Title
Manalac vs. Gellada
Case
A.M. No. RTJ-18-2535
Decision Date
Oct 8, 2018
Judge Gellada revived terminated rehabilitation proceedings, nullified foreclosure, and granted ex-parte execution, violating finality of judgment and due process, resulting in a fine for gross ignorance of the law.

Case Digest (A.M. No. RTJ-18-2535)
Expanded Legal Reasoning Model

Facts:

  • Parties and Institutional Background
    • Complainant:
      • Carlos Gaudencio M. Maaalac, on behalf of Philippine Investment One (PI One), a corporation organized as a Special Purpose Vehicle under Republic Act No. 9182.
    • Respondent:
      • Hon. Epito B. Gellada, Presiding Judge of Branch 53, Regional Trial Court, Bacolod City, Negros Occidental.
  • Context and Loan Background
    • MADCI’s Loan Transaction:
      • Medical Associates Diagnostic Center Inc. (MADCI) obtained a loan from the Development Bank of the Philippines (DBP) secured by a mortgage over a property (TCT No. T-200764).
      • Upon default, DBP transferred its non-performing loan rights (including rights, title, and interest) to PI One.
    • Rehabilitation Proceedings:
      • MADCI filed for corporate rehabilitation raffled to RTC Bacolod City Branch 53.
      • A March 19, 2015 Order terminated the rehabilitation proceedings for MADCI’s failure to comply with its obligations.
  • Foreclosure and Possession of the Property
    • PI One’s Foreclosure Actions:
      • Despite the ongoing rehabilitation context, PI One foreclosed on the mortgage.
      • Upon failure by MADCI to redeem, ownership consolidated under TCT No. 166-2015000786.
    • Subsequent Writ of Possession:
      • PI One obtained a writ of possession from RTC Kabankalan City Branch 61, thereby taking lawful possession of the property.
  • Revival of Rehabilitation Proceedings and Nullification of Foreclosure
    • MADCI’s Post-Termination Actions:
      • On October 7, 2015, MADCI filed a Complaint for Declaration of Nullity of Foreclosure Proceedings (Civil Case No. 15-14609) at RTC Bacolod City Branch 54.
      • MADCI alleged that despite the termination of rehabilitation, it had filed a motion (invoking Rule 2, Section 73 of the Financial Rehabilitation Rules of Procedure) to revive the rehabilitation proceedings.
    • Issuance of the May 5, 2016 Order by Judge Gellada:
      • The Order granted MADCI’s motion, declaring the foreclosure and all subsequent proceedings null and void.
      • It ordered MADCI to comply with the rehabilitation plan within 15 days and restored MADCI’s possession of the subject property and facilities.
  • Ex-Parte Motion for Execution
    • On May 13, 2016, amid the ongoing controversy, MADCI filed an ex-parte motion for execution to enforce the May 5, 2016 Order.
    • The motion was granted, and a writ of execution was issued on the same day without a hearing or notice to PI One.
  • Allegations Against Judge Gellada
    • Grounds for Complaint Filed by PI One:
      • Gross ignorance of the law for:
        • Reviving or reopening rehabilitation proceedings despite the finality of the March 19, 2015 termination order.
        • Nullifying the foreclosure and subsequent proceedings despite an ongoing separate complaint for nullification (filed at RTC Bacolod City Branch 54).
      • Interference with the proceedings of a co-equal and coordinate court by:
        • Restoring MADCI to possession after RTC Kabankalan City Branch 61 had already issued a writ of possession in favor of PI One.
        • Granting relief that was not specifically prayed for in MADCI’s pleadings.
      • Procedural Irregularity:
        • Issuing an ex-parte order for execution without affording PI One notice or an opportunity to be heard.
  • Judge Gellada’s Defense and Justification
    • Asserted Legal Grounds:
      • Contended that MADCI’s motion to revive the proceedings was supported by the Financial Rehabilitation and Insolvency Act of 2010 (FRIA).
      • Argued that the rehabilitation case had not been properly terminated under the FRIA, which allowed for conversion into liquidation proceedings and the issuance of a stay order under certain circumstances.
    • Emphasis on Procedural and Jurisdictional Matters:
      • Claimed that PI One’s actions (foreclosure and consolidation of title) did not comply with the mandatory terms of the FRIA and due process.
  • Office of the Court Administrator (OCA) Report and Recommendation
    • Findings Against Judge Gellada:
      • Found him guilty of gross ignorance of the law for violating the immutable nature of final judgments.
      • Noted his violation of the notice requirement in motions and interference with the orders of a co-equal court.
      • Cited his failure to adhere to Rule 3.01, Canon 3 of the Code of Judicial Conduct regarding professional competence.
    • Sanction Recommendation:
      • Recommended a fine of P20,000.00, taking into account his length of service (23 years, 6 months, and 13 days) and previous lesser offenses.
  • Final Disposition
    • Ruling by the Court:
      • Found Judge Gellada guilty of gross ignorance of the law and procedure.
      • Imposed an administrative fine of P21,000.00 to be deducted from his retirement benefits.
      • Upheld the integrity of the doctrine regarding the immutability of judgments and the non-interference between coordinate courts.

Issues:

  • Whether Judge Gellada exhibited gross ignorance of the law by:
    • Reviving or reopening rehabilitation proceedings that had already attained finality by the March 19, 2015 Order.
    • Nullifying the foreclosure proceedings and subsequent actions taken by a co-equal court.
  • Whether the issuance of the May 5, 2016 Order:
    • Violated the immutable nature of a final judgment by modifying a decision that had already become executory and unalterable.
    • Interfered with the established processes and orders of a co-equal court, particularly given the existence of a writ of possession issued by another branch.
  • Whether the ex-parte issuance of a writ of execution on May 13, 2016, without notice or hearing to PI One, breached the principles of due process and judicial procedure.
  • Whether Judge Gellada’s actions contravened the requirements of professional competence and due deference to settled jurisprudence, thereby justifying administrative sanctions.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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