Riosa vs. Verzosa

A purchaser at an execution sale of land acquires only an inchoate right in the property, subject to defeasance by the judgment debtor’s redemption within twelve months; during that period, the debtor who remains in possession is entitled to the rents and profits, including the right to harvest growing crops, and upon timely redemption the rights of the purchaser are terminated as if no sale had occurred.

On 1 December 1909, a parcel of land belonging to Claro Verzosa was sold at public auction pursuant to an execution issued to satisfy a money judgment against him. The plaintiff, Mariano Riosa, purchased the land at the sale. Riosa also held a mortgage on the same property, due on 1 January 1910. Verzosa, one of the defendants, remained in physical possession of the land after the sale. On 25 January 1910 — well within the twelve‑month period for redemption — Riosa commenced an action to enjoin Verzosa and his co‑defendant Ciriaco Bulan from harvesting and destroying growing hemp on the property, to recover P500 in damages for injuries already caused, and to require the deposit of harvested hemp with the deputy sheriff. The core controversy centered on the scope of rights acquired by a purchaser during the redemption period and the effect of a timely redemption on those rights.

• Nature of the Action: Plaintiff Mariano Riosa filed a complaint on 25 January 1910 seeking (a) a permanent injunction to restrain defendants Claro Verzosa and Ciriaco Bulan from harvesting and destroying growing hemp on a specific parcel of land, (b) P500 in damages for injuries already caused, and (c) deposit of harvested hemp with the deputy sheriff. A temporary injunction was issued ex parte.

• The Execution Sale and Mortgage: Prior to the complaint, a judgment had been rendered against defendant Verzosa for P320.87. Execution was levied on the land, and it was sold at public auction on 1 December 1909. Plaintiff Riosa purchased the land at that sale. Riosa also held a mortgage on the same property due on 1 January 1910. At all material times, defendant Verzosa remained in physical possession of the land; no tenant occupied it.

• Default Judgment: Defendants failed to answer the complaint. Default was entered on 2 April 1910. A trial was held on 20 April 1910 with defendants’ attorney present, but no defense was interposed because no answer had been filed. Judge Nepomuceno granted a permanent injunction and awarded Riosa P300 in damages.

• Motion to Set Aside and Judicial Reticence: The very next day, defendants moved to set aside the default judgment and for leave to present a defense. There was also a separate pending case (No. 1207) involving a mortgage over the same land. Judge Moir, who had replaced Judge Nepomuceno, denied the motion on 9 June 1910, stating that the damages appeared excessive but that the defendants had no right to set aside a judgment rendered in their presence and that of counsel. Crucially, he added that if the defendants redeemed the land within the time allowed by law, a motion for relief from the judgment would be considered. This left the motion technically unresolved.

• Redemption and Renewed Motion: On 11 September 1910, defendants presented satisfactory proof that they had redeemed the land in accordance with law and again moved the court to consider their earlier motion. On 17 September 1910, Judge Moir entered an order setting aside the default judgment and nullifying the sentence of 20 April 1910. After some interlocutory modifications, an answer was filed and a trial on the merits ensued.

• Final Trial Court Decision: On 10 April 1911, Judge Moir rendered judgment holding that the plaintiff had no right to the relief prayed for and dismissed the complaint with costs against the defendants. The basis of the dismissal was that the purchaser’s right under the execution sale was merely inchoate and was extinguished by the defendants’ timely redemption, leaving the plaintiff without any cause of action for injunction or damages.

• Error in Setting Aside Default Judgment: Petitioner maintained that the trial court erred in setting aside the default judgment of 20 April 1910, which had been validly rendered after default and a hearing. The subsequent order of 17 September 1910, vacating that judgment after defendants had already been heard, was contrary to law.

• Lack of Jurisdiction to Annul Judgment: Petitioner argued that the lower court, presided over by Judge Moir, lacked jurisdiction to annul the judgment rendered by his predecessor, Judge Nepomuceno, particularly after the judgment had become final and executory.

• Entitlement to Damages: Petitioner asserted that even if the court had jurisdiction to set aside the default judgment, it erred in failing to award damages for the injuries sustained by the plaintiff through the defendants’ harvesting of the hemp during the redemption period.

N/A — The appellees did not file a brief on appeal.

• Jurisdiction of Successor Judge: Whether Judge Moir, as successor judge, had jurisdiction to annul the default judgment rendered by his predecessor.

• Propriety of Setting Aside Default Judgment: Whether the Court of First Instance erred in setting aside the default judgment of 20 April 1910, considering that the defendants’ motion to set aside was filed the following day and the court’s initial denial was expressly conditional upon redemption.

• Right to Injunction and Damages During Redemption Period: Whether a purchaser at an execution sale may enjoin the judgment debtor in possession from harvesting crops and recover damages for such harvesting during the twelve‑month redemption period, especially where the debtor ultimately redeems the land.

• Jurisdiction of Successor Judge: Judge Moir possessed full jurisdiction to set aside the judgment of his predecessor. A successor judge may take any action in relation to a pending cause that the original judge could have taken. Moreover, all orders entered after 20 April 1910 — up to the final judgment of 10 April 1911 — were issued at the instance of one or both parties, and no objection to the court’s jurisdiction was ever raised.

