Tan, Jr. vs. Court of Appeals

Procedural rules on finality and execution of judgments should not be applied retroactively where doing so would impair vested rights already acquired under the prior rule; the right to redeem property within the period prescribed by the existing rule is a substantive right that cannot be defeated by a subsequent change in procedure.

The case involves a parcel of land in Bunawan, Davao City, originally covered by TCT No. T-72067 in the name of Jaime C. Tan, married to Praxedes V. Tan. On January 22, 1981, Tan sold the property to spouses Jose and Estrella Magdangal for P59,200 under a deed of absolute sale, simultaneously executing a separate agreement granting Tan one year to redeem or repurchase. Tan died on January 4, 1988 without having exercised the right of redemption. His heirs, later substituted by Jaime Tan, Jr. as judicial administrator of Tan's intestate estate, filed suit for reformation of instrument, contending that the transaction was in truth an equitable mortgage.

On January 22, 1981, Jaime C. Tan, for a consideration of P59,200, executed a deed of absolute sale over a 34,829-square-meter parcel of land in Bunawan, Davao City in favor of spouses Jose and Estrella Magdangal. Simultaneously, the parties entered into a separate agreement granting Tan one year within which to redeem or repurchase the property. Despite being given several extensions, Tan failed to redeem the property before his death on January 4, 1988.

On May 2, 1988, Tan's heirs filed before the RTC of Davao City a complaint for reformation of instrument against the Magdangals, docketed as Civil Case No. 19049-88, alleging that the parties' real intention was to constitute an equitable mortgage rather than an absolute sale. Barely hours after the complaint was stamped "received," the Magdangals caused the cancellation of Tan's title and secured TCT No. T-134470 in their names, prompting the heirs to file a supplemental complaint. The heirs were later substituted by Jaime Tan, Jr. as judicial administrator of the intestate estate.

On June 4, 1991, the RTC rendered judgment declaring the deed of absolute sale an equitable mortgage and ordering petitioner to pay the Magdangals P59,200 plus 12% interest per annum from May 2, 1988 "within 120 days after the finality of this decision," upon which payment the Magdangals' title would be canceled and Tan's title reinstated. The Magdangals appealed to the Court of Appeals in CA-G.R. CV No. 33657, which affirmed the trial court's decision in toto on September 28, 1995. Both parties received the appellate court's decision on October 5, 1995. On March 13, 1996, the clerk of the appellate court entered the decision in the Book of Entries of Judgment, with the Entry of Judgment stating that the decision had become final on October 21, 1995.

On March 21, 1996, the Magdangals filed a Motion for Consolidation and Writ of Possession in the trial court, contending that the 120-day redemption period had expired. They reckoned the period as beginning fifteen days after October 5, 1995 — the date of receipt of the CA decision — and ending on October 20, 1995. Petitioner opposed the motion, citing Cueto vs. Collantes and arguing that the redemption period commenced only from receipt of the entry of judgment by the appellate court. On March 27, 1996, petitioner filed a motion for execution with the appellate court, and on April 17, 1996, he deposited with the clerk of court the repurchase price of P116,032 plus interest as required by the trial court's original decision.

On June 10, 1996, the trial court denied the Magdangals' motion and allowed the redemption, ruling that the 120-day period should be reckoned from the date of entry of judgment — March 13, 1996 — and that the deposit made on April 17, 1996 was well within the period. The trial court ordered the clerk of court to deliver the deposited amount to the Magdangals and directed the Register of Deeds to cancel the Magdangals' title and reinstate Tan's title. On July 24, 1996, the trial court denied the Magdangals' motion for reconsideration. The Magdangals then filed a petition for certiorari with the Court of Appeals, which set aside the trial court's orders on July 15, 1998, applying the 1997 Revised Rules of Civil Procedure retroactively. The appellate court denied reconsideration on November 9, 1998.

• Due Process: Petitioner maintained that his right to due process was violated when the Court of Appeals rendered a judgment on the merits of the private respondents' petition without granting him the opportunity to controvert the same.
• Proper Remedy: Petitioner argued that appeal, not certiorari, was the appropriate remedy of private respondents, as there was no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the trial judge, and that delay in resolving the main case is not a ground for giving due course to the petition.
• Applicability of Cueto vs. Collantes: Petitioner contended that Cueto vs. Collantes, 97 Phil. 325, was disregarded by the Court of Appeals, and that it remains good case law and was in effect made part of Section 2, Rule 68 of the 1997 Rules of Civil Procedure on Foreclosure of Mortgage.
• Inapplicability of St. Dominic: Petitioner argued that St. Dominic vs. Intermediate Appellate Court, 138 SCRA 242, is not applicable to the case, while the ruling in Gutierrez Hermanos vs. de La Riva, 46 Phil. 827, applies.
• Equity: Petitioner invoked equity considerations to justify giving due course to the petition.

• Reckoning of Redemption Period: Respondents argued that the 120-day redemption period began to run fifteen days after October 5, 1995 — the date of receipt of the CA decision — and expired on October 20, 1995, rendering petitioner's deposit on April 17, 1996 out of time.
• Finality Under the 1997 Rules: Respondents relied on the 1997 Revised Rules of Civil Procedure, under which execution may be applied for in the court of origin upon submission of certified true copies of the judgment and entry thereof, contending that the judgment became final upon the lapse of the reglementary period to appeal without need of awaiting the entry of judgment by the appellate court.

