Lontoc vs. Tiglao

A judgment of judicial foreclosure must state the amount due — including interest and costs — and order payment within a period of not less than 90 days nor more than 120 days from entry of judgment; an incomplete judgment, though final, is inoperative and cannot be executed, and the trial court must amend it to supply the missing details. Only the prevailing party may move for execution of a judgment; the losing party has no standing to compel execution in its own favor.

Spouses Roselie Tiglao and Tomas Tiglao, Jr. obtained a loan from spouses Leonardo Lontoc and Nancy Lontoc, secured by a deed denominated as an absolute sale over a house and lot in Taguig but characterized by the courts as an equitable mortgage. After the Tiglaos filed a complaint for nullification of the deed of sale, the RTC declared the transaction an equitable mortgage and fixed the mortgage debt at ₱300,000 — a finding affirmed by the CA and ultimately by the Supreme Court in G.R. No. 168503. When the Tiglaos failed to pay the redemption sum, the Lontocs filed a separate complaint for judicial foreclosure of mortgage, docketed as SCA Case No. 3340-TG before RTC, Branch 153, Pasig City. The present controversy arose from the execution of the foreclosure judgment and the subsequent procedural irregularities committed by the courts below in applying Rule 68 of the Rules of Court.

Spouses Roselie Tiglao and Tomas Tiglao, Jr. borrowed money from spouses Leonardo Lontoc and Nancy Lontoc, securing the loan with a deed denominated as an absolute sale over their house and lot in Taguig. The Tiglaos subsequently filed a complaint for nullification of the deed of sale, contending that the transaction was actually an equitable mortgage. On December 20, 1999, RTC, Branch 158, Pasig City declared the deed an equitable mortgage, fixed the mortgage debt at ₱300,000, and gave the Tiglaos three months from finality to redeem the property. The CA modified the decision on December 17, 2004, affirming the equitable mortgage finding and the ₱300,000 redemption sum but setting aside the trial court's award of ₱1,043,205 on Lontoc's counterclaim. The Supreme Court denied Lontoc's appeal in G.R. No. 168503 via Resolution dated July 25, 2005, which became final and executory on January 18, 2006.

Upon the Tiglaos' failure to pay the ₱300,000 redemption sum, the Lontocs filed a complaint for judicial foreclosure of mortgage before RTC, Branch 153, Pasig City, praying that the Tiglaos be ordered to pay ₱300,000 with 12% legal interest per annum within 90 days and that the property be sold at public auction in case of default. After due hearing, the RTC rendered a Decision on February 17, 2011 declaring the property foreclosed and ordering the Tiglaos to pay ₱60,000 as attorney's fees and the costs of suit. Notably, the decision did not state the amount of the mortgage debt or the period within which the Tiglaos were to pay, nor did it order the sale of the property in case of default. Neither party appealed, and the decision became final and executory.

On April 25, 2011, the Tiglaos filed a Motion for Execution, pointing out that the February 17, 2011 Decision was silent as to the amount and manner of execution and praying that a writ be issued ordering them to pay ₱360,000 within 90 days, considering that the mortgage debt had already been determined at ₱300,000. The Lontocs did not object. On June 24, 2011, the RTC granted the motion, and a Writ of Execution was issued on July 8, 2011 directing the sheriff to require the Tiglaos to pay ₱360,000 within 120 days from finality of the February 17, 2011 Decision, failing which the property would be sold at public auction. The Tiglaos paid ₱360,000 on July 22, 2011. The Lontocs moved for reconsideration, arguing that the Tiglaos had already lost their right to redeem for failing to pay within the three-month period fixed in the earlier decisions and that the writ violated the principle of immutability of judgment; the motion was denied on August 2, 2011.

