JACOBUS BERNHARD HULST v. PR BUILDERS INC. (G.R. No.

156364)

FACTS:

The Petitioner and his spouse, both Dutch Nationals, entered into a Contract to Sell with

PR Builders, Inc. to purchase a 210-sq m residential unit in the respondent's townhouse

project in Batanagas. When PR Builder's failed to comply with their verbal promise to

complete the project, the spouses Hulst filed a complaint for recession of contract with

interest, damages and attorney's fees before the Housing and Land Regulatory Board

(HLURB), which then was granted. A Writ of Execution was then addressed to the Ex-

Officio Sheriff of the RTC of Tanauan, Batangas, but upon the complaint of the

respondent, the levy was set aside, leaving only the respondent's personal properties to

be levied first. The Sheriff set a public auction of the said levied properties, however, the

respondent filed a motion to quash Writ of levy on the ground that the sheriff made an

over levy since the aggregate appraised value of the properties at P6,500 per sq m is

P83,616,000. Instead of resolving the objection of the respondent's regarding the

auction, the Sheriff proceeded with the auction since there was no restraining order from

the HLURB. The 15 parcels of land was then awarded to Holly Properties Realty at a bid

of P5,450,653. On the same day, the Sheriff remitted the legal fees and submitted to

contracts of sale to HLURB, however, he then received orders to suspend proceedings

on the auction for the reason that the market value of the properties was not fair. There

was disparity between the appraised value and the value made by the petitioner and the

Sheriff, which should've been looked into by the Sheriff before making the sale. While an

inadequacy in price is not a ground to annul such sale, the court is justified to such

intervention where the price shocks the conscience.

ISSUE:

1. Whether or not the Sheriff erred in the value that was attached to the properties during

the auction and as well as disregarding the objection made by the respondent's?

2. Whether or not the market value of the said property was inadequate?

2. Whether or not the spouses Hulst's request for damages is actionable?

HELD:

1. No. According to the Rules of Court, the value of the property levied is not required to

be exactly the same as the judgment debt. In the levy of property, the Sheriff does not

determine the exact valuation of the levied property. The Sheriff is left to his own

judgment. He should be allowed a reasonable margin between the value of the property

levied upon and the amount of the execution; the fact that the Sheriff levies upon a little

more than is necessary to satisfy the execution does not render his actions improper.

In the absence of a restraining order, no error can be imputed to the Sheriff in

proceeding with the auction sale despite the pending motion to quash the levy filed by

the respondents with the HLURB. Sheriff’s, as officers charged with the task of the

enforcement and/or implementation of judgments, must act with considerable dispatch

so as not to unduly delay the administration of justice. It is not within the jurisdiction of

the Sheriff to consider and resolve respondent's objection to the continuation of the

conduct of the auction sale. The Sheriff has no authority, on his own, to suspend the

auction sale. His duty being ministerial, he has no discretion to postpone the conduct of

the auction sale.

2. No. The HLURB Arbiter and Director had no sufficient factual basis to determine the

value of the levied property. The Appraisal report, that was submitted, was based on the
projected value of the townhouse project after it shall have been fully developed, that is,

on the assumption that the residential units appraised had already been built. Since it is

undisputed that the townhouse project did not push through, the projected value did not

become a reality. Thus, the appraisal value cannot be equated with the fair market

value.

3. No. Under Article 12, Sec.7 of the 1987 Constitution, foreign nationals, the spouses

Hulst, are disqualified form owning real property. However, under article 1414 of the Civil

Code, one who repudiates the agreement and demands his money before the illegal act

has taken place is entitled to recover. Petitioner is therefore entitled to recover what he

has paid, although the basis of his claim for rescission, which was granted by the

HLURB, was not the fact that he is not allowed to acquire private land under the

Philippine Constitution. But petitioner is entitled to the recovery only of the amount of

P3,187,500.00, representing the purchase price paid to respondent. No damages may

be recovered on the basis of a void contract; being nonexistent, the agreement produces

no juridical tie between the parties involved. Further, petitioner is not entitled to actual as

well as interests thereon, moral and exemplary damages and attorney's fees.
 Spouses Litonjua and PWHASI vs L & R Corporation (on article 1324)
G.R. No. 130722
March 27, 2000

Facts:
Spouses Litonjua mortgaged two parcels of land to L & R as security for a loan.
Consequently, they sold the same parcels of land to Philippines White House Auto
Supply, Inc. without the prior written consent of the mortgagee. Since Spouses Litonjua
has defaulted from the payment of the loan, L & R has commenced foreclosure
extrajudicially and only then did it learn that the parcels of land were sold without their
prior written consent. L & R then contended that the sale is invalid as it is contrary to
paragraph 8 and 9 of the contract which prohibits the mortgagor from selling the property
without their prior written consent and should the mortgagor sell the property, they
should be given the right of first refusal.

Issue:
Is the sale between Spouses Litonjua and PWHASI valid?
Was there breach of contract between the mortgagee and mortgagor with respect to
paragraph 9 of the contact?

Ruling:
Yes, the sale is valid since the prohibition in paragraph 8 of the contract is contrary to
law. Although the property is mortgaged, it does not extinguish the ownership of the
debtor. The right to dispose the property being a basic right of an owner, should still be
exercised by the mortgagor.

To rule that a contractual stipulation such as that found in paragraph 8 of the contracts is
governed by Article 1324 on withdrawal of the offer or Article 1479 on promise to buy
and sell would render ineffectual or ‘inutile’ the provisions on right of first refusal so
commonly inserted in leases of real estate nowadays. The Court of Appeals is correct in
stating that Paragraph 8 was incorporated into the contracts of lease for the benefit of
Mayfair which wanted to be assured that it shall be given the first crack or the first option
to buy the property at the price which Carmelo is willing to accept. It is not also correct to
say that there is no consideration in an agreement of right of first refusal. The stipulation
is part and parcel of the entire contract of lease. The consideration for the lease includes
the consideration for the right of first refusal. Thus, Mayfair is in effect stating that it
consents to lease the premises and to pay the price agreed upon provided the lessor
also consents that, should it sell the leased property, then, Mayfair shall be given the
right to match the offered purchase price and to buy the property at that price.

Yes, There is breach of contract since the mortgagee, L & R, was not afforded the right
of first refusal. Paragraph 9 of the contract is valid as it provides for the doctrine of the
right of first refusal.