Lontoc v. Tiglao
REITERATIONFacts
The Antecedents: This case originated from a complaint filed by respondents Spouses Tiglao against petitioners Spouses Lontoc, seeking the nullification of a deed of absolute sale. The Regional Trial Court (RTC) initially declared the sale an equitable mortgage and ordered Spouses Tiglao to redeem the property within three months for PHP 300,000.00, while also directing them to pay Spouses Lontoc PHP 1,043,205.00 plus interest. The Court of Appeals (CA) modified this, affirming the equitable mortgage and the PHP 300,000.00 redemption amount but setting aside the larger payment order. Spouses Lontoc's appeal to the Supreme Court was denied, and the CA decision became final. Procedural History: Following Spouses Tiglao's failure to pay the PHP 300,000.00 redemption amount, Spouses Lontoc initiated a foreclosure complaint. The RTC, Branch 153, rendered a decision on February 17, 2011, declaring the property foreclosed and ordering Spouses Tiglao to pay PHP 60,000.00 in attorney's fees. This decision became final. Spouses Tiglao then filed a motion for execution, which the RTC granted, issuing a writ of execution ordering them to pay PHP 360,000.00 within 120 days. Spouses Lontoc moved for reconsideration, arguing the writ violated the final judgment. The RTC denied this and, in a subsequent order, declared the writ of execution void, ordered the property sold at public auction, and directed the return of the PHP 300,000.00 payment to Spouses Tiglao. Spouses Tiglao challenged this via a petition for certiorari with the CA. The Petition: The Court of Appeals granted Spouses Tiglao's petition, setting aside the RTC's orders and directing the issuance of a writ of possession, finding the RTC gravely abused its discretion by recalling the writ of execution and denying the writ of possession. Spouses Lontoc filed a Petition for Review on Certiorari with the Supreme Court, arguing the CA erred by disregarding the immutability of judgment and allowing Spouses Tiglao to exercise a right of redemption that had already lapsed. They also contended the amount in the writ of execution lacked basis and did not include interest. Spouses Tiglao countered that they were entitled to equity of redemption under Rule 68 and that the RTC's actions were procedurally flawed. The Supreme Court partially granted the petition, reversing the CA decision and amending the RTC's February 17, 2011 decision to specify the principal amount, interest, and costs, and setting a new payment period.
Issue(s)
Whether the Court of Appeals erred in finding grave abuse of discretion on the part of the Regional Trial Court, specifically regarding the completeness of the February 17, 2011 Decision and subsequent writs. Whether the Court of Appeals erred when it departed from the Rules of Court and allowed spouses Tiglao to exercise their right of redemption after the period had lapsed, considering the distinction between the right of redemption and the equity of redemption. Whether the Writ of Execution issued by the RTC, Branch 153, was valid, and whether spouses Tiglao had the standing to file a motion for execution. Whether the RTC, Branch 153, correctly ordered the sale of the property at public auction, and the implications of the payment made by spouses Tiglao.
Ruling
The Supreme Court GRANTS IN PART the Petition for Review on Certiorari, REVERSES and SETS ASIDE the September 10, 2014 Decision and April 6, 2015 Resolution of the Court of Appeals, and AMENDS the February 17, 2011 Decision of the RTC, Branch 153. The Court orders spouses Tiglao to pay the principal sum of PHP 300,000.00 plus 6% legal interest per annum from the finality of the amended decision until fully paid, and PHP 60,000.00 as attorney's fees and costs of suit. This amount is to be paid within ninety (90) days from entry of judgment. In case of default, the property shall be sold at public auction. The previous orders and writ of execution are declared NULL and VOID.
Ratio Decidendi
On the validity of the February 17, 2011 Decision and subsequent writs: The Court held that the February 17, 2011 Decision of the RTC, Branch 153, was incomplete because it failed to specify the amount due, including interest and costs, and the period for payment, as mandated by Rule 68, Section 2 of the Rules of Court. An incomplete judgment is inoperative and cannot be the subject of execution. The Writ of Execution issued on July 8, 2011, which attempted to supply these deficiencies, was therefore null and void. The Court reiterated the principle that only what is ordained in the dispositive portion of a decision can be executed. On the right of redemption and equity of redemption: The Court clarified the distinction between the right of redemption and the equity of redemption. The right of redemption exists in extrajudicial foreclosures, while in judicial foreclosures, only the equity of redemption exists, which is the right of the mortgagor to extinguish the mortgage by paying the secured debt within the period specified in Rule 68, Section 2, or even after the foreclosure sale but prior to its confirmation. The Court found that spouses Lontoc erred in insisting that spouses Tiglao lost their right to redeem based on the three-month period mentioned in the initial RTC decision, as the CA decision, which was affirmed by the Supreme Court, did not affirm this specific period. The nature of the initial action filed by spouses Tiglao was for nullification of sale, not foreclosure, thus the fixing of a redemption period was not initially incumbent upon the court. On the validity of spouses Tiglao's motion for execution and payment: The Court ruled that spouses Tiglao, as the losing party in the foreclosure proceeding, had no personality to file a motion for execution. It is the prevailing party, spouses Lontoc, who has the right to move for execution. Therefore, spouses Tiglao's motion for execution and subsequent payment of PHP 360,000.00 were invalid. On the order to sell the property at public auction and the payment made: The RTC's subsequent order to sell the property at public auction was also erroneous because such action can only be taken after the judgment debtor defaults in payment, as provided in Rule 68, Section 3. The Court also noted that the payment did not include the costs of suit, which was also decreed in the February 17, 2011 Decision. The PHP 360,000.00 erroneously paid by spouses Tiglao was ordered to be returned.
Main Doctrine
A judgment on judicial foreclosure must specify the amount due, including interest and costs, and the period for payment. An incomplete judgment is inoperative and cannot be the subject of execution. The sale of the mortgaged property at public auction is only proper after the judgment debtor fails to pay the amount within the specified period.