On August 22, 2011, the Tiglaos filed a Motion for Issuance of a Writ of Possession. Meanwhile, the Lontocs directed the sheriff to conduct an auction sale, but the RTC disregarded that letter on October 17, 2011. On November 28, 2011, the RTC denied the Tiglao's motion for a writ of possession, declared the July 8, 2011 Writ of Execution null and void, ordered the property sold at public auction, and directed the return of ₱300,000 to the Tiglaos and the release of ₱60,000 in attorney's fees to the Lontocs. The Tiglaos' motion for reconsideration was denied on March 19, 2012. The Tiglaos then filed a Petition for Certiorari and Mandamus with the CA, which granted the petition on September 10, 2014, set aside the RTC orders, and directed the issuance of a writ of possession. The CA held that the RTC failed to follow the five-step procedure under Rule 68, Sections 2 and 3 and that the November 28, 2011 Order altered the final February 17, 2011 Decision in violation of the principle of immutability of judgments. The CA denied the Lontocs' motion for reconsideration on April 6, 2015, prompting the present petition.

• Immutability of Judgment: Petitioner spouses Lontoc argued that the CA erred and violated the doctrine of immutability of judgments when it disregarded the CA Decision rendered on December 17, 2004, which allowed the Tiglaos to pay within a period of three months. They maintained that the February 17, 2011 Decision impliedly incorporated the three-month period, and the Tiglaos' failure to pay during that period terminated their right to redeem the property.
• Inadequacy of the Judgment Amount: Petitioner spouses Lontoc contended that the amount indicated in the Writ of Execution does not find support in the February 17, 2011 Decision. Fixing the Tiglaos' obligation at only ₱300,000 results in injustice, considering that they had not paid any interest on the loan for more than 23 years since 1992.
• CA Departure from Law and Jurisprudence: Petitioner spouses Lontoc asserted that the CA decided the case in a manner patently not in accord with law and applicable decisions of the Supreme Court, and that the CA erred in departing from the Rules of Court by allowing the Tiglaos to exercise a right of redemption that had already been lost.

• Equity of Redemption Under Rule 68: Respondent spouses Tiglao maintained that Rule 68, Section 2 of the Rules of Court grants the judgment obligor the equity of redemption, and that since the body of the February 17, 2011 Decision mentioned the ₱300,000 obligation, the same was not separable from the dispositive portion. They argued that the June 24, 2011 Order granting a 120-day equity period to pay ₱360,000 is valid and conforms with Rule 68, Section 2.
• Rule 68 Deemed Written in the Decision: Respondent spouses Tiglao insisted that the failure to expressly mention the amount in the February 17, 2011 Decision does not mean that Rule 68, Section 2 will no longer apply, as the provision is deemed written in the decision, similar to a law being part of a valid contract without need of express reference.
• Invalidity of the November 28, 2011 Order: Respondent spouses Tiglao argued that the November 28, 2011 Order directing the sale of the contested property has no legal basis, departs from Rule 68, Section 2 and established jurisprudence recognizing the equity of redemption, and defeats the final and executory decision declaring the sale an equitable mortgage.
• Entitlement to Writ of Possession: Respondent spouses Tiglao asserted that having already satisfied the terms laid down in the June 24, 2011 Order, they are entitled to a writ of possession as a matter of right.

• Completeness of Foreclosure Judgment: Whether the February 17, 2011 Decision, which failed to state the amount due and the period for payment as required by Rule 68, Section 2, can be the subject of execution.
• Propriety of Ordering Auction Sale: Whether the RTC could order the sale of the foreclosed property at public auction when the judgment debtor had not been given a period within which to pay the mortgage debt.
• Right of Redemption vs. Equity of Redemption: Whether spouses Tiglao lost their right to redeem the property for failing to pay within three months from the finality of the CA Decision in CA-G.R. CV No. 65930.
• Validity of Payment and Standing to Move for Execution: Whether spouses Tiglao, as the losing party in the foreclosure proceeding, could validly move for execution of the judgment and whether their payment of ₱360,000 was valid.
• Amendment of the Incomplete Judgment: Whether the February 17, 2011 Decision may be amended to specify the amount due, including interest and costs, and the period for payment.

