Herrera v. Arellano
REITERATIONFacts
The Antecedents: Ramon Herrera, as judicial guardian of his minor children, borrowed P7,000 from Siuliong & Co. in September 1920, with 12% annual interest. Between 1920 and 1930, further loans were made, and by June 30, 1930, the total indebtedness was P14,176.26. The wards, upon reaching majority, confirmed these arrangements and compromised the debt, agreeing to pay the balance with 6% interest by October 31, 1932, and mortgaging their 1/4 interest in Hacienda San Roque. Separately, Ramon Herrera and Rosa Gallo acknowledged an indebtedness of P39,084.21 to Siuliong & Co., with 6% annual interest, payable by December 31, 1932, and mortgaged their 1/4 interest in Hacienda San Roque, a house, and several lots. Both mortgage credits were assigned to Francisco Cu Unjieng. From 1937 to 1945, the mortgaged Hacienda San Roque was leased without the mortgagee's consent. Notices of foreclosure were sent in 1934 and 1937 due to unpaid land taxes and outstanding balances. Procedural History: On October 14, 1939, the mortgagors filed Civil Case No. 8181 for accounting and to set aside an extrajudicial foreclosure. The defendants (mortgagees) counterclaimed for non-payment and breach of obligations, praying for judicial foreclosure. The Court of First Instance (CFI) initially dismissed the complaint but later reopened the case. After a petition for rendition of judgment and substitution of a deceased plaintiff, the CFI rendered judgment on March 30, 1949, ordering the mortgagors to pay specific amounts with interest and attorney's fees, and ordering the sale of mortgaged properties if payment was not made within 90 days. The mortgagors appealed to the Court of Appeals (CA), which affirmed the indebtedness amounts but reversed the order for payment within 90 days and the decree of sale, declaring the indebtedness not actionable until the moratorium expired or was lifted. On May 18, 1953, the Supreme Court declared the Moratorium Law unreasonable in Rutter v. Esteban. Subsequently, on May 29, 1953, the mortgagee moved for execution of the CA judgment. The CFI granted this motion on June 19, 1953, and a writ of execution was issued. The mortgaged properties were sold at public auction on September 8, 1953, and the sale was confirmed by the CFI on October 9, 1953. The mortgagors' motions for reconsideration were denied. The mortgagors then filed the present petition for certiorari to annul the CFI orders dated June 19, 1953, and October 9, 1953. The Petition: Petitioners sought a writ of certiorari to annul the orders of the CFI granting the writ of execution and confirming the sale of the mortgaged properties, arguing they were not given the ninety (90)-day period to pay as required by the Rules of Court.
Issue(s)
Whether the orders of the Court of First Instance granting the writ of execution and confirming the sale of the mortgaged properties are null and void for failure to grant the mortgagors the ninety (90)-day period to pay their obligations. Whether the ninety (90)-day period for payment, as provided in Section 2 of Rule 70 of the Rules of Court, is a substantive right that cannot be omitted.
Ruling
The petition is granted, and the orders in question are declared null and void. The Supreme Court orders the petitioners to pay the amount of the judgment within ninety (90) days from the finality of this decision; otherwise, the mortgaged property shall be sold to satisfy the judgment.
Ratio Decidendi
On the nullity of the orders for failure to grant the ninety (90)-day period: The Supreme Court held that the orders of the Court of First Instance granting the writ of execution and confirming the sale of the mortgaged properties were null and void. This was because the mortgagors were not granted the ninety (90)-day period to pay their obligations as mandated by Section 2 of Rule 70 of the Rules of Court. The Court emphasized that this period is a substantive right that cannot be omitted. The writ of execution was issued based on the lifting of the moratorium in Rutter v. Esteban, but the Court clarified that the lifting of the moratorium did not automatically revive the order of payment without a new order from the court. Such a new order must grant the debtor the required ninety (90)-day period. The Court found that the judgment being executed did not contain an order requiring payment within ninety (90) days, nor did it grant such a period, making the execution orders invalid. On the nature of the ninety (90)-day period as a substantive right: The Supreme Court reiterated its ruling in Jose Ponce de Leon v. Judge Fidel Ibañez and Santiago Syjuco, Inc., stating that the ninety (90)-day period granted to a mortgage debtor within which to pay the amount of the mortgage is not merely a procedural requirement but a substantive right. This period is crucial for the mortgagor's "equity of redemption," which is the right of the mortgagor to retain ownership of the property by paying the debt. The Court explained that this period is one of the two steps necessary to destroy the mortgagor's equity of redemption, the other being the sale of the property. Therefore, omitting this period constitutes a denial of a substantial right and renders the subsequent order of sale void. The Court stressed that even if the original judgment required payment within ninety (90) days, if that judgment was held in abeyance, the ninety (90)-day period never began to run and could not be revived without a new court order that specifically grants this period.
Main Doctrine
A writ of execution ordering the sale of mortgaged properties, issued without granting the mortgage debtor the ninety (90)-day period provided by the Rules of Court, is null and void as it denies a substantial right.