Roman Catholic Archbishop of Caceres v. Heirs of Abella

A parcel of land allegedly donated to the church in exchange of a monthly mass. The heirs deny the alleged donation. They filed a case for forcible entry but they lost. The decision became final and executory. They filed another case for quieting of title where they won. The decision became final and executory too. The archbishop moved for the execution of judgment on the forcible entry case but was denied by the MTC.

Whether or not the decision in the quieting of title case was a supervening event in the forcible entry case?

Yes.

Hence, there can be no other conclusion but that the finality of the decision in the quieting of title case constitutes a supervening event that justifies the non-enforcement of the judgment in the forcible entry case.  In Natalia Realty, Inc. vs. Court of Appeals,[11] the Court explained thus:

         ... The jurisdiction of the

court to amend, modify or alter its judgment terminates when the judgment becomes final.  This is the principle of immutability of final judgment that is subject to only few exceptions, none of which is present in this case.  On the other hand, the jurisdiction of the court to execute its judgment continues even after the judgment has become final for the purpose of enforcement of judgment.             . . .             One of the exceptions to the principle of immutability of final judgments is the existence of supervening events.  Supervening events refer to facts which transpire after judgment has become final and executory or to new circumstances which developed after the judgment has

acquired finality, including matters which the parties were not aware of prior to or during the trial as they were not yet in existence at that time.

          In the case at bar, the new circumstance which developed after the finality of the judgment in the forcible entry is the fact that the decision in the case for quieting of title had also attained finality and conclusively resolved the issue of ownership over the subject land, and the concomitant right of possession thereof.  Verily, to grant execution of the judgment in the forcible entry case would work injustice on respondents who had been conclusively declared the owners and rightful possessors of the disputed land.

Session Delights v. CA

Adonis Flora filed a case for illegal dismissal against Session Delights Ice Cream before the labor arbiter. The labor arbiter ruled in favor of Flora and made a computation of awards in its decision. Session Delights appealed before the NLRC which upheld the decision of the labor arbiter. Session Delights then appealed to Court of Appeals but still failed. The decision of the appellate court became final and executory.

A re-computation of the awards was made by the labor arbiter prior to the execution of judgment. Session Delights opposed the re-computation and insist that the first computation made by the labor arbiter should be follow applying the principle of immutability of judgment. Once again it appealed to the NLRC all the way to the Supreme Court.

Whether or not the re-computation of awards in cases of illegal termination is allowed?

Yes.

A source of misunderstanding in implementing the final decision in this case proceeds from the way the original labor arbiter framed his decision.  The decision consists essentially of two parts.  

The first is that part of the decision that cannot now be disputed because it has been confirmed with finality.  This is the finding of the illegality of the dismissal and the awards of separation pay in lieu of reinstatement, backwages, attorney’s fees, and legal interests. 

 The second part is the computation of the awards made.  On its face, the computation the labor arbiter made shows that it was time-bound as can be seen from the figures used in the computation.  This part, being merely a computation of what the first part of the decision established and declared, can, by its nature, be re-computed.We see no error in the CA decision confirming that a re-computation is necessary as it essentially considered the labor arbiter’s original decision in accordance with its basic component parts as we discussed above.

The re-computation of the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being implemented.

Heirs of Maglaque v. Court of Appeals

Spouses Maglaque mortgaged a parcel of land to Planters Development Bank. The land was foreclosed by the bank because of the failure of the mortgagor to pay the mortgage. It was sold in public auction with the bank as the highest bidder. The bank consolidated the ownership of the land after the lapse of the redemption period. Later on it was sold by the bank to spouses Beltran.The first case filed by the spouses was for revocation of sale and reconveyance of title. This case was decided against the spouses by the trial court, the appellate court, and by the Supreme Court.

The second case filed was for recovery of ownership. This case was dismissed by the trial court by reason of res judicata. The appellate court sustained the trial court’s decision.

Whether or not the case is barred by res judicata?

Yes.

The four elements of res judicata are: (1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be between the first and second action, identity of parties, subject matter and causes of action.13

A judgment is on the merits when it determines the rights and liabilities of the parties based on the ultimate facts as disclosed by the pleadings or issues presented for trial.14 It is not necessary that there should have been a trial, actual hearing, or arguments on the facts of the case.15 For as long as the parties had full legal opportunity to be heard on their respective claims and contentions, the judgment is on the merits.16 A judgment on the merits is one rendered after a determination of which party is right as distinguished from a judgment rendered upon some preliminary or final or merely technical point.17

We note that only the Registry of Deeds for the Province of Bulacan was added in the enumeration of defendants. In the recent case of Heirs of the Late Faustina Adalid v. Court of Appeals, we held that:

…The principle of res judicata may not be evaded by the mere expedient of including an additional party to the first and second action. Only substantial identity is necessary to warrant the application of res judicata. The addition or elimination of some parties does not alter the situation. There is substantial identity of parties when there is a community of interest between a party in the first case and a party in the second case albeit the latter was not impleaded in the first case….20

In this case, the Register of Deeds, as a party in the second complaint is of no moment as it is merely a nominal party.21

In several cases, we said that the ultimate test to ascertain identity of action is whether or not the same evidence fully supports and establishes both the present cause of action and the former cause of action.22 Causes of action are identical when there is an identity in the facts essential to the maintenance of the two actions, or where the same evidence will sustain both actions. If the same facts or evidence can sustain either, the two actions are considered the same, so that the judgment in one is a bar to the other. 23 Here, we hold there is, patently, identity of causes of action.

A party cannot escape the operation of res judicata by simply varying the form of the action or by adopting a different mode of presenting its case.

PCGG v. Sandiganbayan

The OSG requested the police in Switzerland to locate and freeze the alleged ill gotten wealth of the Marcoses. As a consequence of this request, the Bankers Trust A.G. of Zurich froze the account of Officeco Holdings N.V.

Officeco appealed the sequestration before the Attorney General of the Canton of Zurich. Then it appealed the decision of the attorney general to the Swiss Federal Court where it likewise lost. Then, Officeco filed a case before the Sandiganbayan to compel the OSG and PCGG to advise the Swiss government to unfreeze and release the accounts of Officeco. PCGG moved for the dismissal of the complaint but was denied by the Sandiganbayan. Hence, this petition before the Court.

Whether or not the Sandiganbayan erred in not dismissing the complaint on the ground of res judicata?

No.

For the preclusive effect of res judicata to be enforced, the following requisites must obtain: (1) The former judgment or order must be final; (2) It must be a judgment or order on the merits, that is, it was rendered after a consideration of

the evidence or stipulations submitted by the parties at the trial of the case; (3) It must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4) There must be, between the first and second actions, identity of parties, of subject matter and of cause of action. This requisite is satisfied if the two actions are substantially between the same parties.22

While the first three elements above are present in this case, we rule that the fourth element is absent. Hence, res judicata does not apply to prevent the Sandiganbayan from proceeding with Civil Case No. 0164.

Absolute identity of parties is not a condition sine qua non for res judicata to apply, a shared identity of interest being sufficient to invoke the coverage of the principle.23 In this regard, petitioners claim that while "the Philippine government was not an impleaded party respondent in Switzerland," it is undisputed that "the interest of the Philippine government is identical to the interest of the Swiss officials," harping on the fact that the Swiss officials issued the freeze order on the basis of the IMAC request.24 However, we fail to see how petitioners can even claim an interest identical to that of the courts of Switzerland. Petitioners’ interest, as reflected in their legal mandate, is to recover ill-gotten wealth, wherever the same may be located.25 The interest of the Swiss court, on the other hand, is only to settle the issues raised before it, which include the propriety of the legal assistance extended by the Swiss authorities to the Philippine government.

In arguing that there is identity of causes of action, petitioners claim that "the proofs required to sustain a judgment for [Officeco] in Switzerland is no different from the proofs that it would offer in the Philippines." We disagree.