• Completeness of Foreclosure Judgment: No. The February 17, 2011 Decision was incomplete for failing to indicate the amount due and the period to pay as mandated by Rule 68, Section 2, rendering it inoperative and incapable of execution; the trial court should have amended its decision to supply the missing details rather than granting the motion for execution.
• Propriety of Ordering Auction Sale: No. Under Rule 68, Sections 2 and 3, an order to sell the mortgaged property at public auction is proper only after the judgment debtor fails to pay the amount due within the period specified in the judgment of foreclosure; since no period was ever specified, there could be no default.
• Right of Redemption vs. Equity of Redemption: No. The CA Decision of December 17, 2004 did not affirm or discuss the three-month period fixed by the trial court; in judicial foreclosure by a non-bank mortgagee, the mortgagor possesses only an equity of redemption, not a right of redemption, which may be exercised even beyond the 90-day period and after the foreclosure sale but before its confirmation.
• Validity of Payment and Standing to Move for Execution: No. Only the prevailing party has the right to move for execution; the losing party cannot compel the winning party to take the judgment. Spouses Tiglao's payment of ₱360,000 was invalid because it was made pursuant to a void writ of execution issued on their own motion and based on an incomplete, inoperative judgment.
• Amendment of the Incomplete Judgment: Yes. The February 17, 2011 Decision was amended to specify the principal sum of ₱300,000 plus 6% legal interest per annum from finality until fully paid, ₱60,000 in attorney's fees, costs of suit, and a 90-day payment period from entry of judgment, with the property to be sold at public auction in case of default.

• Completeness of Foreclosure Judgment: Rule 68, Section 2 expressly mandates that a judgment of foreclosure must (1) render judgment for the sum due to the plaintiff upon the mortgage debt or obligation, including interest and other charges as approved by the court, and costs, and (2) order that the same be paid within a period of not less than 90 days nor more than 120 days from entry of judgment, with the property to be sold at public auction in default of such payment. A plain reading of the fallo of the February 17, 2011 Decision shows that the RTC merely declared the property foreclosed and ordered payment of ₱60,000 in attorney's fees — it did not state the mortgage debt amount or the period to pay. While the decision was not erroneous, it was incomplete. An incomplete decision, even after attaining finality, is inoperative, ineffectual, and cannot be the subject of execution. Citing Rodriguez vs. Caoibes and Philippine Trust Company vs. Policarpio, the Court held that the proper remedy was for the trial court to amend its decision to conform with Rule 68, Section 2, rather than granting the Tiglaos' motion for execution. The July 8, 2011 Writ of Execution, which directed payment of ₱360,000 within 120 days, was null and void because a writ of execution cannot supply the deficiencies of an incomplete decision. Only what is ordained in the dispositive portion of a decision can be the subject of execution.

• Propriety of Ordering Auction Sale: Rule 68, Section 3 provides that when the defendant, after being directed to do so under Section 2, fails to pay the amount of the judgment within the period specified, the court shall order the property sold at public auction. The sale at public auction comes only after the judgment debtor defaults from paying the mortgage obligation within the period provided in the judgment of foreclosure. Since the February 17, 2011 Decision never specified any amount or period, the Tiglaos could not be deemed in default, and the November 28, 2011 Order directing the sale of the property at public auction contravened Rule 68, Sections 2 and 3. Although the RTC sought to correct its prior error in granting the Tiglaos' motion for execution, it committed a further procedural error by skipping the required payment period and proceeding directly to auction.

