004 Eulogio v.
Bell (Sarmiento) was no proof that its value had increased beyond the statutory limit due to
July 8, 2015 | Sereno,C.J.| Family Home
PETITIONER: ENRICO S. EULOGIO AND NATIVIDAD V. EULOGIO
RESPONDENTS: PATERNO C. BELL, SR., ROGELIA CALINGASAN-
BELL, PATERNO WILLIAM BELL, JR., FLORENCE FELICIA VICTORIA
BELL, PATERNO FERDINAND BELL III, AND PATERNO BENERAÑO
BELL IV,
SUMMARY: The Bell siblings are the children of respondent Spouses Paterno
C. Bell and Rogelia Calingasan-Bell. They sought the annulment of the contract
of sale executed by Spouses Bell over their 329-square-meter residential house
and lot, as well as the cancellation of the title obtained by petitioners by virtue
of the Deed. The RTC granted the Bell's prayers, but declared Spouses Bell
liable to petitioners in the amount of PI million plus 12% interest per annum.
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.the RTC issued a Writ of Execution, as a result of which respondents'
property was levied on execution. Upon motion by the Bells, trial court ordered
the lifting of the writ of execution on the ground that the property was a family
home. Petitioners opposed, invoking Article 160 of the Family Code, they
posited that the current market value of the property exceeded the statutory limit
of P300,000 considering that it was located in a commercial area, and that
Spouses Bell had even sold it to them for P1 million. ISSUE: whether
respondents' family home may be sold on execution under Article 160 of
the Family Code. NO. Respondents' family home cannot be sold on
execution under Article 160 of the Family Code. ARTICLE 155. The family
home shall be exempt from execution, forced sale or attachment but subject to
certain exceptions. 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. Any subsequent improvement or
enlargement of the family home by the persons constituting it, its owners, or
any of its beneficiaries will still be exempt from execution, forced sale or
attachment provided the following conditions obtain: (a) the actual value of the
property at the time of its constitution has been determined to fall below the
statutory limit; and (b) the improvement or enlargement does not result in an
increase in its value exceeding the statutory limit. Otherwise, the family home
can be the subject of a forced sale, and any amount above the statutory limit is
applicable to the obligations under Articles 155 and 160. The trial court had
already determined with finality that the property was a family home, and there
voluntary improvements by respondents.
DOCTRINE: Any subsequent improvement or enlargement of the family home
by the persons constituting it, its owners, or any of its beneficiaries will still be
exempt from execution, forced sale or attachment provided the following
conditions obtain: (a) the actual value of the property at the time of its
constitution has been determined to fall below the statutory limit; and (b) the
improvement or enlargement does not result in an increase in its value
exceeding the statutory limit.
FACTS:
1. Respondents Paterno William Bell, Jr., Florence Felicia Victoria Bell,
Paterno Ferdinand Bell III, and Paterno Benerano IV (the Bell siblings) are
the unmarried children of respondent Spouses Paterno C. Bell and Rogelia
Calingasan-Bell (Spouses Bell).
2. In 1995, the Bell siblings lodged a Complaint for annulment of documents,
reconveyance, quieting of title and damages against petitioners Enrico S.
Eulogio and Natividad Eulogio (the Eulogios). The Complaint sought the
annulment of the contract of sale executed by Spouses Bell over their 329-
square-meter residential house and lot, as well as the cancellation of the title
obtained by petitioners by virtue of the Deed.
3. RTC: granted the prayer of the Bells
a. That the sale of the subject house and lot under Deed of Sale 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;
b. 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 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.
 c. The house and lot in question is free from any and all
encumbrances by virtue of said equitable mortgage or the
purported sale; and
d. The Deed of Sale is null and void for being contrary to law and
public policy.
4. RTC issued a Writ of Execution, as a result of which respondent Bell's
property covered by the newly reconstituted was levied on execution.
a. Upon motion by the Bells, the trial court, ordered the lifting of the
writ of execution on the ground that the property was a family
home.
b. Eulogio filed a Motion for Reconsideration of the lifting of the writ
of execution. Invoking Article 160 of the Family Code, they
posited that the current market value of the property exceeded the
statutory limit of P300,000 considering that it was located in a
commercial area, and that Spouses Bell had even sold it to them
for P1 million.
5. The RTC, set the case for hearing to determine the present value of the
family home of respondents. It also appointed a Board of Appraisers to
conduct a study on the prevailing market value of their house and lot
6. Subsequently, the RTC issued an Order dispensing with the valuation report
of the commissioners and directing the issuance of a writ of execution.
7. CA: ruled that the RTC Decision, which had become final and executory,
only declared respondents' house and lot as a family home. Since the issue
of whether it may be sold in execution was incidental to the execution of the
aforesaid Decision, there was as yet no res judicata.
a. Still, the CA found that the trial court committed grave abuse of
discretion in ordering the execution sale of the subject family home
after finding that its present value exceeded the statutory limit.
b. The basis for the valuation of a family home under Article 160,
according to the appellate court, is its actual value at the time of its
constitution and not the market/present value; therefore, the trial
court's order was contrary to law.
ISSUE: whether respondents' family home may be sold on execution under
Article 160 of the Family Code—NO.
