What should a judgment of foreclosure indicate?
Property rules

What should a judgment of foreclosure indicate?


In Spouses Lontoc v. Spouses Tiglao, respondents Tomas, Jr. and Roselie Tiglao (collectively, “Spouses Tiglao”) failed to pay petitioners Leonardo and Nancy Lontoc (collectively, “Spouses Lontoc”) the sum adjudged as a loan by the Regional Trial Court (RTC) and upon appeal, by the Court of Appeals and Supreme Court, in an earlier case. This prompted Spouses Lontoc to file against Spouses Tiglao a complaint for foreclosure of real estate mortgage, which was favorably decided by the RTC.

In its ruling, the RTC found that (a) the disputed land in the earlier case was deemed foreclosed; and (b) Spouses Tiglao were liable to pay Spouses Lontoc P60,000 as attorney’s fees, as well as costs of the suit (“judgment on foreclosure”). This decision became final and executory since both parties did not interpose any appeal.


Upon motion by Spouses Lontoc, the RTC issued a writ of execution of its judgment on foreclosure and directed Spouses Tiglao to pay the sum prayed for by Spouses Lontoc, but within a supposed equity period of 120 days from the finality of its decision (“execution order”).


Despite payment of the directed sum by Spouses Tiglao, the RTC that its writ of execution was void and directed, among others, the foreclosure and sale by public auction of the same land in favor of Spouses Lontoc (“possession order”).

Upon appeal, the Court of Appeals reversed and set aside the RTC’s findings, and directed that a writ of possession be issued in Spouses Tiglao’s favor and that the rest of the foreclosure proceedings be conducted in accordance with the Rules of Court (“Rules”).

Aggrieved, the Spouses Lontoc filed the instant appeal, which the Supreme Court partly granted by, among others, reversing and setting aside the Court of Appeals’ findings, and amending the RTC’s judgment of foreclosure.

In arriving at its decision, the Supreme Court held at the outset that in judicial foreclosure proceedings, the Rules mandate the trial court to: (a) render judgment on the amount due; and thereafter, (b) order the judgment debtor to pay the sum within 90 days, but no longer than 120 days, from the entry of judgment. This sum shall include the mortgage debt or obligation, interest, other charges, and costs approved by the trial court.

In this case, the judgment on foreclosure merely declared the disputed property as foreclosed and directed Spouses Tiglao to pay attorney’s fees. While it was merely incomplete, and not erroneous, under the Rules, the Supreme Court noted that despite having been apprised by Spouses Tiglao of the incompleteness, the RTC committed the error when it issued the writ of execution, instead of amending its incomplete judgment to comply with the Rules, pursuant to earlier jurisprudence.

According to the Supreme Court, an incomplete decision, such as the judgment on foreclosure, is inoperative, ineffectual and thus, cannot be the subject of execution, despite having attained finality. It thus held the writ of execution issued by the RTC to be void, and Spouses Tiglao’s payment of the directed sum to be invalidly tendered, and which should be returned to them.


Moreover, while the RTC attempted to correct its error by declaring the writ of execution as void, it continued to err when it ordered the sale of the disputed property through public auction. Under the Rules, the foreclosed property may only be sold by public auction after the judgment debtor defaults from paying the judgment debt and other costs. In this regard, a judgment debtor is deemed in default only after the period provided in the judgment on foreclosure has lapsed without paying the amount indicated therein, pursuant to the Rules.

In this case, while Spouses Tiglao have failed to pay the judgment debt, they are still entitled to exercise their equity of redemption—that is, their right to extinguish the concerned mortgage and retain ownership of the foreclosed property by paying said debt within the 90-day period after the judgment becomes final, or even after the foreclosure sale but before its confirmation.

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TAGS: Business, property

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