The subject property is a family home.
The petitioners maintain that the subject property is a family home and, accordingly, the sale thereof on execution was a nullity. In Ramos v. Pangilinan,20 this Court laid down the rules relative to exemption of family homes from execution:
For the family home to be exempt from execution, distinction must be made as to what law applies based on when it was constituted and what requirements must be complied with by the judgment debtor or his successors claiming such privilege. Hence, two sets of rules are applicable.
If the family home was constructed before the effectivity of the Family Code or before August 3, 1988,then it must have been constituted either judicially or extra-judicially as provided under Articles 225, 229-231 and 233 of the Civil Code. Judicial constitution of the family home requires the filing of a verified petition before the courts and the registration of the court’s order with the Registry of Deeds of the area where the property is located. Meanwhile, extrajudicial constitution is governed by Articles 240 to 242 of the Civil Code and involves the execution of a public instrument which must also be registered with the Registry of Property. Failure to comply with either one of these two modes of constitution will bar a judgment debtor from availing of the privilege.
On the other hand, for family homes constructed after the effectivity of the Family Code on August 3, 1988, there is no need to constitute extrajudicially or judicially, and the exemption is effective from the time it was constituted and lasts as long as any of its beneficiaries under Art. 154 actually resides therein. Moreover, the family home should belong to the absolute community or conjugal partnership, or if exclusively by one spouse, its constitution must have been with consent of the other, and its value must not exceed certain amounts depending upon the area where it is located. Further, the debts incurred for which the exemption does not apply as provided under Art. 155 for which the family home is made answerable must have been incurred after August 3, 1988.21(citations omitted)
In the earlier case of Kelley, Jr. v. Planters Products, Inc.,22 we stressed that:
Under the Family Code, there is no need to constitute the family home judicially or extrajudicially. All family homes constructed after the effectivity of the Family Code (August 3, 1988) are constituted as such by operation of law. All existing family residences as of August 3, 1988 are considered family homes and are prospectively entitled to the benefits accorded to a family home under the Family Code.23 (emphasis supplied and citation omitted)
The foregoing rules on constitution of family homes, for purposes of exemption from execution, could be summarized as follows:
First, family residences constructed before the effectivity of the Family Code or before August 3, 1988 must be constituted as a family home either judicially or extrajudicially in accordance with the provisions of the Civil Code in order to be exempt from execution;
Second, family residences constructed after the effectivity of the Family Code on August 3, 1988 are automatically deemed to be family homes and thus exempt from execution from the time it was constituted and lasts as long as any of its beneficiaries actually resides therein;
Third, family residences which were not judicially or extrajudicially constituted as a family home prior to the effectivity of the Family Code, but were existing thereafter, are considered as family homes by operation of law and are prospectively entitled to the benefits accorded to a family home under the Family Code.
Here, the subject property became a family residence sometime in January 1987. There was no showing, however, that the same was judicially or extrajudicially constituted as a family home in accordance with the provisions of the Civil Code. Still, when the Family Code took effect on August 3, 1988, the subject property became a family home by operation of law and was thus prospectively exempt from execution. The petitioners were thus correct in asserting that the subject property was a family home.
The family home’s exemption from execution must be set up and proved to the Sheriff before the sale of the property at public auction.
Despite the fact that the subject property is a family home and, thus, should have been exempt from execution, we nevertheless rule that the CA did not err in dismissing the petitioners’ complaint for nullification of TCT No. T-221755 (M). We agree with the CA that the petitioners should have asserted the subject property being a family home and its being exempted from execution at the time it was levied or within a reasonable time thereafter. As the CA aptly pointed out:
In the light of the facts above summarized, it is evident that appellants did not assert their claim of exemption within a reasonable time. Certainly, reasonable time, for purposes of the law on exemption, does not mean a time after the expiration of the one-year period provided for in Section 30 of Rule 39 of the Rules of Court for judgment debtors to redeem the property sold on execution, otherwise it would render nugatory final bills of sale on execution and defeat the very purpose of execution – to put an end to litigation. x x x.24
The foregoing disposition is in accord with the Court’s November 25, 2005 Decision in Honrado v. Court of Appeals,25 where it was categorically stated that at no other time can the status of a residential house as a family home can be set up and proved and its exemption from execution be claimed but before the sale thereof at public auction:
While it is true that the family home is constituted on a house and lot from the time it is occupied as a family residence and is exempt from execution or forced sale under Article 153 of the Family Code, such claim for exemption should be set up and proved to the Sheriff before the sale of the property at public auction. Failure to do so would estop the party from later claiming the exemption. As this Court ruled in Gomez v. Gealone:
Although the Rules of Court does not prescribe the period within which to claim the exemption, the rule is, nevertheless, well-settled that the right of exemption is a personal privilege granted to the judgment debtor and as such, it must be claimed not by the sheriff, but by the debtor himself at the time of the levy or within a reasonable period thereafter;
“In the absence of express provision it has variously held that claim (for exemption) must be made at the time of the levy if the debtor is present, that it must be made within a reasonable time, or promptly, or before the creditor has taken any step involving further costs, or before advertisement of sale, or at any time before sale, or within a reasonable time before the sale, or before the sale has commenced, but as to the last there is contrary authority.”