• Right of Redemption vs. Equity of Redemption: The Lontocs argued that the Tiglaos lost their right to redeem when they failed to pay ₱300,000 within three months after G.R. No. 168503 became final, claiming the CA Decision of December 17, 2004 impliedly included the three-month period. The Court rejected this argument. A reading of the CA Decision shows that it only affirmed the finding of equitable mortgage and the ₱300,000 obligation; it neither affirmed nor discussed the three-month period fixed by the trial court. Moreover, the original action was for nullification of the deed of sale, not foreclosure, so the fixing of a period to pay was improper in that context. The Court further clarified that the Lontocs confused the right of redemption with the equity of redemption. Citing Limpin vs. Intermediate Appellate Court, the right of redemption exists only in extrajudicial foreclosure or in judicial foreclosure where the mortgagee is a bank or banking institution. In judicial foreclosure by a non-bank mortgagee, only the equity of redemption exists — the right of the mortgagor to extinguish the mortgage and retain ownership by paying the secured debt within the 90-day period after judgment becomes final under Rule 68, or even after the foreclosure sale but prior to its confirmation. Since the Lontocs opted for judicial foreclosure under Rule 68, the Tiglaos retained their equity of redemption and could not be deprived of it despite their failure to pay within any prior period.

• Validity of Payment and Standing to Move for Execution: The Tiglaos' payment of ₱360,000 was invalid for two reasons. First, the February 17, 2011 Decision was incomplete and inoperative; the subsequent orders of June 24, 2011 and November 28, 2011 did not cure the deficiency. Payment made pursuant to a writ of execution issued on the basis of an incomplete judgment cannot be validly tendered. Second, even assuming the decision fully complied with Rule 68, Section 2, the execution should have been initiated by the Lontocs as the prevailing party, not by the Tiglaos as the losing party. Citing AFP Mutual Benefit Association, Inc. vs. Court of Appeals, the Court held that it is the prevailing party that is entitled as a matter of right to a writ of execution; the losing party has no personality to move for execution and compel the winning party to take the judgment. Allowing the Tiglaos to benefit from their own prolonged default — the mortgage debt of ₱300,000 remained unpaid since 1992 despite repeated demands and the finality of the Decision in G.R. No. 168503 — would constitute the height of injustice. Furthermore, the Tiglaos' payment of ₱360,000 did not include the costs of suit as required by Rule 142, Section 1, which were clearly indicated in the February 17, 2011 Decision. Accordingly, the payment cannot serve as a basis for issuing a writ of possession.

• Amendment of the Incomplete Judgment: Under Rule 68, Section 2, the judgment on foreclosure should render judgment on the sum due, which includes not only the mortgage debt but also interest, other charges, and costs approved by the court. The mortgage obligation was fixed at ₱300,000 pursuant to the CA Decision affirmed in G.R. No. 168503. As for interest, the February 17, 2011 Decision denied imposing interest on the loan because the parties failed to expressly stipulate the same in writing, and this ruling became final for lack of appeal. However, the decision only referred to interest on the loan, not to the judgment award. Interest on the judgment obligation should be imposed pursuant to Rule 68, Section 2, which expressly provides for adjudication of the amount including interest, and Rule 39, Section 8, which requires that the writ of execution specifically state the amount of interest due. Following Nacar vs. Gallery Frames, the sum of ₱360,000 — consisting of the mortgage debt and attorney's fees — shall earn interest at 6% per annum from finality of the February 17, 2011 Decision until its satisfaction. The Court amended the decision to specify the principal of ₱300,000 plus 6% legal interest from finality until fully paid, ₱60,000 in attorney's fees, and costs of suit, all payable within 90 days from entry of judgment, with the property to be sold at public auction in case of default. The ₱360,000 previously paid by the Tiglaos shall be deducted from the total judgment award.

• Requirements of a Judgment of Judicial Foreclosure (Rule 68, Section 2) — A judgment of judicial foreclosure must contain two mandatory elements: (1) the amount due to the plaintiff upon the mortgage debt or obligation, including interest and other charges as approved by the court, and costs; and (2) an order that the same be paid within a period of not less than 90 days nor more than 120 days from entry of judgment, with the property to be sold at public auction in default of such payment. The absence of either element renders the judgment incomplete, inoperative, and incapable of execution, even if it has attained finality. The proper remedy is for the trial court to amend its decision to supply the missing details, not to issue a writ of execution that effectively fills the gap.

