PURPOSE OF EXECUTION The principles in Rule 39 and Rule 16 are practically identical.
Terceria is predicated on the premise that the property levied upon by the sheriff for the purpose of executing of the duly entered judgment does not belong to the judgment debtor.
(Terceria is a 3rd party claim filed with the sheriff.) If the property levied upon belongs to another person, the levy is not valid. The levy not being valid, the sale is not valid. Rule 39 expects that the property levied upon by the sheriff belongs to a judgment debtor, because Rule 39 is for the satisfaction of a judgment against a judgment debtor. If the sheriff makes a levy on properties which do not belong to the judgment debtor, you can expect the true owner to complain. Such owner can file a complaint for the recovery of the real property from the sheriff.
The filing of such complaint of the owner is just one of the several remedies which the owner can avail of. In Rule 39, the remedy refers to the filing of a 3rd party claim (Terceria).
The other remedies which are expressly acknowledged in Section 16 Rule 39.
What are the remedies available to a third-party claimant in levy of real property?
A:
1. Summary hearing before the court which authorized the execution;
2. Terceria or third party claim filed with the sheriff;
3. Action for damages on the bond posted by judgment creditors; or
4. Independent reinvindicatory action. (Sec. 16, Rule 39)
The remedies are cumulative and may be resorted to by the third party claimant independently of or separately from the others.
Note: The officer shall not be liable for damages for the taking or keeping of the property, to any third-party claimant if there is a bond filed by the winning party. If there is no bond, the sale cannot proceed. However, the judgment obligee can claim damages against a third-party claimant who filed a frivolous or plainly spurious claim, and such judgment obligee can institute proceedings therefor in the same or separate action (Sec. 16, Rule 39).
Replevin – remedy of the true owner of the personal property if it was improperly levied and sold If the property is a real property, the true owner/3rd party claimant can file an independent action to prevent the sheriff from selling the property.
The 3rd party claimant, under Section 16 Rule 39, can make use of these remedies successively. Thus, if he was unsuccessful in recovering the property under one remedy, he can make use of the other remedies.
The easiest and most practical remedy available right away to the 3rd party claimant is a Third Party Claim. It does not require the filing of a complaint, just the submission of an affidavit to the sheriff and to the court, setting forth his ownership and entitlement to the possession, and that the property should not be levied upon as this is not a property of the judgment debtor.
Evidence appurtenant thereto must be attached.
Can the court render a judgment that will tell the sheriff that the property is not the third party claimant’s but that of the judgment debtor?
No. The third party claim is an incident to the execution process, the trial proceedings are over insofar the court is concerned. The court has no power to resolve an issue of ownership involving the property levied upon. It should be threshed out in a separate complaint. Regardless of a finding by the execution court that the true owner is the judgment debtor, that will have no bearing on the third party claimant. That order will not be entered, it will not be considered a judgment on the merits and will not constitute res judicata insofar as a 3rd party claimant. If at all, the consequence of the finding of the court is that the sheriff can go ahead with the sale of the property.
If the sheriff schedules the sale, can third party file an independent action to stop the sale of real property?
Yes, he can file the complaint in another court, RTC, for injunction with claims for damages, if any.
If property levied upon is a personal property of a 3rd party claimant, can 3rd party file complaint for replevin?
Yes. The claimant must implead the sheriff and the judgment creditor (prevailing party).
If the executing court is an RTC, and 3rd party claimant files a case for replevin, can he file it in the MTC?
Yes, as replevin is cognizable by the MTC depending upon the value of the thing subject to the auction sale.
Is this interference with the other court? Can the sheriff in the other court claim that the seizure is interfering with
the proceedings of the other court?
No. The sheriff of the MTC can seize the personal property from the sheriff of the other court.
Cannot the sheriff of the MTC capitalize on the provisions of Rule 60 on replevin that the writ of replevin cannot be enforced when the property is subject to attachment?
If you go to Rule 60, it is really a requisite in the issuance of a writ of replevin. The issuing court can issue a writ of replevin validly if the property to be seized is not under custodia legis, not under a levy of execution or attachment.
If the property is subject of a levy on execution, it is under custodia legis.