• Retroactivity of Procedural Rules: Whether the 1997 Revised Rules of Civil Procedure on execution of judgments should be applied retroactively to determine the reckoning date of the 120-day redemption period.
• Reckoning of Redemption Period: Whether the 120-day redemption period ordered by the trial court should be reckoned from the date the appellate court's decision became final or from the date of entry of judgment by the appellate court.

• Retroactivity of Procedural Rules: No. The 1997 Revised Rules should not be applied retroactively in this case, as doing so would impair the petitioner's vested right to redeem the property and result in great injustice.
• Reckoning of Redemption Period: The 120-day redemption period should be reckoned from the date of entry of judgment by the appellate court, pursuant to the old rule as interpreted in Cueto vs. Collantes. Petitioner's deposit on April 17, 1996 was well within the 120-day period counted from March 13, 1996.

• Retroactivity of Procedural Rules: While procedural laws are generally retroactive in that they apply to actions pending and undetermined at the time of their enactment, well-delineated exceptions exist: where the statute expressly or by necessary implication excepts pending actions, where retroactive application would impair vested rights, where it would work injustice, or where it would involve intricate problems of due process. Petitioner's right to redeem the subject lot is a substantive right. He faithfully followed the procedural rule then existing — Rule 51, Sections 10 and 11 of the Revised Rules of Court, as interpreted in Cueto vs. Collantes — when he deposited the redemption price on April 17, 1996. Applying the 1997 Revised Rules retroactively would result in his losing the right to redeem, which is inequitable. The manner of exercising a right cannot be changed and the change applied retroactively if to do so will defeat a right already vested.

• Reckoning of Redemption Period: The trial court's decision ordered petitioner to pay "within 120 days after the finality of this decision." Under the old rule, as interpreted in Cueto vs. Collantes, where a trial court's decision is appealed and affirmed, the period for exercising the right of redemption should be counted from the date of entry of judgment by the appellate court, not from the date the appellate decision becomes final. The entry of judgment was made on March 13, 1996. Petitioner deposited the redemption price on April 17, 1996, well within the 120-day period. The Court of Appeals erred in applying the 1997 Revised Rules retroactively, which would have reckoned the period from the date of finality of the appellate decision rather than from the date of entry of judgment.

• Retroactivity of Procedural Rules — Exception for Vested Rights — Procedural laws are generally retroactive and applicable to pending actions, as no vested right attaches to procedural remedies. However, retroactive application is refused where it would impair vested rights, work injustice, or involve intricate problems of due process. The right to redeem property within the period prescribed by the existing procedural rule is a substantive right; a litigant who faithfully followed the rule then in force cannot be deprived of that right by a subsequent change in procedure applied retroactively.

• Reckoning of Redemption Period from Entry of Judgment — Under the old rule (Rule 51, Sections 10 and 11) as interpreted in Cueto vs. Collantes, where a trial court orders redemption within a specified period "after finality" and the decision is appealed and affirmed, the redemption period is reckoned from the date of entry of judgment by the appellate court, not from the date the appellate decision becomes final. The entry of judgment is the operative event that triggers the running of the period.

• "We hold that section 1, Rule 39 of the 1997 Revised Rules of Procedure should not be given retroactive effect in this case as it would result in great injustice to the petitioner." — This is the core ratio decidendi: the Court's refusal to apply the new procedural rule retroactively where it would defeat a vested right of redemption.

• "Undoubtedly, petitioner has the right to redeem the subject lot and this right is a substantive right." — This passage establishes the critical characterization of the right of redemption as substantive, not merely procedural, which underpins the exception to retroactive application.

• "The manner of exercising the right cannot be changed and the change applied retroactively if to do so will defeat the right of redemption of the petitioner which is already vested." — This formulation articulates the boundary between permissible retroactive application of procedural rules and impermissible impairment of vested rights.

• Cueto vs. Collantes, 97 Phil. 325 (1955) — Controlling precedent followed and applied. The Court held that where a trial court's decision is appealed and affirmed, the redemption period ordered "from finality" is reckoned from the date of entry of judgment by the appellate court, not from the date the appellate decision becomes final. This ruling was deemed still good case law and was in effect incorporated into Section 2, Rule 68 of the 1997 Rules.
• St. Dominic vs. Intermediate Appellate Court, 138 SCRA 242 — Cited by petitioner as inapplicable to the case; the Court did not rely on it in reaching its decision.
• Gutierrez Hermanos vs. de La Riva, 46 Phil. 827 — Cited by petitioner as the applicable ruling; the Court did not expressly discuss it in the disposition.

• Rule 51, Sections 10 and 11, Revised Rules of Court — Governed the finality and entry of judgments during the relevant period (1991–1996). Section 10 provides that the date when a judgment becomes executory is deemed the date of its entry, and Section 11 provides that a motion for execution may only be filed after entry of the judgment. These provisions were the basis for reckoning the redemption period from the date of entry of judgment.
• Section 1, Rule 39, 1997 Revised Rules of Civil Procedure — Amended the rule on execution of judgments, allowing the prevailing party to apply for execution in the court of origin by submitting certified true copies of the judgment and entry thereof, without waiting for remand of records. The Court refused to apply this provision retroactively to the case.
• Circular No. 24-94 (April 18, 1994) — Interim administrative circular promulgating the amended Section 1, Rule 39, effective June 1, 1994, to address delays in the remand of records for execution of appealed judgments. This circular was the precursor to the 1997 amendment.

Davide, Jr., C.J., Kapunan, Pardo, and Ynares-Santiago, JJ.

None.