Case Summary (G.R. No. 8025)
Trial Court Ruling on Equitable Mortgage
The RTC held that the deed of sale lacked formalities but evidenced an intention to secure debt by real property. It rendered final judgment ordering petitioners to deposit the required amount within 90–120 days, failing which the property would be sold at public auction.
Failure to Deposit and Issuance of Writ of Execution
Petitioners did not comply with the deposit directive, disputing the computation of the debt and filing premature oppositions. Upon petition by Macaspac, the court issued a writ of execution on March 25, 1998, authorizing levy and sale under Rule 39.
Auction Sale and Confirmation
The property was sold at public auction on May 15, 1998, to respondents Alfonso and Lourdes Suba for ₱285,000 as highest bidders. On July 15, 1998, the RTC confirmed the sale and directed the sheriff to issue the final deed of sale. A new Transfer Certificate of Title was subsequently issued in respondents’ names on August 3, 1998.
Petition for Writ of Possession and Reconsideration
Respondents moved for a writ of possession, asserting that confirmation of sale extinguished petitioners’ equity of redemption. Petitioners filed a motion for reconsideration but were denied. The RTC ruled there is no right of redemption in judicial foreclosure under Rule 68.
Court of Appeals Dismissal
On petition for certiorari, the CA dismissed for lack of merit, holding that judicial foreclosure extinguished mortgagors’ right of redemption and that petitioners could not invoke the one-year redemption period under Rule 39 § 25, which applies solely to extrajudicial foreclosure.
Petitioners’ Contentions
Petitioners argued that since their loan was unsecured, the sale should be treated as execution for money judgment under Rule 39 §§ 9 and 25, thereby entitling them to a one-year redemption period post-registration of sale certificate.
Supreme Court’s Analysis on Equitable Mortgage and Judicial Foreclosure
The Court affirmed that the RTC correctly characterized the transaction as an equitable mortgage and properly applied Rule 68. It rejected petitioners’ attempt to reclassify the proceedings as ordinary execution under Rule 39. Judicial foreclosure under Rule 68 affords only a limited equity of redemption within the 90-day period before sale confirmati
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Facts of the Case
- Spouses Ricardo Rosales and Erlinda Sibug (petitioners) acquired property from Felicisimo Macaspac and Elena Jiao by deeds of sale (Exhibits D, G and I) in 1982.
- In Civil Cases Nos. 94-72303 and 94-72379, RTC Branch 13, Manila, on June 13, 1997, declared those deeds an equitable mortgage and ordered petitioners to deposit ₱65,000.00 plus 9% interest from September 30, 1982, and ₱219.76 for real estate taxes, within 90 days from finality, for reconveyance.
- The decision became final and executory; petitioners failed to deposit the required amounts.
Motion for Execution and Auction Sale
- Judgment creditor Macaspac moved for execution; petitioners opposed as premature and claimed lack of correct computation.
- Macaspac’s supplemental motion fixed the amount due at ₱243,864.08; petitioners still did not pay.
- On March 25, 1998, the trial court issued a writ of execution directing sale of the mortgaged property.
- On May 15, 1998, an auction sale was held; spouses Alfonso and Lourdes Suba (respondents) purchased the property for ₱285,000.00.
- On July 15, 1998, the trial court confirmed the sale and directed issuance of a final deed of sale in respondents’ favor.
Post-Sale Proceedings and Possession
- Macaspac moved for release of ₱176,176.06 from the auction proceeds; petitioners sought appointment of an independent CPA to determine the exact debt.
- On August 3, 1998, the Register of Deeds issued a new Transfer Certificate of Title in the names of respondents.
- On August 18, 1998, respondents moved for a writ of possession, arguing the confirmation of sale cut off petitioners’ equity of redemption.
- Petitioners filed a motion for reconsideration of the July 15 confirma