Causes of action are identical when there is an identity in the facts essential to the maintenance of the two actions, or where the same evidence will sustain both actions. More significantly, there is identity of causes of action when the judgment sought will be inconsistent with the prior judgment.35 In the case at bar, allowing

Civil Case No. 0164 to proceed to its logical conclusion will not result in any inconsistency with the 31 May 1989 decision of the Swiss Federal Court. Even if the Sandiganbayan finds for Officeco, the same will not automatically result in the lifting of the questioned freeze orders. It will merely serve as a basis for requiring the PCGG (through the OSG) to make the appropriate representations with the Swiss government agencies concerned.

DBP v. La Campana Development Corporation

The first case involved the release of title and cancellation of mortgages over the properties of La Campana which were mortgaged before the DBP. The Court of Appeals decided in favor of DBP.

The second case is for the annulment of consolidation of titles filed by La Campana against DBP. The bank moved for the dismissal of the complaint in view of the first case decided in its favor before the appellate court. The trial court did not dismiss the case and its decision was upheld by the appellate court. Hence, this petition.

Whether or not the first case bars the filing of the second case on the ground of res judicata?

No.

The causes of action, and logically, the issues in the two cases, are crystal clear, very much different, requiring divergent adjudications. In short, while there is identity of parties, there is NO identity of subject matter and cause of action. This being so, different causes of action and circumstances in different cases would make reliance on the doctrine of res judicata misplaced.

Further, based on the records, it appears that the consolidation of the titles was undertaken by DBP in February 1997.33 The present case was filed on 04 March 1997 with the trial court. It cannot be said that the complaint had been barred by prior judgment because it was precisely the consolidation done in February

1997 which gave rise to the cause of action which was used by La Campana as basis in filing the Complaint for Annulment of Consolidation of Titles.

Cayana v. Court of Appeals

This case involved a property dispute over two parcels of lands between siblings. The two parcels of land were sold to Pastor and Rosita by Raymundo and Ulalia. Later on Eulalia and her children filed a case for the annulment of sale on the ground of forgeries. Meanwhile Pastor mortgaged and first parcel of land to the Rural Bank of Urbiztondo. Later on he sold it to Rosafina who mortgaged it again to the same bank. The trial court declared that the deed of sale on both parcels of lands were null and void. This decision attained finality. The first parcel which was mortgaged by Rosafina was however foreclosed. The bank then sold the land to Marceliano and Rosalia who sold the same to Rafael and Rosemarie.

The second case was filed for the annulment of deed of sale, cancellation of title, and recovery of possession. The trial court applying the doctrine of res judicata decided in favor of the petitioners. This decision was reversed by the appellate court on the ground that there is no identity of causes of action. The appellate court also upheld the validity of the deeds of sale which was already declared null and void on the first case and which decision already attained finality.

Whether or not the decision in the first case operates to bar the second case?

No.

The trial court and the appellate court both erred in the manner by which they treated and applied the final decision in Civil Case No. 15298 to the instant case.

The distinction between the doctrine of res judicata, or bar by prior judgment, under paragraph (b) above and conclusiveness of judgment under paragraph (c) is well-laid. There is ‘bar by prior judgment’ when, between the

first case where the judgment was rendered and the second case which is sought to be barred, there is identity of parties, subject matter and cause of action. But where between the first and second cases, there is identity of parties but no identity of cause of action, the first judgment is conclusive in the second case, only as to those matters actually and directly controverted and determined and not as to matters merely involved therein.

In order to determine the identity of the causes of action in Civil Case Nos. 15298 and 15937, and consequently, the application of the doctrine of res judicata, it is essential to consider the identity of facts essential to their maintenance, or whether the same evidence would sustain both causes of action. If the same facts or evidence would sustain both, the two actions are considered the same and covered by the rule that the judgment in the former is a bar to the subsequent action. If, however, the two actions rest upon different states of fact, or if different proofs would be required to sustain the two actions, a judgment in one is no bar to the maintenance of the other.

We find that the evidence required to prove the allegations in Civil Case No. 15937, which involves the annulment of the subsequent transactions and TCTs covering the subject parcels of land and the recovery of possession thereof on the basis of the alleged deed of donation inter vivos, is necessarily more than that required in Civil Case No. 15298, which involves only the annulment of the Deeds of Absolute Sale in favor of Pastor Cayabyab and the corresponding TCTs covering the First and Second Parcels. Furthermore, the decision in Civil Case No. 15298 necessarily turned only upon whether the Deeds of Absolute Sale were fictitious or simulated, while that in Civil Case No. 15937 will also have to include a determination of the good or bad faith of the subsequent purchasers. Res judicata, therefore, does not apply.

Nonetheless, the trial court and the Court of Appeals should have applied the doctrine of conclusiveness of judgment. - a fact or question which was in issue in a former suit and there was

judicially passed upon and determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to that action and persons in privity with them are concerned and cannot be again litigated in any future action between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or different cause of action, while the judgment remains unreversed by proper authority.

Under the doctrine of conclusiveness of judgment, the final decision in Civil Case No. 15298 declaring null and void the Deeds of Absolute Sale in favor of Pastor Cayabyab and the corresponding TCTs covering the subject parcels of land precluded the Court of Appeals from further adjudicating on the validity of the said deeds and titles.

Republic v. Yu

Respondents filed a petition for reversion of expropriated property before the RTC of Cebu. The Republic moved for the dismissal of the complaint on the ground of res judicata taking into consideration the cases of Valdehueza v. Republic and Yu v. Republic which both attained finality. The trial court dismissed the case but its decision was reversed on appeal.

Whether or not the action is barred by res judicata?

Yes.

Res judicata lays the rule that an existing final judgment or decree rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit.

The elements of res judicata are: (1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered

by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the first and second action, identity of parties, subject matter, and causes of action.

In the present case, the first three elements are present. Only the presence of the identity of causes of action is at issue.At this juncture, we need to stress that res judicata has two concepts:14(1) "bar by prior judgment" as enunciated in Rule 39, Section 47 (b)15of the Rules of Civil Procedure; and (2) "conclusiveness of judgment" in Rule 39, Section 47 (c).

There is "bar by prior judgment" when, as between the first case where the judgment was rendered, and the second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. But where there is identity of parties and subject matter in the first and second cases, but no identity of causes of action, the first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved therein. This is "conclusiveness of judgment." The identity of causes of action is not required but merely identity of issues.

Conclusiveness of judgment clearly exists in the present case, because respondents again seek to enforce a right based on a sale which has been nullified by a final and executory judgment.

Stronghold Insurance v. Felix

Garon filed a case for collection of sum of money against Project Movers and Stronghold Insurance before the RTC of Makati. A summary judgment was rendered in favor of Garon. She filed a motion for execution pending appeal which was granted by the trial court. Stronghold Insurance appealed the order granting the motion for execution pending appeal. The appellate court sustained the order of the trial court on the ground of Garon’s husband illness.

Whether or not there is a good reason to justify execution pending appeal?

None.

Execution pending appeal is an exception to the general rule. Execution pending appeal is an extraordinary remedy, being more of the exception rather than the rule.  This rule is strictly construed against the movant because courts look with disfavor upon any attempt to execute a judgment which has not acquired finality.  Such execution affects the rights of the parties which are yet to be ascertained on appeal.

The requisites for the grant of an execution of a judgment pending appeal are the following:          (a)  there must be a motion by the prevailing party with notice to the adverse party;          (b)  there must be good reasons for execution pending appeal;          (c)  the good reasons must be stated in the special order.

As a discretionary execution, execution pending appeal is permissible only when good reasons exist for immediately executing the judgment before finality or pending appeal or even before the expiration of the period to appeal.

We agree with Stronghold Insurance that Garon failed to present good reasons to justify execution pending appeal. In this case, it was not Garon, but her husband, who was ill.

The posting of a bond, standing alone and absent the good reasons required under Section 2, Rule 39 of the Rules, is not enough to allow execution pending appeal.

