G.R. No. 137792 - Spouses Rosales vs. Spouses Suba

Case Summary (G.R. No. 137792)

Procedural History and Trial Court Ruling

The Regional Trial Court (Branch 13, Manila) rendered judgment declaring certain deeds of sale to be an equitable mortgage and directing petitioners to deposit P65,000.00 with interest and reimbursement of taxes within 90 days to satisfy the mortgage debt; failure to comply would result in sale of the property. The decision became final and executory. Petitioners failed to deposit the required sum within the prescribed period. Judgment creditor Macaspac moved for execution; the trial court issued a writ of execution and ordered the sale. An auction was held on May 15, 1998; respondents Suba were the highest bidders (P285,000.00). The sale was confirmed by the trial court on July 15, 1998, and a new Transfer Certificate of Title was issued in respondents’ names on August 3, 1998. The trial court later granted a writ of possession to respondents and denied petitioners’ motion for reconsideration, holding that petitioners had no right of redemption in judicial foreclosure and that respondents were entitled to possession.

Post‑judgment Motions and Contestations

After confirmation of sale, petitioners contested the computation of the judgment debt and sought appointment of an independent certified public accountant to determine amounts due. They argued that the debt was unsecured and that execution for money under Rules governing execution (Section 9 in relation to Section 25, Rule 39) should apply, allegedly entitling them to a one‑year redemption period following registration of a certificate of sale. Respondents and the trial court treated the proceeding as a judicial foreclosure under Rule 68, with sale and confirmation operating to divest the parties’ rights and vest title in the purchaser.

Issue Presented on Review

The principal issues presented were: (1) whether petitioners retained a right of redemption after the judicial foreclosure sale and confirmation; and (2) whether the trial court committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing a writ of possession to respondents and denying petitioners’ motion for reconsideration.

Court of Appeals Disposition

The Court of Appeals dismissed petitioners’ certiorari petition for lack of merit, holding that a right of redemption is not available in cases of judicial foreclosure of mortgage (except in limited statutory circumstances), and accordingly upholding the trial court’s issuance of a writ of possession and denial of reconsideration. Petitioners’ motion for reconsideration at the Court of Appeals was likewise denied.

Supreme Court Analysis and Application of Law

The Supreme Court affirmed the Court of Appeals. It first recognized the trial court’s finding that the transaction was an equitable mortgage — a binding characterization that, for purposes of lien and foreclosure, operates like a real estate mortgage despite formal deficiencies (citing Matanguihan and Zubiri). Given the equitable mortgage and the trial court’s foreclosure judgment, the Court applied Sections 2 and 3 of Rule 68 (1997 Rules) which govern judicial foreclosure: the court must ascertain the amount due and give the judgment debtor 90 to 120 days to pay; failure to pay authorizes sale of the mortgaged property under execution procedures, and a confirmed sale “operate[s] to divest the rights in the property of all the parties to the action and to vest their rights in the purchaser, subject to such rights of redemption as may be allowed by law.” The Court relied on Huerta Alba Resort (and related authorities) for the established distinction between judicial and extrajudicial foreclosure: the statutory right of redemption (one year from registration of sheriff’s certificate) is a creature of law in the context of extrajudicial foreclosure (Act No. 3135), whereas judicial foreclosure does not generally afford a post‑confirmation right of redemption except where particular statutes (e.g., the PNB charter or the General Banking Act for banks) so provide. In judicial foreclosure, the remedial protection available to the mortgagor is an equity of redemption exercisable before confirmation — specifically the period afforded by Rule 68 for payment (the 90‑120 day period) or, in some instances, prior to confirmation of sale — but not a statutory one‑year redemption after registration. Because petitioners failed to pay within the court‑ordered period and did not redeem prior to co

Case Syllabus (G.R. No. 137792)

Procedural Posture and Relief Sought

Petition for review on certiorari from the Resolutions of the Court of Appeals dated November 25, 1998 and February 26, 1999 in CA G.R. SP No. 49634, which dismissed the petition for certiorari filed by Spouses Ricardo Rosales and Erlinda Sibug (petitioners).
Petitioners contested the Court of Appeals' dismissal of their challenge to the trial court’s issuance of a writ of possession in favor of respondents and denial of petitioners’ motion for reconsideration of the confirmation of the foreclosure sale.
The Supreme Court resolved the petition in G.R. No. 137792, decided August 12, 2003 (456 Phil. 127), Third Division, authored by Justice Sandoval-Gutierrez.