But notwithstanding that provision in Rule 60, the SC said that a writ of replevin issued by the MTC will prevail over the levy on execution writ by the sheriff, because the writ of execution by the sheriff is void. What is required under Rule 60 to is that a property should be under custodia legis to prevent enforcement of a writ of replevin, it assumes that there was a prior VALID LEVY ON EXECUTION. For a property to be validly levied upon, the property must be owned by the judgment debtor.
Otherwise, the levy is void.
Therefore, the property can be the subject of a seizure by another sheriff in compliance with a writ of replevin issued by another court, even if it is an MTC. It is proper for the MTC to issue a writ of preliminary mandatory injunction directed against the sheriff to prevent the sheriff from going ahead with the sale.
In Rule 39, if the property of judgment debtor has been subjected to levy on execution, can it be subjected to another levy on execution?
Yes. If there are several cases where the property is subject to levy, it is possible the same property can be subject to levy
on execution. The debtor remains to be the owner of the land, and the levy creates a lien only over the property. The first levy annotated on the title of the property shall be superior to the subsequent levies following the principle of seniority. The SC has held that if the property is the subject of different levies, and the judgment debtor sells the property, the sale is valid, as the judgment debtor is still the owner of the property at the time of the sale. But the buyer must respect the annotations of levies in the title as to the liens imposed. So, if the property is sold at public auction sale later on in execution of the first judgment, the person who bought it from the judgment debtor stands to lose the property. Buyer is not considered a buyer in good faith due to the said annotation of the levies in the title.
If the property was mortgaged to a bank that is still existing, can the sheriff subsequently levy the property?
Yes, as the levy will not affect the ownership of the property by the judgment debtor. It only creates a lien. He loses ownership if there was a public auction sale thereon. But ownership shall not immediately be lost, so long as judgment debtor still has the right of redemption.
If in cases where there are two different levies over the same piece of land of the judgment debtor, usually, the property will be sold as a result of the first levy of the property. If the property is later on sold at public auction, and as the law gives to the judgment the right of redemption, this right of redemption will also be enjoyed by the buyer. Rule 39 in defining the redemptioner names a judgment debtor, his successors in interest or any creditor who holds another levy or lien subsequent to that of the levying creditor who has caused the sale of the property.
The right of the first levy holder to redeem is distinct right from the 2nd levy holder to redeem the property. If it is the 2nd holder who redeems the property, there could be another redemption by the first judgment debtor. Under Rule 39, when it is the judgment debtor who redeems the property from the highest bidder, other rights of redemption are cut off by virtue of the redemption by the judgment debtor. So we can speak of successive redemptions only if the redemptioner is not the judgment debtor himself. If the one who redeems the property is another lien holder, we can apply the rule of successive redemption which says that another redemption can be had within 60 days from the efficacy of the first redemption, even if the 1-year period for redemption has already expired.
For example, there are 3 redemptioners, one being the judgment debtor. If the redemption is carried out by the judgment debtor, the rights of redemption of the other 2 are cut off. Redemption for all of them is 1 year from the registration of the sale in the certificate of title.
So we have to assume that a redemption made should be within 1 year of the registration of the certificate of sale in the certificate of title. If the 2nd levy holder redeems the property, then the 3rd levy holder can also further redeem the property within 60 days of the last redemption. But within the 1-year period, the judgment debtor can redeem the property, who upon his exercise of his right of redemption, the rights of the others to redeem will be cut off.
Will this not cause prejudice to the other levy holders if we cut off the right to redemption?
No, it will not. The levy holders will simply enforce their levy since the property in the hands of the judgment debtor. They can have another public auction sale of that levied property.
In civil law, as well as in Rule 39, the SC has accepted the principle that whenever there is a doubt in the interpretation of redemption rules and laws, the interpretation should always be in favor of the redemptioner, the judgment debtor.
Rule 39 is also very clear in saying that right of redemption will exist only when the property sold at public auction is a real property. When the property levied upon and sold at public auction is a personal property, there is no right of redemption.
SC has come up with these principles that are applicable to redemption of real property and principles applicable because there is no redemption allowed in personal property:
1.Personal property is sold in auction, and the price generated is inequitably low, the sale is void. The highest bidder does not acquire ownership of the property. The court will issue an order declaring the sale as ineffectual.
Sheriff must schedule another auction sale until the price generated is not inequitably low.