JP Latex v. Balloons Grangers Balloons

This is a complaint for rescission with damages filed by Balloons Grangers Balloons (BGB) against JP Latex. The trial court ruled in favor of BGB. Subsequently BGB filed a motion for

execution pending appeal which was granted by the trial court on the ground that the machinery is already deteriorating and that JP Latex may not have any money to pay for damages. The sheriff successfully dismantled the machinery. JP Latex filed a petition for certitiorari before the appellate court but it was dismissed for reason that JP Latex did not file an MR to the trial court’s decision.

WHETHER EXECUTION PENDING APPEAL MAY BE ISSUED AND IMPLEMENTED WHEN THE DECISION SOUGHT TO BE EXECUTED IS NOT YET FINAL BECAUSE OF THE PENDING AND UNRESOLVED MOTION FOR RECONSIDERATION OF THE DECISION SOUGHT TO BE EXECUTED PENDING APPEAL.

As a general rule, a petition for certiorari before a higher court will not prosper unless the inferior court has been given, through a motion for reconsideration, a chance to correct the errors imputed to it. This rule, though, has certain exceptions, namely: (1) when the issue raised is purely of law; (2) when public interest is involved; or (3) in case of urgency. As a fourth exception, the Court has ruled that the filing of a motion for reconsideration before availment of the remedy of certiorari is not a sine qua non, when the questions raised are the same as those that have already been squarely argued and exhaustively passed upon by the lower court.

In the instant case, the issue raised is purely an issue of law. Moreover, following the fourth exception, a motion for reconsideration of the RTC order allowing the immediate execution of its decision is no longer necessary in view of the fact that the RTC had already passed upon the propriety of respondents’ motion for execution "pending appeal" on two occasions.

Execution pending appeal or immediate execution, which is now called discretionary execution under Rule 39, Section 2(a), 1997 Rules of Civil Procedure, as amended, is allowed pending appeal of a judgment or final order of the trial court, upon good reasons to be stated in a special order after due hearing.

After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in the appellate court.Discretionary execution may only issue upon good reasons to be stated in a special order after due hearing.It is clear from the caption of the provision that discretionary execution is allowed only when the period to appeal has commenced but before the trial court loses jurisdiction over the case. The period to appeal where a motion for reconsideration has been filed as in the instant case commences only upon the receipt of a copy of the order disposing of the motion for reconsideration. The pendency of a motion for reconsideration, therefore, prevents the running of the period to appeal.Where there is a pending motion for reconsideration of the RTC decision, an order execution pending appeal is improper and premature.

In any event, the Court does not find any good reason to justify the execution of the RTC decision pending finality. The RTC’s finding that the machinery under litigation was deteriorating is not supported by the evidence on record. Nor is the possibility that petitioner would not be able to pay the judgment award a good reason to order discretionary execution. The good reasons allowing execution pending appeal must constitute superior circumstances demanding urgency that will outweigh the injuries or damages to the adverse party if the decision is reversed.

Archinet International v. Becco Philippines

Becco Philippines sub contracted Archinet International for the construction of interior portions of Infinity Tower. Becco failed to pay Archinet. A case for collection was instituted in the Makati RTC. Ten condominium units of Becco were attached in favor of Archinet. Trial court found in favor of Archinet. The latter moved for discretionary execution alleging that it has good reasons because Becco’s president is a fugitive from justice, Becco is already in the process of dissolving its corporate term, and it’s in danger

of insolvency. The trial court granted Archinet’s motion.

On appeal, the appellate court found no good reasons for discretionary execution, thus it reversed the order of the trial court.

Whether or not there is a good reason for discretionary execution?

Yes.

In the instant case, the trial court acted within its discretion in granting petitioners’ motion for discretionary execution on grounds that Becco is in dissolution and Beccomax is in imminent danger of insolvency. 

Good reasons consist of compelling circumstances justifying immediate execution lest judgment becomes illusory, or the prevailing party after the lapse of time be unable to enjoy it, considering the tactics of the adverse party who may have apparently no cause but to delay.  Such reasons must constitute superior circumstances demanding urgency which will outweigh the injury or damages should the losing party secure a reversal of the judgment.

The records show that petitioners submitted documentary evidence in support of its prayer for discretionary execution.  Petitioners submitted a warrant of arrest[38] against Chan Shik Kim, President of Becco and Beccomax, to prove that the latter has not returned to the country since October 25, 2002; a Director’s Certificate[39] dated October 7, 2002, showing that Becco’s Board of Directors authorized its dissolution effective October 31, 2002; and certified machine copies from the Securities and Exchange Commission (SEC) of Reports of Independent Auditors with accompanying audited financial statements[40] of Becco and Beccomax to demonstrate that the former is in a state of liquidation while the latter is in imminent danger of insolvency.

In any event, execution pending appeal does not bar the continuance of the appeal on the merits[56] and respondents are not left without relief in the event of reversal of the judgment

against it.  Section 5, Rule 39 of the Rules of Court specifically provides that where the executed judgment is reversed totally or partially, or annulled, on appeal or otherwise, the trial court may, on motion, issue such orders of restitution or reparation of damages as equity and justice may warrant under the circumstances.

Thus, while there are good reasons justifying an execution pending appeal, the trial court erred in ordering the cancellation of CCTs and ordering the issuance of new titles by mere motion.  The proper course of action was to file a petition in court.  

Florendo v. Paramount Insurance

Spouses Florendo bought five agricultural lands in 1980 but did not register it. In 1998 they discovered that Paramount Insurance caused the attachment of said lands in connection with a case in the CFI of Manila. The Florendo’s then filed a petition for annulment of the liens caused by Paramount Insurance before the RTC of Cavite. The court decided in favor of the Florendo’s. A motion for discretionary judgment was then filed by the Florendo’s alleging as their good reason the advance age of Rosario Florendo, that Paramount’s appeal is only dilatory, and its willingness to answer for whatever damage the Paramount might suffer in connection with the discretionary judgment. The trial court granted the motion for discretionary judgment.

The appellate court reversed the trial court’s decision.

Whether or not there is a good reason for discretionary judgment?

None.

“Good reasons,” it has been held, consist of compelling circumstances that justify immediate execution lest the judgment becomes illusory.  The circumstances must be superior, outweighing the injury or damages that might

result should the losing party secure a reversal of the judgment.

The Florendos point out that Rosario is already in her old age and suffers from life threatening ailments.  But the trial court has allowed execution pending appeal for all of the Florendos, not just for Rosario whose share in the subject lands had not been established.  No claim is made that the rest of the Florendos are old and ailing.  Consequently, the execution pending appeal was indiscreet and too sweeping.   All the lands could be sold for P42 million, the value mentioned in the petition, and distributed to all the Florendos for their enjoyment with no sufficient assurance that they all will and can return such sum in case the CA reverses, as it has in fact done, the RTC decision.  Moreover, it is unclear how much of the proceeds of the sale of the lands Rosario needed for her old age.

The RTC also justified the execution pending appeal on respondent Paramount’s delaying tactics and the possibility that it could become insolvent during the appeal.  But these justifications are purely speculative.

Lastly, the Florendos’ posting of a P4 million bond to answer for the damages that respondent Paramount might suffer in case the RTC decision is reversed on appeal is quite insufficient.[22]  The lands had a market value of P42 million in 2001.

What is more, on October 28, 2008 the CA decided in the main case [24] to reverse and set aside the decision of the RTC, dismiss the Florendos’ complaint, and order the issuance of new titles to the lands in the name of respondent Paramount.  Assuming that such decision has not yet become final, the RTC decision subject of execution pending appeal has nonetheless already lost its presumptive validity. 

Divinagracia v. Ruiz

Divinagracia filed a derivative suit in behalf of PBS and against Bombo Radyo and Florete. Both

defendants filed a counterclaim against Divinagracia. The derivative suit was dismissed and the counterclaim was granted by the trial court. Bombo Radyo and Florete then filed a motion for immediate execution of judgment which was granted by the trial court.

Divinagracia appealed the order granting the immediate execution before the appellate court. However, it was dismissed. According to the appellate court, all rulings in intra-corporate controversies are immediately executor.