• Equity of Redemption vs. Right of Redemption — The equity of redemption is distinct from the right of redemption. The right of redemption — understood as the prerogative to re-acquire mortgaged property after the foreclosure sale — exists only in extrajudicial foreclosure (under Act 3135, within one year from registration of the sheriff's certificate of sale) and in judicial foreclosure where the mortgagee is the Philippine National Bank or a bank or banking institution. In judicial foreclosure by a non-bank mortgagee, no right of redemption exists; there is only the equity of redemption, which is the right of the mortgagor to extinguish the mortgage and retain ownership of the property by paying the secured debt within the 90-day period after the judgment becomes final under Rule 68, Section 2, or even after the foreclosure sale but prior to its confirmation. After the order of confirmation, no redemption can be effected.

• Prevailing Party's Exclusive Right to Move for Execution — Only the prevailing party is entitled as a matter of right to a writ of execution in its favor. The losing party has no personality to move for execution of a final judgment and cannot compel the winning party to take the judgment. Allowing the losing party to move for execution would enable it to benefit from its own default or violation of the obligation underlying the judgment.

• Amendment of Incomplete Judgments Despite Finality — An incomplete judgment of foreclosure, though it has attained finality, may still be amended by the trial court to conform with the mandatory requirements of Rule 68, Section 2. The omission of a necessary part of the judgment — whether the amount due, the period to pay, or both — may be supplied by amendment even after finality, as the applicable rule is deemed written into the judgment. The parties should invite the court's attention to the flaw rather than appealing the incomplete decision.

• Immutability of Judgments and Incomplete Decisions — While the principle of immutability of judgments bars courts from altering or amending a final judgment, an exception exists for incomplete judgments that fail to comply with mandatory procedural requirements. Such judgments are inoperative and cannot be the subject of execution; the court may amend them to supply the missing details without violating the immutability principle, because the amendment merely conforms the judgment to what the law requires.

• "A judgment of foreclosure must always indicate the amount, including the interest and costs, and the period for the judgment debtor to pay the same in accordance with Rule 68, Section 2 of the Rules of Court. Otherwise, the decision is incomplete and cannot be the subject of execution." — This is the opening pronouncement of the decision, stating the core legal principle that governs the entire case and articulating the ratio decidendi in compressed form.

• "The trial courts should bear in mind that an incomplete decision although having attained finality, is inoperative, ineffectual, and cannot be the subject of execution." — This passage establishes the doctrinal rule that finality alone does not render an incomplete foreclosure judgment executable; compliance with Rule 68, Section 2's mandatory contents is a precondition to valid execution.

• "It is the prevailing party which is entitled as a matter of right to a writ of execution in its favor. It is not an option of the losing party to file a motion for execution of judgment to compel the winning party to take the judgment." — This quotation, drawn from AFP Mutual Benefit Association, Inc. vs. Court of Appeals and adopted by the Court, articulates the rule that only the prevailing party may move for execution, a principle the Court applied to invalidate the Tiglaos' motion for execution and their subsequent payment.

• "The equity of redemption is, to be sure, different from and should not be confused with the right of redemption. The right of redemption in relation to a mortgage — understood in the sense of a prerogative to re-acquire mortgaged property and registration of the foreclosure sale — exists only in the case of the extrajudicial foreclosure of the mortgage. No such right is recognized in a judicial foreclosure except only where the mortgagee is the Philippine National Bank or a bank or banking institution." — This passage, quoted from Limpin vs. Intermediate Appellate Court, provides the canonical formulation of the distinction between the equity of redemption and the right of redemption, a distinction central to the Court's rejection of the Lontocs' argument that the Tiglaos had lost their right to redeem.

