.R. No. 191661, August 13, 2013)

Ma. Soledad Deriquito-Mawis is currently the Dean, Lyceum of the Philippines University; president of Philippine Association of Law Schools; and Senior Partner at Gatchalian Castro & Mawis Law Office

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TAGS: condominium building, Contract, FG Construction Inc. (FGCI), Maggie
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