Whether or not moral damages, exemplary damages, and attorney's fees, awarded as a result of a counterclaim in an intra-corporate case, are immediately executory despite the pendency of the appeal in the main case?

Acting on the Resolution dated September 5, 2006 of the Committee on the Revision of Rules of Court, the Court Resolved to AMEND Section 4, Rule 1 of The Interim Rules of Procedure Governing Intra-Corporate Controversies... The amended provision expressly exempts awards for moral damages, exemplary damages, and attorney's fees from the rule that decisions and orders in cases covered by the Interim Rules are immediately executory.

Indisputably, the amendment of Section 4, Rule 1 of the Interim Rules is procedural in character. Well-settled is the rule that procedural laws are construed to be applicable to actions pending and undetermined at the time of their passage, and are deemed retroactive in that sense and to that extent.

Based on the foregoing disquisitions, the conclusion is certain in that the award of moral damages, exemplary damages and attorney's fees, awarded as an incident to an intra-corporate case, are exempt from the rule on immediate execution.

Yau v. Silverio, Sr.

Yau bought a Promissory Note (PN) from Philfinance. The PN was issued by Philippine Shares Corporation (PSC). Philfinance issued

checks in favor of Yau. When the latter deposited the checks, it was dishonored. PSC denied issuing the PN. Yau filed a complaint for recovery against Philfinance and the members of its board. Only Pablo Carlos, Jr. filed Answer and the other members of BOD were declared in default. Silverio and the other members of the BOD filed an MR to the order of default. When their MR was denied, they appealed the order denying their MR to the appellate court. It was also dismissed and the decision attained finality.

In the meantime, the trial court decided in favor of Yau for the recovery of money he paid on the PN. This decision was appealed by Carlos, Sr. to the appellate court which substantially upheld the decision of the trial court only modifying the computation of interest. This decision attained finality.

The trial court issued a writ of execution against the members of the board (Macapagal and Silverio) who were declared in default. Their bank deposits and shares of stock were garnished in favor of Yau.

Silverio and Macapagal, both members of the board, filed separate appeals. Macapagal filed a petition for certiorari before the SC which was referred to CA and was subsequently dismissed by reason of res judicata. Silverio filed a petition before the appellate court which was also dismissed. Both filed petition before the Supreme Court assailing the dismissal of their respective petitions before the appellate court. The petitions in the Supreme Court were consolidated because they arose from the same facts. The petition was however dismissed.

The sheriff of the trial court resumed the enforcement of the writ. It sent notices to several bank to garnish the bank deposits of Macapagal. A motion to quash the writ of execution was filed by Macapagal on the ground that the decision of the trial court which is the basis of the writ of execution is more than five years. Hence, it can only be enforced through an independent civil action. Macapagal’s motion was denied by the trial court. According to the trial court there was an effective delay because of the various petitions filed by Macapagal before the CA and

SC. Macapagal appealed the decision to CA but it was also denied.

The sheriff also served notice of levy on a house and lot owned by Silverio in Forbes Park. It was sold in an auction sale to Yau. Silverio then filed a petition before the trial court to declare the levy, auction sale, and the certificate of sale void for the reason that the judgment sought to be executed was more than five years. The trial court denied the motion. On appeal, the CA reversed the decision of the trial court. Yau appealed the CA’s decision to SC. Macapagal and Yau’s petitions were consolidated in view of the identity of parties and issues.

Whether the Decision rendered by the RTC in Civil Case No. CEB-2058 may no longer be enforced against Silverio and Macapagal since more than five (5) years have already lapsed from its finality?

No.It is clear from the above Rule that a judgment may be executed on motion within five years from the date of its entry or from the date it becomes final and executory. Thereafter, before barred by the statute of limitations, by action. However, there are instances where this Court allowed execution by motion even after the lapse of five years upon meritorious grounds.

In Francisco Motors Corporation v. Court of Appeals,[9] this Court held that in computing the time limit for enforcing a final judgment, the general rule is that there should not be included the time when execution is stayed, either by agreement of the parties for a definite time, by injunction, by the taking of an appeal or writ of error so as to operate as a supersedeas, by the death of a party or otherwise. Thus, the time during which execution is stayed should be excluded, and the said time will be extended by any delay occasioned by the debtor. These exceptions have one common denominator, and that is, the delay is caused or occasioned by actions of the judgment debtor and/or is incurred for his benefit or advantage.

Here, the judgment of the trial court sought to be executed became final and executory on

December 26, 1991. The writ of execution was issued on September 17, 1992. It could not be enforced for the full satisfaction of the judgment within the five-year period because Macapagal and Silverio filed with the Court of Appeals and this Court petitions challenging the trial court’s judgment and the writ of execution. Such petitions suspended or interrupted the further enforcement of the writ.

Because of their maneuvers, there has been a delay of sixteen (16) years in the enforcement of such judgment, reckoned from its finality on December 26, 1991 up to the present. Indeed, the enforcement of the trial court’s judgment by motion has been interrupted by the acts of Macapagal and Silverio the judgment debtors.

Solco v. Provido

The Villaruel’s entered a contract to sell over a parcel of land with Solco. They agreed that the full payment will be upon the removal of the structures in the land the clearing of the premises of its occupants. Solco then started to make improvements over the land. The Villaruel’s filed a complaint for rescission of contract to sell because according to them Solco breached the contract when it started making improvement prior to the dismantling of the billboard which is still in the subject land. The trial court held in favor of Solco. The Villaruel’s filed an appeal to CA but it was dismissed. The judgment of the appellate court attained finality.

Solco then filed a motion for execution before the trial court. Solco informed the sheriff that he will only pay the remaining balance after the premises is vacated by its occupants. An ocular inspection was made and it was found out that only the billboard remains in the subject land. The sheriff demanded from Solco the balance of the purchase price but the latter did not pay. Because of this the Villaruel’s informed Solco of their decision to terminate the contract. However, the Villaruel’s also asked the sheriff for the full implementation of the writ of execution by garnishing the bank account of Solco.

In the meantime, Solco presented a check to the court representing the full amount of the remaining balance of the purchase price of the land. The trial court accepted the check and ordered the Villaruel’s to execute a deed of sale over the land.

The Villaruel’s filed a complaint for cancellation of contract and quieting of title. They also filed a motion to quash the writ of execution. It was denied by the trial court. They appealed to CA which reversed the trial court’s decision.

Whether the Court of Appeals erred in reversing the Order of the RTC dated November 23, 2005 accepting the MBTC check as full payment of the contract price?

Yes.

Solco argues that the payment with the clerk of court of MBTC cashier’s check dated August 22, 2005 in the amount of P1,287,786.00 as full payment of the balance of the contract price was in accordance with Section 9, Rule 39 of the Rules of Court which provides that if the judgment obligee is not present to receive the payment, the judgment obligor shall deliver the said payment to the sheriff, who shall turn over all the amounts coming to his possession to the clerk of court.

In the instant case, the Villaruels moved to quash the writ of execution because it allegedly varied the terms of the judgment.  They claimed that the writ directed the sheriff to execute the decision only as against them, contrary to the dispostive portion of the decision which likewise ordered Solco to pay the balance of the purchase price.  This contention is untenable. Villaruels’ remedy was not to move for the quashal of the writ of execution but to move for its modification to include the portion of the decision which ordered Solco to pay the balance of the contract price. Besides, records show that despite the apparent insufficiency in the dispositive portion of the writ, the sheriff did not fail to demand payment from Solco.

Interestingly, we note that at one point, the Villaruels invoked the validity of the writ by

asking the clerk of court “to cause the full implementation” of the writ since Solco “had failed to pay nor deposit before [the RTC] the amount of one million four hundred thousand pesos (P1.4M) less damages, in violation of said Writ of Execution.”  However, when Solco paid the balance of the purchase price in compliance with said writ, the Villaruels moved to have it quashed because it allegedly modified the judgment of the trial court.  This ploy to frustrate the implementation of the writ cannot be countenanced.