Underlying Facts

On June 13, 1997, the Regional Trial Court (RTC), Branch 13, Manila, rendered a Decision in Civil Cases Nos. 94-72303 and 94-72379 containing specific dispositive directives concerning the subject property and monetary obligations.
The RTC Decision became final and executory.
Petitioners (Spouses Ricardo Rosales and Erlinda Sibug), who were the judgment debtors, failed to comply with paragraph (2) of the RTC dispositive portion, i.e., they did not deposit with the Clerk of Court within 90 days from finality the sum of P65,000.00 (plus interest at nine percent per annum from September 30, 1982 until payment, and P219.76 reimbursement for real estate taxes) to be paid to Felicisimo Macaspac and Elena Jiao (judgment creditors).
Judgment creditor Macaspac filed a motion for execution; petitioners opposed as premature and later filed a manifestation and motion questioning computation of the judgment debt and stating difficulty in paying.
On February 23, 1998, Macaspac filed a supplemental motion for execution claiming the amount due to him was P243,864.08.
Petitioners did not pay the stated sums.

RTC Dispositive (as rendered June 13, 1997)

The dispositive portion ordered:
- (1) Declaring the Deed of Sale of Exhibits D, G and I affecting the property to be an equitable mortgage.
- (2) Declaring the parties Erlinda Sibug and Ricardo Rosales, within 90 days from finality of the Decision, to deposit with the Clerk of Court for payment to Felicisimo Macaspac and Elena Jiao the sum of P65,000.00 with interest at nine percent per annum from September 30, 1982 until payment is made, plus P219.76 as reimbursement for real estate taxes.
- (3) Directing Macaspac and Elena Jiao, upon deposit of the specified sums, to execute a deed of reconveyance of the property to Erlinda Sibug and the Register of Deeds of Manila to cancel Transfer Certificate of Title No. 150540 in the name of the Macaspacs and issue a new title in the name of Sibug.
- (4) For non-compliance by Sibug and Rosales with paragraph (2), ordering that the property be sold in accordance with the Rules of Court for the release of the mortgage debt and issuance of title to the purchaser.

Execution, Auction Sale, and Possessory Proceedings

On March 25, 1998, the trial court issued a writ of execution ordering the sale of the subject property to satisfy the judgment.
A public auction sale was held on May 15, 1998; petitioners participated but were not the highest bidders.
The property was sold to Spouses Alfonso and Lourdes Suba (respondents) for P285,000.00 as the highest bidders.
On July 15, 1998, the trial court issued an order confirming the sale and directed the sheriff to issue a final deed of sale in favor of respondents.
On July 28, 1998, Macaspac moved for the release to him of P176,176.06 from the auction proceeds.
Petitioners moved for the appointment of an independent certified public accountant to settle the exact amount due to Macaspac.
On August 3, 1998, the Register of Deeds of Manila issued a new Transfer Certificate of Title (TCT) over the subject property in the names of respondents.
On August 18, 1998, respondents filed a motion for a writ of possession, asserting that the confirmation of the sale “effectively cut off petitioners' equity of redemption.”
Petitioners filed a motion for reconsideration of the order of July 15, 1998 confirming the sale.
On October 19, 1998, the trial court (acting on both motions) issued an order (1) granting respondents' prayer for a writ of possession and (2) denying petitioners' motion for reconsideration, ruling that petitioners had no right to redeem as the case was for judicial foreclosure under Rule 68 of the 1997 Rules of Civil Procedure, as amended.

Court of Appeals Proceedings and Rulings

Petitioners filed a petition for certiorari in the Court of Appeals, docketed as CA-G.R. SP No. 49634, alleging grave abuse of discretion amounting to lack or excess of jurisdiction by the trial court in issuing the writ of possession and denying reconsideration.
On November 25, 1998, the Court of Appeals dismissed the petition for lack of merit, holding there is no right of redemptio