• Rodriguez vs. Caoibes, 62 Phil. 142 (1935) — Controlling precedent on the amendment of incomplete foreclosure judgments. The Court applied its holding that a trial court may amend an incomplete foreclosure decision despite finality to conform with the rules, and that the parties should invite the court's attention to the flaw rather than appeal the incomplete decision. The Court extended Rodriguez — which dealt only with the omission of the period to pay — to cover the omission of both the amount due and the period to pay, as in the present case.
• Philippine Trust Company vs. Policarpio, 139 Phil. 547 (1969) — Followed as a reiteration of Rodriguez, reinforcing the doctrine that incomplete foreclosure judgments may be amended to supply missing details required by the rules.
• Limpin vs. Intermediate Appellate Court, 248 Phil. 318 (1988) — Controlling precedent distinguishing the right of redemption from the equity of redemption. The Court relied on this case to hold that in judicial foreclosure by a non-bank mortgagee, only the equity of redemption exists, and the Tiglaos could not be deprived of it despite their failure to pay within any prior period.
• AFP Mutual Benefit Association, Inc. vs. Court of Appeals, 417 Phil. 250 (2001) — Controlling precedent on the rule that only the prevailing party may move for execution. The Court applied this doctrine to invalidate the Tiglaos' motion for execution and their subsequent payment, holding that the losing party cannot compel the winning party to take the judgment.
• Nacar vs. Gallery Frames, 716 Phil. 267 (2013) — Followed for the rule on the applicable legal interest rate. The Court applied Nacar to impose 6% interest per annum on the judgment award of ₱360,000 from finality of the February 17, 2011 Decision until its satisfaction.
• Casilan vs. De Salcedo, 136 Phil. 108 (1969) — Followed for the settled rule that only what is ordained in the dispositive portion of a decision can be the subject of execution, supporting the nullification of the writ of execution that directed payment of an amount not stated in the dispositive portion.

• Rule 68, Section 2, Rules of Court (Judgment on foreclosure for payment or sale) — Requires the court to ascertain the amount due to the plaintiff upon the mortgage debt or obligation, including interest and other charges as approved by the court and costs, render judgment for the sum so found due, and order that the same be paid within a period of not less than 90 days nor more than 120 days from entry of judgment, with the property to be sold at public auction in default of such payment. The Court held that the February 17, 2011 Decision failed to comply with this provision, rendering it incomplete and inoperative, and amended the decision to specify the principal of ₱300,000, 6% legal interest, ₱60,000 attorney's fees, costs, and a 90-day payment period.
• Rule 68, Section 3, Rules of Court (Sale of mortgaged property; effect) — Provides that when the defendant, after being directed to do so under Section 2, fails to pay the amount of the judgment within the period specified, the court shall order the property sold at public auction. The Court held that the November 28, 2011 Order directing the sale of the property contravened this provision because no period for payment had ever been specified in the judgment, and thus there could be no default. This section also governs the entitlement to a writ of possession by the purchaser or last redemptioner upon finality of the order of confirmation or expiration of the period of redemption.
• Rule 39, Section 1, Rules of Court (Execution of judgments) — Governs the execution of judgments and was applied to support the rule that only the prevailing party may move for execution of a final judgment.
• Rule 39, Section 8, Rules of Court (Issuance, form and contents of a writ of execution) — Requires that the writ of execution shall specifically state the amount of interest, costs, damages, rents, or profits due as of the date of issuance, aside from the principal obligation. The Court cited this provision to support the imposition of interest on the judgment award and the requirement that the writ specify the interest due.
• Rule 142, Section 1, Rules of Court (Costs) — Provides that costs are allowed to the prevailing party as of course, unless otherwise provided. The Court noted that the Tiglaos' payment of ₱360,000 did not include the costs of suit, which were clearly indicated in the February 17, 2011 Decision, further invalidating the payment.

Hernando, Zalameda, Rosario, and Marquez, JJ., concurred.