In reversing the assailed Orders, the Court of Appeals held that the payment with the clerk of court of MBTC cashier’s check representing the balance of the purchase price less the damages awarded did not comply with the foregoing rule as it was made payable to the clerk of court and not directly to the Villaruels.

This Court recognizes the importance of procedural rules in insuring the effective enforcement of substantive rights through the orderly and speedy administration of justice. However, while it is desirable that the Rules of Court be conscientiously observed, the Court has never hesitated, in meritorious cases, to interpret said rules liberally.

Under the foregoing rules, a sheriff is under obligation to enforce the execution of a money judgment by demanding from the judgment obligor the immediate payment directly to the judgment obligee or his representative of the full amount stated in the writ of execution and all lawful fees.  However, if the judgment obligee or his representative is not present to receive the payment, the rules require the sheriff to receive the payment which he must turn over within the same day to the clerk of court.

Moreover, the fact that payment was made to the clerk of court is of no moment.  Indeed, the Rules require that in case the judgment obligee or his representative is not present to receive the payment, the judgment obligor “shall deliver the aforesaid payment to the executing sheriff,” who “shall turn over all the amounts coming into his possession within the same day to the clerk of court,” who in turn shall deliver the amount to

the judgment obligee or his representative in satisfaction of the judgment.   However, it would be defeating the ends of justice to rigidly enforce the rules and to invalidate the acceptance of the payment made directly to the clerk of court just because it was not initially paid to the sheriff, who is duty bound to “turn over all the amounts coming into his possession” to the clerk of court. Considering that there was no chance for Solco to deliver the payment to the respondents or their representatives, or even to the sheriff, it was only logical for him to make the payment to the clerk of court who issued the writ of execution.

Hi-Yield v. Court of Appeals

Francisco mortgaged the property of spouses Carawatan to Hi-Yield Realty. For failure to pay the mortgage, the property was extrajudicially foreclosed. Francisco claiming that Hi-Yield did not accept the redemption price it offered filed a petition before the trial court for consignation. The trial court then ordered Hi-Yield Realty to submit an updated statement of account which will be the basis of payment of the redemption price. It also ordered Francisco to make full payment within 15 days upon the receipt of the updated statement of account. Hi-Yield submitted the updated statement of account. Francisco however failed to pay within the 15 day period as ordered by the trial court. He asked for another 45 day extension to pay the redemption price. It was denied by the trial court. Francisco filed an MR, the trial court reversed its earlier decision. Hi-Yield appealed to CA but it was dismissed.

Whether or not the trial court erred in allowing the redemption after the lapse of redemption period?

Yes.

Pursuant to the abovementioned rule, the right of redemption should be exercised within the specified time limit, which is one year from the date of registration of the certificate of sale. Moreover, the redemptioner should make an actual tender in good faith of the full amount

of the purchase price as provided above, which means the auction price of the property plus the creditor’s other legitimate expenses like taxes, registration fees, etc.

According to jurisprudence,[9] the redemptioner faced with such a problem may preserve his right of redemption through judicial action which in every case must be filed within the one-year period of redemption.  The filing of the court action to enforce redemption, being equivalent to a formal offer to redeem, would have the effect of preserving his redemptive rights and “freezing” the expiration of the one-year period.

Stated otherwise, the foregoing interpretation, as applied to the case at bar, has three critical dimensions:  (1) timely redemption or redemption by expiration date (or, as what happened in this case, the redemptioner was forced to resort to judicial action to “freeze” the expiration of the redemption period);  (2) good faith as always, meaning, the filing of the private respondent’s action on August 13, 1993 must have been for the sole purpose of determining the redemption price and not to stretch the redemptive period indefinitely; and (3) once the redemption price is determined within a reasonable time, the redemptioner must make prompt payment in full.

Conversely, if private respondent had to resort to judicial action to stall the expiration of the redemptive period on August 13, 1993 because he and the petitioner could not agree on the redemption price which still had to be determined,  private respondent could not thereby be expected to tender payment simultaneously with the filing of the action on said date. Accordingly, the trial court did not err when it resolved to allow private respondent to redeem the property through its orders dated January 31, 1994 and March 15, 1994.

However, after petitioner, pursuant to the trial court order on March 15, 1994, furnished private respondent the updated statement of account on March 24, 1994, the latter should have redeemed the foreclosed property within 15 days, that is, on or before April 8, 1994. But on April 8, 1994,

the deadline set by the trial court, private respondent did not tender any payment.  Instead, he asked for an extension of 45 days because his money was not enough. The trial court was therefore correct when it denied, on May 4, 1994,[11] private respondent’s plea for a 45-day extension for payment.

Strangely, however, the trial court had a sudden change of heart and reversed itself after private respondent filed a motion for reconsideration on May 26, 1994. The trial court resolved to allow private respondent to redeem and pay the redemption price of the property in the “interest of justice” and on the “ground of equity” way beyond what was reasonable and contemplated by the law. We cannot upbraid the trial court for sympathizing with private respondent but this exercise of discretion cannot be allowed to trample upon the other party’s rights.

It was serious error to make the final redemption of the foreclosed property dependent on the financial condition of private respondent. It may have been difficult for private respondent to raise the money to redeem the property but financial hardship is not a ground to extend the period of redemption.

Thus, this Court cannot apply the same leniency as it did in Belisario vs. IAC. There was a definite tender of payment by petitioners therein although at the outset the amount tendered was incomplete and made with a proposal to pay on installment. Had private respondent’s act of filing a suit for redemption really been in good faith, private respondent could have at least consigned or deposited what he thought to be the correct amount simultaneously with the filing of the action to redeem on August 13, 1993 - to show not only good faith but also his intention and capability of paying in full what he believed to be the reasonable price. But even as he petitioned the court for the consignation of the redemption price, no actual consignation was made.

Honrado v. Court of Appeals

In 1997, Premium Agri-Vet filed a collection suit in RTC of Quezon City against Honrado for the unpaid amounts of the veterinary products he purchased on credit. Honrado failed to appear on the pre-trial of the collection suit. He was declared on default. A decision was rendered in 1999 favor of Premium Agr-Vet.

In 1998, Honrado filed a petition before the RTC of Calamba for the judicial constitution of Family Home. The court decreed the property as a Family Home in its 2002 decision.

Honrado filed a Notice of Appeal before the CA on the RTC of QC decision. It was dismissed for his failure to file his appellant’s brief. The decision attained finality. Premium Agri-Vet then filed a motion for execution. A notice of levy was annotated on the property (the subject of petition for the judicial constitution of a family home) in 2001. The property was sold in a public auction. Honrado failed to redeem the property.

Honrado then filed a motion to exempt the property from execution because it is a family home. Premium Agri-Vet opposed the motion of the ground that Honrado was already estopped from claiming the exemption. The motion was denied. Honrado appealed to CA, it was also denied.

Whether or not Honrado can still raise exemption from execution in connection with his family home?

He cannot.

...he did not bother to object to the levy and the projected sale on the ground that the property and the house thereon was a family home.  The petitioner allowed the sale at public auction to proceed and the Sheriff to execute a certificate of sale over the property...  He even vacated the property after the said sale. ...there was no showing that, during the hearing of said motion, the petitioner adduced evidence to prove the value of the property and that it is, indeed, a family home. 

Moreover, the petitioner never informed the Court that the RTC of Calamba, Laguna, had

rendered judgment in SP Case No. 489-1998-C earlier on April 29, 2002.  It was only on November 25, 2002 that the petitioner revealed to the RTC of Quezon City that there was such a case and a decision had already been rendered. The petitioner has not justified why he concealed such matters for such considerable period of time.

While it is true that the family home is constituted on a house and lot from the time it is occupied as a family residence and is exempt from execution or forced sale under Article 153 of the Family Code, such claim for exemption should be set up and proved to the Sheriff before the sale of the property at public auction.

