I am indebted to a loan shark and cannot pay anymore due to high interest imposed on the principal amount I borrowed. Originally my loan was P30,000 in 2013 but it ballooned to P100,00 in just a year. If ever the creditor will file a case, wins and the court will order me to pay, will our only house and lot where my wife, children and I reside be subjected to execution of judgment? The house is located somewhere between Mandaluyong and Pasig area. We started to live there in 1995. Thanks.
The crux of your question is anchored on whether or not your house and lot where your family resides is subject to execution of judgment or decision of the court.
The Rules of Court explicitly enumerates properties which are exempt from execution of judgment, one of which is the judgment obligor’s family home (Section 13 (a), Rule 39, Rules of Court).
As defined, the family home, constituted jointly by the husband and the wife or by an unmarried head of a family, is the dwelling house where they and their family reside, and the land on which it is situated (Article 152, Family Code of the Philippines).
According to Article 157 of the Family Code of the Philippines, the actual value of the family home shall not exceed, at the time of its constitution, P300,000 in urban areas and P200,000 in rural areas.
The house and lot mentioned in your letter is considered as a family home based on the aforesaid definition. Likewise, under Article 153 of the same code, a family home is deemed constituted on a house and lot from the time it is occupied as a family residence.
It is worthy to mention that as a general rule, a family home is exempt from execution subject to the above conditions and under Article 155 of the said law, the following are the exceptions:
“Art. 155. The family home shall be exempt from execution, forced sale or attachment except:
(1) For nonpayment of taxes;
(2) For debts incurred prior to the constitution of the family home;
(3) For debts secured by mortgages on the premises before or after such constitution; and
(4) For debts due to laborers, mechanics, architects, builders, material men and others who have rendered service or furnished material for the construction of the building.”
Thus, if the value of the abovementioned house and lot when constituted as your family home in 1995 did not exceed the amount of P300,000, then it is exempt from execution. Otherwise, it is exempted only up to the amount of P300,000, the excess thereof is subject to execution of judgment (Article 160, Family Code of the Philippines).
Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.
We hope that we were able to enlighten you on the matter.
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