LOURDES RAMOS, ENRIQUE RAMOS, MILAGROS RAMOS, ANTONIO RAMOS, AND ANGELITA RAMOS, PLAINTIFFS-APPELLANTS, VS. GUILLERMO N. PABLO, PRIMITIVA C. CRUZ, THE EX-OFFICIO SHERIFF OF QUEZ…

Ramos versus Pablo

The Case

This is the story of the Ramos heirs against Guillermo Pablo, Primitiva Cruz, the Sheriff of Quezon City, and the Register of Deeds of Quezon City. The heirs of the late Socorro Ramos sued to annul an execution sale — the public auction by which eighteen parcels of land that had belonged to their mother were sold in one lump sum to the spouses Pablo and Cruz, who were the only bidders. The case matters because it teaches the requisites of res judicata, the proper way to attack an execution sale, and when a case is truly moot and academic. It is a remedial law case dressed as a civil law dispute.

Procedural History

The case began in the Court of First Instance of Rizal, Branch Sixteen, sitting in Quezon City, where the Ramos heirs filed a complaint to annul the auction sale, the certificate of sale, the sheriff's final deed of sale, and the new titles issued to the spouses Pablo. The defendants moved to dismiss just after filing their answer, on grounds of res judicata, improper remedy, failure to raise the issue of inadequacy of price as shocking to conscience, and mootness. The trial court granted the motion and dismissed the complaint. The heirs moved for reconsideration; it was denied. They appealed to the Court of Appeals. Because the issues were purely legal, the Court of Appeals, on the heirs' motion to transfer, forwarded the case to the Supreme Court, which treated it as a petition for review on certiorari.

Facts

In July 1957, Guillermo Pablo and Primitiva Cruz entered into an agreement to buy on installment a parcel of land in Quezon City from Pedro del Rosario and the Del Rosario Realty. The rights over that land passed to Socorro Ramos, who executed a deed of absolute sale in favor of Pablo and Cruz in March 1963. Unknown to the buyers, the land was already mortgaged to Rodrigo Enriquez, who had filed a foreclosure case as early as April 1959. Socorro Ramos knew the Supreme Court had already decided that case against her when she signed the deed, but she concealed it until her death in 1965. The buyers later discovered that the land had been foreclosed and titled in the name of Rodrigo Enriquez, who sold it to another.

Pablo and Cruz then sued the estate of Socorro Ramos for damages in the Court of First Instance of Rizal, Branch Seven, sitting in Pasay City. They won, and the Court of Appeals affirmed. To satisfy that judgment, the Sheriff of Quezon City levied on eighteen parcels of land registered in the name of Socorro Ramos and sold all of them in one lump-sum bid of 56,885 pesos and 22 centavos to the spouses Pablo and Cruz, the sole bidders. That amount covered the entire judgment debt and the expenses of sale. The certificate of sale issued after an unopposed motion, and new titles were issued in the names of the spouses.

Learning of this, the Ramos heirs filed the present action to annul the sale. They alleged that the lump-sum sale violated the Rules of Court, which require separate bidding and individual sale of levied real properties and a statement of the price paid for each lot. They alleged that a sale in parcels would have raised more money, and that they were not given notice as surviving heirs, preventing them from directing the order in which the parcels should be sold to their advantage.

Issues

• Whether or not the principle of res judicata bars the present action for annulment of the execution sale.
• Whether or not the proper remedy of the heirs is a motion with the court of origin attacking the execution sale, rather than a separate action.
• Whether or not the heirs raised the issue of inadequacy of price as shocking to conscience.
• Whether or not the finality of the Supreme Court's decision in the Enriquez case made the present case moot and academic.

Applicable Provisions

Section 21 of Rule 39 of the Rules of Court, on the sale of real property levied upon on execution, provides:

Section 21. Sale of real property levied upon. — The sheriff or other officer shall sell the real property levied upon, or so much thereof as may be necessary to satisfy the judgment and costs, at public auction, and shall give notice of the time and place of sale as provided in the preceding section. The sale shall be made in separate parcels, unless the court otherwise directs, and the officer shall state in his return the price paid for each distinct lot or parcel.

The heirs invoked this provision to show that the lump-sum sale of eighteen parcels was contrary to the rule requiring separate bidding and individual sale.

Section 27 of Rule 39, on the statement of the price paid for each lot, provides:

Section 27. Statement of price paid for each lot. — The officer shall state in his return the price paid for each distinct lot or parcel, and if the property is sold in separate parcels, the price paid for each parcel shall be stated.

This provision was cited to show that the sheriff's return failed to state the price for each distinct lot, a defect that tainted the sale.

Ruling

On the first issue, the Court held that res judicata did not apply because the requisites were absent. The judgment invoked must be final, the court must have jurisdiction over the subject matter and the parties, the judgment must be on the merits, and there must be identity of parties, subject matter, and causes of action. There was no identity of parties, because the heirs were impleaded in the first case only in their representative capacity, the principal party being the estate of Socorro Ramos, while the present case impleaded the buyers, the sheriff, and the register of deeds, who were not parties in the first case. There was no identity of causes of action, because the first case was an action for damages while the second was an action for annulment of the execution sale. There was no identity of subject matter, because the first case involved the contracts of sale while the second involved the eighteen parcels of land, and the land in the first case was not even part of the eighteen parcels. The Court also noted that res judicata was not even raised by the respondents in their motion to dismiss.

On the second issue, the Court held that a separate action for annulment of the execution sale was in order. The acts complained of arose after the appellate court issued its decision, so they could not have been covered by that decision. The Court found no provision of law limiting an attack on an execution sale only through a motion with the court of origin.

On the third issue, the Court held that a reading of the complaint showed that inadequacy of price was raised as an issue. Even assuming the price was shockingly low, the Court said, that would not vitiate the auction sale, because redemption would be comparatively easier.

On the fourth issue, the Court held that the case was not moot and academic. The lower court had assumed that an order in the Enriquez foreclosure case allowed foreclosure over the eighteen parcels, but the records showed no actual foreclosure had been effected. For a case to be considered moot and academic, the determining event must be passed upon in a trial on the merits, not in a motion to dismiss. Whoever wins the case would be the one with the right to pay the mortgage in favor of Rodrigo Enriquez, and it would be foolish for the heirs to pay the mortgage when the titles had already been transferred to the spouses Pablo.

Doctrine

For res judicata to apply, four requisites must concur: the judgment must be final; the court rendering it must have jurisdiction over the subject matter and the parties; the judgment must be on the merits; and there must be identity of parties, subject matter, and causes of action. The absence of any one requisite defeats the plea. A separate action to annul an execution sale is proper, especially where the acts complained of arose after the judgment sought to be executed. Inadequacy of price, even if shocking to conscience, does not by itself vitiate an auction sale, because redemption is made comparatively easier. A case is not moot and academic where the determining event has not been established in a trial on the merits.

Disposition

The Supreme Court set aside the orders of the lower court dismissing the complaint and remanded the case for proper trial on the merits. The Ramos heirs won the appeal.

Remember This

Memorize the four requisites of res judicata and the rule that a separate action may annul an execution sale. Examiners use this case to test res judicata, the annulment of execution sales, and the moot and academic doctrine.