Cardinal Building v. Asset Recovery

Cardinal Building filed a collection suit against Marual for its unpaid assessment dues for the two condominium units he owned in Cardinal Condominium. A compromise agreement was entered between Marual and Cardinal Building. The RTC approved the compromise agreement. However, Marual failed to comply with his obligation under the said agreement. Hence, Cardinal Building filed a motion for execution of judgment of the compromise agreement. When the sheriff served the notice of levy on the RD of Manila, the sheriff found out that there were prior annotations (Mortgaged to Planters Bank and Sale to Asset Recovery).

Cardinal Building then filed a petition for sum of money and a motion for possession of the two condominium units. A writ of possession was issued in its favor upon the filing of bond. Asset Recovery filed a petition before CA assailing the writ of possession of the trial court. The appellate court ruled in favor of Asset Recovery. According to CA, there are only four instances (land registration, extrajudicial foreclosure, judicial foreclosure, execution sale) where a writ of possession may be issued and the case at bar is not one of them.

Whether or not the RTC is correct in issuing the writ of possession?

No.

Moreover, the Decision rendered by the RTC based on the compromise agreement by the parties is a money judgment, the enforcement of which is provided in Section 9, Rule 39 of the 1997 Rules of Civil Procedure, as amended

There is nothing in the above provisions which authorizes the RTC, Branch 4, Manila to issue a writ of possession over the two condominium units in favor of petitioner. ...an execution is fatally defective if the judgment was for sum of money and the writ of execution was for the sale of the mortgaged property. As petitioners' obligation under the compromise agreement as approved by the court was monetary in nature, private respondents can avail only of the writ of execution provided in Section 15 (now Section 9), Rule 39 of the Revised Rules of Court, and not that provided in Section 13 (now Section 10 [c] 18).

Sanga v. Alcantara

This is an administrative case filed against two sheriffs both from the RTC of Morong, Rizal. Sanga was a complainant in an ejectment case before the MTC of Tanay, Rizal. He obtained a favorable judgment in that case. The MTC issued a writ of demolition. Sheriff Alcantara was ordered by the court to execute the writ. According to Sanga, Sheriff Alcantara estimated 45K for the execution of the writ. Sanga gave the amount but no official receipt was issued. The writ was also not executed. Sanga then went to Sheriff Bisnar. The latter demanded 100K for the execution of the writ. They eventually settled to 50K. No official receipt was issued and also the writ remained unimplemented. An administrative complaint was then filed by Sanga against the two sheriffs. After the investigation, they were both found guilty. The OCA recommended for their dismissal.

We adopt the recommendation of the OCA. Under Section 9, Rule 141 of the Rules of Court, the sheriff is required to secure the court’s prior

approval of the estimated expenses and fees needed to implement the court process.

Thus, following the above-mentioned rules, a sheriff is guilty of violating the Rules if he fails to observe the following: (1) prepare an estimate of expenses to be incurred in executing the writ, for which he must seek the court's approval; (2) render an accounting; and (3) issue an official receipt for the total amount he received from the judgment debtor.

Sheriffs are not allowed to receive any voluntary payments from parties in the course of the performance of their duties. To do so would be inimical to the best interests of the service, because even assuming arguendo that the payments were indeed given and received in good faith, this fact alone would not dispel the suspicion that such payments were made for less than noble purposes.

Both Alcantara and Bisnar demanded and collected money from the plaintiff allegedly to defray the expenses for the implementation of the writ. The acquiescence or consent of the plaintiffs to such expenses does not absolve the sheriff of his failure to secure the prior approval of the court concerning such expenses. They did not deposit the sums received from complainant with the Clerk of Court who, under Section 9, was then authorized to disburse the same to respondent sheriff to effect the implementation of the writ. Neither was it shown that they rendered an accounting and liquidated the said amount to the court.

Furthermore, we also agree with the findings of the OCA that respondents’ issuance of Temporary Receipts, which were handwritten on scraps of papers, also constitutes a violation of Section 113 of Article III, Chapter V of the National Accounting and Auditing Manual, which provides that “no payment of any nature shall be received by a collecting officer without immediately issuing an official receipt in acknowledgment thereof.”

Peña, Jr. v. Regalado II (sweet revenge case)

Peña, Jr. was one of the respondents in a falsification case. An adverse judgment was promulgated and he was ordered to pay a fine of 5K and damages in the amount of 30K to Francisco. Sheriff Regalado II collected sums of money from him without issuing any receipts. He reported the unethical conduct of the sheriff before the OCA. The sheriff admitted collecting the amounts from Peña, Jr. but claimed that he already turned over the money to the winning party in the falsification case. It was found out however that the sheriff did not give all the money he collected from Peña, Jr., it was only after the winning party wrote the judge that the sheriff failed to execute the full amount in the writ that the sheriff gave all the money.

According to the sheriff, he did not turn over the money to the clerk of court as rules provide to spare the winning party who is already in advance age the trouble for filing a motion to release the money. He also claimed that he is already a sheriff for 12 years and this is the procedure is some of the cases he handled.

It turned out that it is already the second case filed against Regalado II for not following the procedure in execution of writ. The investigating judge recommended a 15 day suspension. The OCA however recommended a more severe punishment which was dismissal.

Despite complainant’s manifest apathy towards the outcome of this administrative case, the Court is duty-bound to proceed with its investigation and resolution to determine whether respondent has, in fact, erred in his conduct. Complainant's lack of interest in pursuing the case will not exonerate respondent from any administrative action. It will not divest this Court of jurisdiction to determine the truth behind the complaint...

When the judgment obligee is not present at the time the judgment obligor makes the payment, the sheriff is authorized to receive it.  However, the money received must be remitted to the clerk of court within the same day or, if not practicable, deposited in a fiduciary account with the nearest government  depository  bank.  Evidently,

sheriffs are not permitted to retain the money in their possession beyond the day when the payment was made or to deliver the money collected directly to the judgment obligee.

Respondent’s excuse for not turning over the money to the clerk of court does not persuade us enough to arrive at a contrary finding.

Respondent may have been motivated by a noble intention when he directly gave the P13,000.00 to Francisco, but the same cannot be said of the two succeeding payments.

Suspended for 1 year.

Fermin v. Estevez

An action of quieting of title with damages before the RTC of Baguio City by Tanenglian against Arizo, et. al. Judgment was rendered in favor of Tanenglian. On appeal, the CA affirmed the trial court’s decision. The decision attained finality. Entry of judgment was made. The trial court then issued a Special Order for Demolition.

Fermin and Kigis filed a petition for prohibition, temporary injunction with prayer for TRO before the CA. According to them, the writ of demolition to be implemented by the sheriff will not only affect Arizo, et. al. But also them who were not parties to the case before the trial court. They also alleged that they entered the possession of the property as members of indigenous cultural community believing that the property is part of their ancestral land. Their petition was however denied by the appellate court.

Whether the Special Order of Demolition may be enforced against petitioners who were not party-defendants in Civil Case  No. 925-R?

No.

The generally accepted principle is that no man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by a judgment rendered by the court. Execution of a judgment can only be issued against one who is a party to the action,

and not against one who, not being a party in the case, did not have his day in court. In this case, petitioners were not parties in Civil Case  No. 925-R. The Special Order of Demolition only binds the defendants in Civil Case No. 925-R as well as  their agents, assigns, representatives, or successors-in-interest.

The Court of Appeals ruled that petitioners could have intervened in Civil Case No. 925-R.  Yet, there was no evidence that petitioners were aware of the pendency of Civil Case No. 925-R. We cannot accept respondent’s assertion that the pendency of Civil Case No. 925-R could not have escaped petitioners’ notice because it was frequently talked about in the community.

The Court of Appeals also ruled that petitioners could have availed themselves of the remedy under Section 43, Rule 39 of the 1997 Rules of Civil Procedure. In this case,  Arizo, et al. are not judgment obligors as contemplated in Section 43, Rule 39 of the 1997 Rules of Civil Procedure.    Neither are petitioners indebted to Arizo, et al.  It was not even established that petitioners are in possession of the property of Arizo, et al.  In fact, petitioners alleged that it was not established that their residential structures are within the area subject of Civil Case No. 925-R.  In other words, Section 43, Rule 39 of the 1997 Rules of Civil Procedure, which would allow the judgment oblige to recover indebtedness due to the judgment obligor, does not apply in this case.

