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9 Gross Inadequacy of Price

This document summarizes a Supreme Court case regarding the execution sale of property to satisfy a judgment. The key points are: 1) Gross inadequacy of price alone does not nullify an execution sale, it must shock the conscience. 2) The value of property levied does not need to exactly match the judgment amount, and sheriffs have discretion in determining how much property to levy. 3) The party challenging the levy as excessive bears the burden of proof, which the respondent failed to provide here through an unsupported appraisal report. Therefore, the lower court orders setting aside the levy constituted an abuse of discretion.

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197 views

9 Gross Inadequacy of Price

This document summarizes a Supreme Court case regarding the execution sale of property to satisfy a judgment. The key points are: 1) Gross inadequacy of price alone does not nullify an execution sale, it must shock the conscience. 2) The value of property levied does not need to exactly match the judgment amount, and sheriffs have discretion in determining how much property to levy. 3) The party challenging the levy as excessive bears the burden of proof, which the respondent failed to provide here through an unsupported appraisal report. Therefore, the lower court orders setting aside the levy constituted an abuse of discretion.

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Ron Ace
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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JACOBUS BERNHARD HULST vs. PR BUILDERS, INC.

G.R. No. 156364  


September 3, 2007          

Topic:
Effect of gross inadequacy of price (Article 1470)

Doctrine:
Gross inadequacy of price does not nullify an execution sale. It is only where such
inadequacy shocks the conscience that the courts will intervene.

Facts:
Spouses Hulst, Dutch nationals, entered into a Contract to Sell with PR Builders, Inc.
(respondent), for the purchase of a 210-sq m residential unit in respondent's townhouse project in
Batangas.

Respondent failed to comply with its verbal promise to complete the project. The spouses
Hulst filed before the Housing and Land Use Regulatory Board (HLURB) a complaint for
rescission of contract with interest, damages and attorney's fees

HLURB rendered a Decision in favor of spouses. The HLURB Arbiter issued a Writ of
Execution addressed to the Ex-Officio Sheriff of the Regional Trial Court of Tanauan, Batangas
directing the latter to execute its judgment and so he proceeded to implement the Writ of
Execution. However, upon complaint of respondent with the CA on a Petition for Certiorari and
Prohibition, the levy made by the Sheriff was set aside, requiring the Sheriff to levy first on
respondent's personal properties and tried to implement the writ as directed but the writ was
returned unsatisfied.

Upon petitioner's motion, the HLURB Arbiter issued an Alias Writ of Execution.

The Sheriff levied on respondent's 15 parcels of land covered by 13 Transfer Certificates


of Title (TCT). Thereafter, he set the public auction of the levied properties.

Respondent filed an Urgent Motion to Quash Writ of Levy with the HLURB on the
ground that the Sheriff made an overlevy since the aggregate appraised value of the levied
properties at P6,500.00 per sq. m is P83,616,000.00.

Respondent's counsel objected to the conduct of the public auction on the ground that
respondent's Urgent Motion to Quash Writ of Levy was pending resolution.

Absent any restraining order from the HLURB, the Sheriff proceeded to sell the 15
parcels of land. Holly Properties Realty Corporation was the winning bidder for the total amount
of P5,450,653.33. The sum of P5,313,040.00 was turned over to the petitioner in satisfaction of
the judgment award after deducting the legal fees.
While the Sheriff was at the HLURB office to remit the legal fees relative to the auction
sale and to submit the Certificates of Sale, he received the Order dated issued by the HLURB
Arbiter to suspend the proceedings on the matter.

The HLURB Arbiter and HLURB Director issued an Order setting aside the sheriff's levy
on respondent's real properties thereby prompting the petitioner to file a Petition for Certiorari
and Prohibition with the CA.

The CA dismissed the petition. Without filing a motion for reconsideration, petitioner
took the present recourse on the sole ground that: The honorable Court of Appeals gravely erred
in affirming the arbiter’s order setting aside the levy made by the sheriff on the subject
properties.

Issue:
Whether or not the sale shall be nullified on the ground of gross inadequacy of price

Ruling:
No. gross inadequacy of price does not nullify an execution sale. It is only where such
inadequacy shocks the conscience that the courts will intervene.

Secondly, the Rules of Court do not require that the value of the property levied be
exactly the same as the judgment debt.

Thirdly, in determining what amount of property is sufficient out of which to secure


satisfaction of the execution, the Sheriff is left to his own judgment. He may exercise a
reasonable discretion, and must exercise the care which a reasonably prudent person would
exercise under like conditions and circumstances. He is also allowed a reasonable margin
between the value of the property levied upon and the amount of the execution.

Finally, one who attacks a levy on the ground of excessiveness carries the burden of
sustaining that contention. Here, the HLURB Arbiter and Director had no sufficient factual basis
to determine the value of the levied property. Respondent submitted an Appraisal Report, based
merely on surmises on the projected value of the townhouse project after it shall have been fully
developed. Thus, the appraisal value cannot be equated with the fair market value. Appraisal
Report is not the best proof to accurately show the value of the levied properties as it is clearly
self-serving.

The Order of HLURB Arbiter Aquino and Director Ceniza in HLRB which set aside the
sheriff's levy on respondent's real properties, was clearly issued with grave abuse of discretion.
The CA erred in affirming said Order.

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