• Propriety of Setting Aside Default Judgment: The default judgment of 20 April 1910 never became final. The defendants’ motion of 21 April 1910 suspended its finality until the motion was resolved. The order of 9 June 1910 did not finally dispose of that motion; it merely denied it without prejudice, expressly leaving the door open for reconsideration if the defendants redeemed the land within the statutory period. When the defendants did redeem and renewed their motion on 11 September 1910, the court properly vacated the judgment. Because the redemption extinguished the plaintiff’s inchoate right, the default judgment — which had been predicated on the plaintiff’s interest as purchaser — became baseless. The subsequent trial on the merits and dismissal were therefore procedurally sound.

• Right to Injunction and Damages During Redemption Period: No right to injunction or damages existed. Under Sections 463, 464, 465, 468, and 469 of Act No. 190, a purchaser at an execution sale acquires only an inchoate right in the land, subject to being defeated and terminated upon redemption within twelve months. The judgment debtor who remains in possession (the land being in the possession of the owner, not a tenant) is entitled to remain and to the rents and profits during the redemption period, including the right to harvest growing crops. This principle was settled in De la Rosa vs. Santos (10 Phil. Rep. 148). Because the defendants harvested the hemp while still entitled to possession and later redeemed the land within the statutory period, the redemption retroactively confirmed their right to the use and fruits of the property. The plaintiff’s inchoate right was extinguished as if no sale had taken place; consequently, there was no legal basis for injunctive relief or for damages.

• Inchoate Right of Purchaser at Execution Sale — A purchaser of land at a public auction conducted pursuant to a writ of execution does not acquire absolute ownership. The right obtained is inchoate — an incipient interest that is subject to defeasance and complete termination if the judgment debtor exercises the right of redemption within twelve months from the date of sale. Upon a valid and timely redemption, the purchaser’s inchoate right is retroactively extinguished, and the legal position of the parties is restored to what it was before the sale, as though no sale had occurred.

• Right of Debtor in Possession to Rents and Profits — Where the land sold under execution is in the possession of the judgment debtor (and not a tenant), the debtor is entitled to remain in possession during the entire twelve‑month redemption period and to retain all rents and profits, including the right to harvest growing crops. The purchaser may not recover such rents and profits from the debtor. (See De la Rosa vs. Santos, 10 Phil. Rep. 148.)

• Injunction Against Waste Distinguished — While the judgment debtor in possession is entitled to the rents and profits, that right must be exercised with due regard to the purchaser’s inchoate interest. Under Section 468 of Act No. 190, a purchaser may seek an injunction to prevent the commission of actionable waste on the property during the redemption period, provided the judgment debtor has not yet redeemed. Any such injunction, however, must contain a provision for its dissolution upon the debtor’s timely redemption, and a judgment for damages for waste committed must similarly be subject to relief upon redemption. (Concurring opinion of Justice Carson, joined by Justice Moreland.)

• “The purchaser of lands sold at public auction under a writ of execution only has an inchoate right in the property, subject to be defeated and terminated within a period of twelve months from the date of sale, by a redemption on the part of the owner.” (Majority opinion, per Johnson, J.) This passage defines the core nature of the purchaser’s interest and underpins the entire ruling.

• “We have already held, in the case of De la Rosa vs. Santos (10 Phil. Rep., 148), that the purchaser, where the land was in possession of the owner and not a tenant, was not entitled to recover the rents and profits of the land sold during the period within which the owner might redeem.” (Majority opinion) This excerpt establishes the rule regarding rents, profits, and harvested crops during the redemption period.

• “It needs no argument to show that while under our rulings the judgment debtor who continues in possession of real estate during the redemption period is entitled to the rents and profits and may harvest the crops growing thereon during that period … nevertheless he must exercise that right with due regard to the rights of the purchaser at the sheriff’s sale, and until and unless he exercise his right of redemption, he may be restrained from committing acts waste upon the land.” (Concurring opinion, Carson, J.) This passage qualifies the majority’s general language and clarifies the availability of injunctive relief against waste.

• De la Rosa vs. Santos, 10 Phil. Rep. 148 (1908) — Controlling precedent. Held that a purchaser at an execution sale is not entitled to recover the rents and profits of the land sold where the property remains in the possession of the owner (judgment debtor) during the redemption period. Applied here to deny the plaintiff any claim to damages for the harvesting of hemp during the redemption period.

• In re Ceballos, 12 Phil. Rep. 271 (1909) — Cited in support of the same principle regarding the purchaser’s inchoate right and the debtor’s entitlement to possession and profits.

• Sections 463, 464, 465, 468, and 469 of Act No. 190 (Code of Civil Procedure) — These provisions collectively regulate execution sales and the right of redemption. Sections 463 and 464 grant the judgment debtor the right to redeem within twelve months and to remain in possession during that period. Section 465 fixes the redemption period. Section 468 authorizes the issuance of an injunction to prevent waste on property sold under execution. Section 469 distinguishes between land in the possession of a tenant (where the purchaser is entitled to rents and profits) and land in the possession of the debtor (where the purchaser is not). The Court relied on these provisions to conclude that the judgment debtors were entitled to remain on the land and harvest the growing hemp, and that the plaintiff’s inchoate right was extinguished upon redemption.

Arellano, C.J., and Torres, J., concurred. Trent, J., concurred in the result.

Justice Carson, joined by Justice Moreland, filed a separate concurring opinion. Justice Carson emphasized that the majority opinion should not be interpreted as a holding that a purchaser at an execution sale cannot obtain an injunction to prevent waste during the redemption period. Under Section 468 of Act No. 190, an injunction against waste is available, but any such injunction must be dissolved if the debtor validly redeems, and any judgment for waste must contain a mechanism for relief upon redemption. Since the debtors in this case redeemed the land, the denial of damages and dissolution of the injunction were correct.

None.