When the Court of Appeals referred to the remedy of terceria, it must be referring to Section 16, Rule 39, not Section 43, Rule 39 of the 1997 Rules of Civil Procedure. The remedy of terceria is available to a third person other than the judgment obligor or his agent who claims a property levied on.  In this case, the property was not levied on and put on auction.  The implementation of the Special Order of Demolition would result in the destruction of petitioners’ property.  Further, terceria is not a speedy and adequate remedy   insofar as petitioners are concerned considering that the Special Order of Demolition ordered the Deputy Sheriff to cause the demolition of all the improvements

immediately after the expiration of the 15-day period granted upon the defendants, their agents, assigns, representatives, or successors-in-interest to remove their improvements on the premises.

Corpuz v. Sto. Tomas (1 year marriage case)

Corpuz was a Filipino citizen who acquired a Canadian citizenship in 2000. On January 2005, he married Sto. Tomas in Pasig City. He learned that his wife is having an affair with another man on April 2005. He filed a divorce in Canada which was granted in December 2005. Corpuz found another Filipina that he intends to marry. He went to Pasig Civil Registry to register the decree of divorce in Canada. He was however informed that his marriage with Sto. Tomas still subsists and the foreign decree of divorce must be judicially recognized by a competent court for it to take effect.

Corpuz then filed a petition for judicial recognition of the foreign divorce decree and the dissolution of his marriage with Sto. Tomas before the Pasig RTC. The trial court however denied his petition reasoning that he is not a proper party to institute the petition since he is a Canadian citizen and it is only the Filipino spouse who can avail the remedy provided in Art. 26 (2) of the Family Code.

Whether or not a foreign citizens can file a petition for judicial recognition of the foreign divorce decree under Art. 26 (2) of the Family Code?

No.

The alien spouse can claim no right under the second paragraph of Article 26 of the Family Code as the substantive right it establishes is in favor of the Filipino spouse.

Through the second paragraph of Article 26 of the Family Code, EO 227 effectively incorporated into the law this Court’s holding in Van Dorn v. Romillo, Jr. and Pilapil v. Ibay-Somera. In both cases, the Court refused to acknowledge the alien spouse’s assertion of marital rights after a

foreign court’s divorce decree between the alien and the Filipino. The Court, thus, recognized that the foreign divorce had already severed the marital bond between the spouses.

The legislative intent is for the benefit of the Filipino spouse, by clarifying his or her marital status, settling the doubts created by the divorce decree. Essentially, the second paragraph of Article 26 of the Family Code provided the Filipino spouse a substantive right to have his or her marriage to the alien spouse considered as dissolved, capacitating him or her to remarry.

Additionally, an action based on the second paragraph of Article 26 of the Family Code is not limited to the recognition of the foreign divorce decree. If the court finds that the decree capacitated the alien spouse to remarry, the courts can declare that the Filipino spouse is likewise capacitated to contract another marriage.

We qualify our above conclusion – i.e., that the second paragraph of Article 26 of the Family Code bestows no rights in favor of aliens – with the complementary statement that this conclusion is not sufficient basis to dismiss Gerbert’s petition before the RTC. In other words, the unavailability of the second paragraph of Article 26 of the Family Code to aliens does not necessarily strip Gerbert of legal interest to petition the RTC for the recognition of his foreign divorce decree. The foreign divorce decree itself, after its authenticity and conformity with the alien’s national law have been duly proven according to our rules of evidence, serves as a presumptive evidence of right in favor of Gerbert, pursuant to Section 48, Rule 39 of the Rules of Court which provides for the effect of foreign judgments.

To our mind, direct involvement or being the subject of the foreign judgment is sufficient to clothe a party with the requisite interest to institute an action before our courts for the recognition of the foreign judgment. In a divorce situation, we have declared, no less, that the divorce obtained by an alien abroad may be recognized in the Philippines, provided the

divorce is valid according to his or her national law.

The starting point in any recognition of a foreign divorce judgment is the acknowledgment that our courts do not take judicial notice of foreign judgments and laws. This means that the foreign judgment and its authenticity must be proven as facts under our rules on evidence, together with the alien’s applicable national law to show the effect of the judgment on the alien himself or herself.

Needless to state, every precaution must be taken to ensure conformity with our laws before a recognition is made, as the foreign judgment, once recognized, shall have the effect of res judicata between the parties, as provided in Section 48, Rule 39 of the Rules of Court.

The recognition of the foreign divorce decree may be made in a Rule 108 proceeding itself, as the object of special proceedings (such as that in Rule 108 of the Rules of Court) is precisely to establish the status or right of a party or a particular fact. Moreover, Rule 108 of the Rules of Court can serve as the appropriate adversarial proceeding by which the applicability of the foreign judgment can be measured and tested in terms of jurisdictional infirmities, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

Republic v. Gingoyon

Yoko nah!

Mijares v. Ranada

The petitioners are prominent victims of human rights abuse during the Marcos regime. They filed a class suit against the estate of the late dictator before the US District Court in Hawaii invoking the Alien Tort Act. They won in the district court and the amount of damages awarded is more than $1.9B. The judgment of the district court was affirmed by the US Court of Appeals, 9th Circuit.

Petitioners then filed before the RTC of Makati a petition for the enforcement of foreign judgment. They paid P410.00 as docket fee for the enforcement of the foreign judgment. The estate of Marcos filed a motion to dismiss on the ground of non-payment of correct docket fees. Petitioners argued that the enforcement of foreign judgment is not capable of pecuniary estimation, hence they paid the correct docket fees. The RTC ruled that it is capable of pecuniary estimation and the correct docket fee is P472M. The case was dismissed without prejudice.

Whether or not the RTC is correct in dismissing the case?

No.

An examination of Rule 141 of the Rules of Court readily evinces that the respondent judge ignored the clear letter of the law when he concluded that the filing fee be computed based on the total sum claimed or the stated value of the property in litigation. Petitioners' complaint may have been lodged against an estate, but it is clearly based on a judgment, the Final Judgment of the US District Court. The provision does not make any distinction between a local judgment and a foreign judgment, and where the law does not distinguish, we shall not distinguish.

In a real action, the assessed value of the property, or if there is none, the estimated value, thereof shall be alleged by the claimant and shall be the basis in computing the fees. ...this provision does not apply in the case at bar. A real action is one where the plaintiff seeks the recovery of real property or an action affecting title to or recovery of possession of real property.16 Neither the complaint nor the award of damages adjudicated by the US District Court involves any real property of the Marcos Estate.

Thus, respondent judge was in clear and serious error when he concluded that the filing fees should be computed on the basis of the schematic table of Section 7(a), as the action involved pertains to a claim against an estate based on judgment.

The rules of comity, utility and convenience of nations have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious under certain conditions that may vary in different countries.

The conditions required by the Philippines for recognition and enforcement of a foreign judgment were originally contained in Section 311 of the Code of Civil Procedure, which was taken from the California Code of Civil Procedure which, in turn, was derived from the California Act of March 11, 1872.

There is an evident distinction between a foreign judgment in an action in rem and one in personam. For an action in rem, the foreign judgment is deemed conclusive upon the title to the thing, while in an action in personam, the foreign judgment is presumptive, and not conclusive, of a right as between the parties and their successors in interest by a subsequent title. However, in both cases, the foreign judgment is susceptible to impeachment in our local courts on the grounds of want of jurisdiction or notice to the party,22 collusion, fraud,23 or clear mistake of law or fact.

The rules are silent as to what initiatory procedure must be undertaken in order to enforce a foreign judgment in the Philippines. But there is no question that the filing of a civil complaint is an appropriate measure for such purpose.

As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of jurisdiction of the foreign court, the service of personal notice, collusion, fraud, or mistake of fact or law. Otherwise known as the policy of preclusion, it seeks to protect party expectations resulting from previous litigation, to safeguard against the harassment of defendants, to insure that the task of courts not be increased by never-ending litigation of the same disputes...