2.Real property is sold at public auction, it does not matter as to price even if inequitably low, the sale will be valid. The low price will not render the sale void because of the existence of the right to redeem by the judgment debtor. If the price is very low, that is advantageous to the judgment debtor, because if he decides to redeem the property, he need only to match the auction sale price.
Due to the above principle, there could arise a situation where the levy and public auction sale of a real property would result that the price generated will be insufficient to pay the
lien of the judgment creditor.
Let us say that the judgment creditor has a lien of 1M, and a piece of land owned by the judgment debtor was sold at public
auction, but
generated only 500K. It is not enough to pay in full the award given to the judgment creditor.
The 500k will go to
the judgment
creditor, but there is still a residue of 500k. When the judgment debtor
redeems the
property, should he deliver to the sheriff 500k or 1M?
The judgment debtor should deliver only 500k. He need not deliver 1M because the price paid by the highest bidder was only 500k.
So, if the judgment debtor was able to
redeem the
property by
producing 500k, but the judgment creditor was not yet fully paid, the judgment creditor will be tempted to have another levy on the property.
The judgment
creditor could really entertain that idea because he has not yet been fully paid. In Rule 39, there must be full satisfaction of the award to put an
end to the
litigation. If the judgment creditor decides to have another levy on the same property
previously levied upon, but the property had been redeemed by the judgment debtor, can the same levying creditor carry out another levy on the same property?
SC held that in this situation, the same levying creditor
cannot impose
another levy on the same property. If the levying creditor wants to have full satisfaction of his lien, he should make another lien on another property owned by the judgment debtor. Or, he could avail of the
other remedies
provided for in Rule 39 if he cannot get full satisfaction of the judgment.
3. If there is still a residue on the lien of the judgment creditor, he can levy other properties owned by the judgment debtor, but the judgment creditor cannot levy the same property that the judgment debtor has redeemed.
This principle does not prevent other creditors from levying the property that was already redeemed.
With respect to the issue as to who is entitled to the fruits earned during the pendency of the levy and during the 1-year period of redemption, Rule 39 settled that issue. The fruits of the property sold at public auction during the period of redemption shall redound to the benefit of the judgment debtor when the redemption period is still running. The basis is that the judgment debtor retains ownership of the property while the period of redemption is still running.
If the judgment debtor is unable to redeem the property within the period of redemption, then
the title will be consolidated in favor of the highest bidder.
Q: What are the rights of a judgment debtor during the period of redemption?
A: 1. To remain in possession of the property until the expiration of period of redemption;
2. To collect rents and profits until the expiration of period of redemption (Sec. 32);
3. To use the property in the same manner it was previously used;
4. To make necessary repairs; and
5. Use it in the ordinary course of husbandry (Sec. 31).
In the auction sale, anybody can bid, even the judgment creditor.
It is usually the judgment creditor who will be offering the highest bid because the judgment creditor can give an amount equivalent to the award given by the court. If the award given by the court is 1M, then the judgment creditor can give an amount as high as 1M. He need not turn over any cash to the sheriff, because he will just tell the sheriff that he will consider the 1M lien as fulfillment of his claim. Whereas if a stranger is the highest bidder, this stranger is expected to give the 1M to the sheriff.
Can the judgment creditor be forced to shell out the equivalent of the highest bid even if the highest bid is exactly equivalent to the amount of his claim?
Generally, no. But if there is a 3rd party claim, a terceria, and the highest bid was that of the judgment creditor, the judgment creditor must still shell out cash in order to be treated by the sheriff and the court as the highest bidder.
If the judgment creditor is not fully paid, there are other options
given in the rules in order to fully satisfy the claim:
1. File a motion in the court for an examination of the judgment debtor.
2. File a motion in the executing court for the examination of a debtor of the judgment debtor.
3. File a motion for the appointment of a receiver for the remaining properties of the judgment debtor.
A receiver is one of the provisional remedies in the RoC.
Receivership is allowed by the court, although the case has already been terminated, being already in the execution stage of the judgment. This is one instance where a provisional remedy can be used even after a case has been decided by the court. The usual concept of a provisional remedy is that they are availed of during the pendency of the case, before entry of judgment. But in the case of receivership, this remedy can be availed of under Rule 39 even if the case has already been decided, the judgment has been entered and is now subject to execution.
THE PRINCIPLE OF RES