In the light of the facts above summarized, it is self-evident that appellants did not assert their claim of exemption within a reasonable time. Certainly, reasonable time, for purposes of the law on exemption, does not mean a time after the expiration of the one-year period provided for in Section 30 of Rule 39 of the Rules of Court for judgment debtors to redeem the property sold on execution, otherwise it would render nugatory final bills of sale on execution and defeat the very purpose of execution—to put an end to litigation. We said before, and We repeat it now, that litigation must end and terminate sometime and somewhere, and it is essential to an effective administration of justice that, once a judgment has become final, the winning party be not, through a mere subterfuge, deprived of the fruits of the verdict. We now rule that claims for exemption from execution of properties under Section 12 of Rule 39 of the Rules of Court must be presented before its sale on execution by the sheriff.26 (citations omitted)
Reiterating the foregoing in Spouses Versola v. Court of Appeals,27 this Court stated that:
Under the cited provision, a family home is deemed constituted on a house and lot from the time it is occupied as a family residence; there is no need to constitute the same judicially or extrajudicially.
The settled rule is that the right to exemption or forced sale under Article 153 of the Family Code is a personal privilege granted to the judgment debtor and as such, it must be claimed not by the sheriff, but by the debtor himself before the sale of the property at public auction. It is not sufficient that the person claiming exemption merely alleges that such property is a family home. This claim for exemption must be set up and proved to the Sheriff. x x x.28 (emphasis supplied and citations omitted)
Having failed to set up and prove to the sheriff the supposed exemption of the subject property before the sale thereof at public auction, the petitioners now are barred from raising the same. Failure to do so estop them from later claiming the said exemption.
Indeed, the family home is a sacred symbol of family love and is the repository of cherished memories that last during one’s lifetime.29 It is likewise without dispute that the family home, from the time of its constitution and so long as any of its beneficiaries actually resides therein, is generally exempt from execution, forced sale or attachment.30
The family home is a real right, which is gratuitous, inalienable and free from attachment. It cannot be seized by creditors except in certain special cases.31 However, this right can be waived or be barred by laches by the failure to set up and prove the status of the property as a family home at the time of the levy or a reasonable time thereafter.
In this case, it is undisputed that the petitioners allowed a considerable time to lapse before claiming that the subject property is a family home and its exemption from execution and forced sale under the Family Code. The petitioners allowed the subject property to be levied upon and the public sale to proceed. One (1) year lapsed from the time the subject property was sold until a Final Deed of Sale was issued to Claudio and, later, Araceli’s Torrens title was cancelled and a new one issued under Claudio’s name, still, the petitioner remained silent. In fact, it was only after the respondents filed a complaint for unlawful detainer, or approximately four (4) years from the time of the auction sale, that the petitioners claimed that the subject property is a family home, thus, exempt from execution.
For all intents and purposes, the petitioners’ negligence or omission to assert their right within a reasonable time gives rise to the presumption that they have abandoned, waived or declined to assert it. Since the exemption under Article 153 of the Family Code is a personal right, it is incumbent upon the petitioners to invoke and prove the same within the prescribed period and it is not the sheriff’s duty to presume or raise the status of the subject property as a family home.
The petitioners’ negligence or omission renders their present assertion doubtful; it appears that it is a mere afterthought and artifice that cannot be countenanced without doing the respondents injustice and depriving the fruits of the judgment award in their favor. Simple justice and fairness and equitable considerations demand that Claudio’s title to the property be respected. Equity dictates that the petitioners are made to suffer the consequences of their unexplained negligence.
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