Petitioners appreciate this distinction, and rely upon it to support the proposition that the subject matter of the complaintthe

enforcement of a foreign judgmentis incapable of pecuniary estimation. Admittedly the proposition, as it applies in this case, is counter-intuitive, and thus deserves strict scrutiny. For in all practical intents and purposes, the matter at hand is capable of pecuniary estimation, down to the last cent.

The jurisprudential standard in gauging whether the subject matter of an action is capable of pecuniary estimation is well-entrenched. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation... where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money...

Thus, we are comfortable in asserting the obvious, that the complaint to enforce the US District Court judgment is one capable of pecuniary estimation. But at the same time, it is also an action based on judgment against an estate, thus placing it beyond the ambit of Section 7(a) of Rule 141. For this case and other similarly situated instances, we find that it is covered by Section 7(b)(3), involving as it does, "other actions not involving property."

Notably, the amount paid as docket fees by the petitioners on the premise that it was an action incapable of pecuniary estimation corresponds to the same amount required for "other actions not involving property." The petitioners thus paid the correct amount of filing fees, and it was a grave abuse of discretion for respondent judge to have applied instead a clearly inapplicable rule and dismissed the complaint.

There is no obligatory rule derived from treaties or conventions that requires the Philippines to recognize foreign judgments, or allow a procedure for the enforcement thereof. 

While the definite conceptual parameters of the recognition and enforcement of foreign judgments have not been authoritatively established, the Court can assert with certainty

that such an undertaking is among those generally accepted principles of international law.

Certainly, the Philippine legal system has long ago accepted into its jurisprudence and procedural rules the viability of an action for enforcement of foreign judgment, as well as the requisites for such valid enforcement, as derived from internationally accepted doctrines. The bare principle, to our mind, has attained the status of opinio juris in international practice.

The preclusion of an action for enforcement of a foreign judgment in this country merely due to an exhorbitant assessment of docket fees is alien to generally accepted practices and principles in international law. The vagaries of inflation, as well as the relative low-income capacity of the Filipino, to date may very well translate into an award virtually unenforceable in this country, despite its integral validity, if the docket fees for the enforcement thereof were predicated on the amount of the award sought to be enforced. We cannot very well require that the filing fee be computed based on the value of the foreign property as determined by the standards of the country where it is located.

It bears noting that Section 48, Rule 39 acknowledges that the Final Judgment is not conclusive yet, but presumptive evidence of a right of the petitioners against the Marcos Estate. Moreover, the Marcos Estate is not precluded to present evidence, if any, of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. This ruling, decisive as it is on the question of filing fees and no other, does not render verdict on the enforceability of the Final Judgment before the courts under the jurisdiction of the Philippines, or for that matter any other issue which may legitimately be presented before the trial court.  Such issues are to be litigated before the trial court, but within the confines of the matters for proof as laid down in Section 48, Rule 39.

Quasha Ancheta Peña and Nolasco Law Office v. Court of Appeals

Legend International Resorts (Legend) is a foreign corporation organized in HK and authorized to operate casino in Subic. Quasha Law Office is the counsel of Legend. Picazo Law Office was Legend’s former counsel.

Legend filed a case against SBMA and PAGCOR for amending the contract to operate the casino in Subic. The trial ruled in favor of Legend and nullified the amendment. PAGCOR appealed this decision to the CA.

In the meantime, in HK, Legend filed a Winding-Up and consequently liquidators were appointed by the HK court to manage the remaining business of Legend including the casino in Subic. The liquidators appointed dismissed the services of the CEO in the casino and the services of Picazo Law Office. They then engaged the services of Quasha Law Office.

Quasha Law Office then filed its appearance before the CA where the appeal of PAGCOR was pending. It attached the letter terminating the services of Picazo Law Office and engaging its services. The appellate court refused to recognise the appearance of Quasha Law Office. According to the appellate court, the letter presented by the law office has no probative value. The appellate court also held that it cannot take judicial notice to the order of the HK court appointing liquidators since it is a foreign judgment. Quasha Law Office filed a manifestation that in the other division (10th div) of the appellate court, their appearance was recognized on the strength of the same letter. However, the appellate court (6th div) ruled that decision of the other division is not binding to them.

Whether the Special Sixth Division of the Court of Appeals acted with grave abuse of discretion in not giving due deference to a Decision of its co-division, which similarly resolved the issue of proper legal representation of petitioner LIRL?

Whether the Special Sixth Division of the Court of Appeals gravely abused its discretion in considering that the Orders of the Hong Kong Court appointing liquidators for petitioner LIRL

involved enforcement and recognition of a foreign judgment?

In the case at bar, this Court holds that there was no grave abuse of discretion amounting to lack or excess of jurisdiction committed by the Special Sixth Division of the Court of Appeals in not giving due deference to the decision of its co-division.  As correctly pointed out by the Special Sixth Division of the Court of Appeals, the decision of its co-division is not binding on its other division.

However, as regards the second issue of whether the Special Sixth Division of the Court of Appeals gravely abused its discretion in considering that the Orders of the Hong Kong Court appointing liquidators for petitioner LIRL involved enforcement and recognition of a foreign judgment, we hold that the same is already barred by the principle of res judicata—conclusiveness of judgment.

It has already been settled in the aforesaid two Decisions that the Orders of the Hong Kong Court appointing liquidators for petitioner LIRL did not involve the enforcement of a foreign judgment.  The act of terminating the legal services of private respondent Picazo Law Office and engaging in its place petitioner Quasha Law Office was a mere exercise of petitioner LIRL’s prerogative, through its appointed liquidators, which was an internal affair that required no prior recognition in a separate action.

Republic v. Florendo

PEZA filed a complaint for expropriation of 7 parcels of land in the RTC of Lapu-Lapu City. It was granted and was the amount of just compensation was set to 1.5K per sqm. Spouses Florendo appealed before CA to question the correctness of the amount of just compensation. While the appeal was pending, the parties reached amicable settlement. They agreed to the amount of 1.5K per sqm. PEZA then paid the full amount for the first 4 parcels of land. The case filed was however not dismissed because there were still 3 parcels of land that PEZA is about to pay. They just agreed that the compromise

agreement will only cover the first 4 parcels of land paid. The compromise agreement was neither approved nor brought to the knowledge of the appellate court. The appellate court rendered a decision ruling that the correct amount should be 1K per sqm. The decision of the appellate court attained finality.

Florendo then filed a motion before the trial court for the issuance of writ of execution of the final judgment of the appellate court. The trial court granted the motion and notices of garnishment were served. PEZA moved to quash the writ of execution and notices of garnishment. It was however denied by the trial court reasoning that the compromise agreement was not approved by the appellate court and therefore not binding. PEZA appealed the judgment to CA, it was dismissed too.

Whether this perfected compromise agreement is valid despite the finality of judgment of the CA?

A compromise agreement is a contract whereby the parties make reciprocal concessions in order to resolve their differences and thus avoid litigation or to put an end to one already commenced.[28] When it complies with the requisites and principles of contracts, it becomes a valid agreement which has the force of law between the parties.[29] It has the effect and authority of res judicata once entered into,[30] even without judicial approval.

Thus, although a compromise agreement has the effect and authority of res judicata upon the parties even without judicial approval, no execution may issue until it has received the approval of the court where the litigation is pending and compliance with the terms of the agreement is thereupon decreed.

Accordingly, we hold that the compromise agreement reached by the parties while the appeal was pending in the CA is valid.  When the CA rendered its June 25, 2002 decision, it unknowingly adjudicated a case which, for all intents and purposes, had already been closed and terminated by the parties themselves when they agreed on a settlement.[43]  It does not

matter that the CA decision lapsed into finality when neither party questioned it. A compromise agreement is still valid even if there is already a final and executory judgment.

Consequently, considering that the  June 25, 2002 decision of the CA had been superseded by the compromise agreement of the parties, the various orders of the RTC directing the execution of the said June 25, 2002 CA decision were invalid and of no force and effect.