RULING: WHEREFORE, the Petition for Review on Certiorari is hereby DENIED
for lack of merit. Accordingly, the Decision of the Court of Appeals in CA-G.R. SP
No. 87531, enjoining the trial court from proceeding with the sale of the family
home of respondents, is AFFIRMED.
RATIO:
1. Respondents' family home cannot be sold on execution under Article 160 of
the Family Code.
2. Unquestionably, the family home is exempt from execution as expressly
provided for in Article 153 of the Family Code.
a. It has been said that the family home is a real right that is
gratuitous, inalienable and free from attachment. The family home
cannot be seized by creditors except in special cases.The nature
and character of the property that debtors may claim to be exempt,
however, are determined by the exemption statute. The exemption
is limited to the particular kind of property or the specific articles
prescribed by the statute; the exemption cannot exceed the
statutory limit.
3. Articles 155 and 160 of the Family Code specify the exceptions mentioned
in Article 153, to wit:
a. ARTICLE 155. The family home shall be exempt from execution, forced
sale or attachment except:
i. (1) For nonpayment of taxes;
ii. (2) For debts incurred prior to the constitution of the family
home;
iii. (3) For debts secured by mortgages on the premises before or
after such constitution; and
iv. (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.
b. 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. under Article 160 to satisfy the money judgment awarded to them in Civil
The excess, if any, shall be delivered to the judgment debtor. Case No. 4581.
c. ARTICLE 157. The actual value of the family home shall not exceed, at 9. As earlier discussed, it has been judicially determined with finality that the
the time of its constitution, the amount of three hundred thousand pesos in
property in dispute is a family home, and that its value at the time of its
urban areas, and two hundred thousand pesos in rural areas, or such
constitution was within the statutory limit. Moreover, respondents have
amounts as may hereafter be fixed by law.
timely claimed the exemption of the property from execution. On the other
4. In any event, if the value of the currency changes after the adoption of this
hand, there is no question that the money judgment awarded to petitioners
Code, the value most favorable for the constitution of a family home shall
falls under the ambit of Article 160.
be the basis of evaluation.
10. Notwithstanding petitioners' right to enforce the trial court's money
a. For purposes of this Article, urban areas are deemed to include
judgment, however, they cannot obtain its satisfaction at the expense of
chartered cities and municipalities whose annual income at least
respondents' rights over their family home. It is axiomatic that those
equals that legally required for chartered cities. All others are
asserting the protection of an exception from an exemption must bring
deemed to be rural areas.
themselves clearly within the terms of the exception and satisfy any
5. The minutes of the deliberation by the drafters of Family Code on Article
statutory requirement for its enforcement.
160 are enlightening. The exemption of the family home from execution,
11. To warrant the execution sale of respondents' family home under Article
forced sale or attachment is limited to P300,000 in urban areas and
160, petitioners needed to establish these facts: (1) there was an increase in
P200,000 in rural areas, unless those maximum values are adjusted by law.
its actual value; (2) the increase resulted from voluntary improvements on
If it is shown, though, that those amounts do not match the present value of
the property introduced by the persons constituting the family home, its
the peso because of currency fluctuations, the amount of exemption shall be
owners or any of its beneficiaries; and (3) the increased actual value
based on the value that is most favorable to the constitution of a family
exceeded the maximum allowed under Article 157.
home. Any amount in excess of those limits can be applied to the payment
12. During the execution proceedings, none of those facts was alleged - much
of any of the obligations specified in Articles 155 and 160.
less proven - by petitioners. The sole evidence presented was the Deed of
6. Any subsequent improvement or enlargement of the family home by the
Sale, but the trial court had already determined with finality that the
persons constituting it, its owners, or any of its beneficiaries will still be
contract was null, and that the actual transaction was an equitable mortgage.
exempt from execution, forced sale or attachment provided the following
Evidently, when petitioners and Spouses Bell executed the Deed of Sale in
conditions obtain: (a) the actual value of the property at the time of its
1990, the price stated therein was not the actual value of the property in
constitution has been determined to fall below the statutory limit; and (b)
dispute.
the improvement or enlargement does not result in an increase in its value
13. The Court thus agrees with the CA's conclusion that the trial court
exceeding the statutory limit. Otherwise, the family home can be the subject
committed grave abuse of discretion in ordering the sale on execution of the
of a forced sale, and any amount above the statutory limit is applicable to
property in dispute under Article 160. The trial court had already
the obligations under Articles 155 and 160.
determined with finality that the property was a family home, and there was
7. Certainly, the humane considerations for which the law surrounds the
no proof that its value had increased beyond the statutory limit due to
family home with immunities from levy do not include the intent to enable
voluntary improvements by respondents. Yet, it ordered the execution sale
debtors to thwart the just claims of their creditors.
of the property. There is grave abuse of discretion when one acts in a
8. Eulogio maintain that this case falls under the exceptions to the exemption
capricious, whimsical, arbitrary or despotic manner in the exercise of one's
of the family home from execution or forced sale. They claim that the actual
judgment, as in this case in which the assailed order is bereft of any factual
value of respondents' family home exceeds the P300,000 limit in urban
or legal justification.
areas. This fact is supposedly shown by the Deed of Sale whereby private
respondents agreed to sell the property for PI million way back in 1995.
Therefore, the RTC only properly ordered the execution sale of the property