Doctrine of finality of judgment not applied by the Court by reason of equity - G.R. No. 194653

G.R. No. 194653

"x x x.

 

The issue presented by the instant case is not novel. In FGU Insurance Corporation v. Regional Trial Court of Makati City, Branch 66,[9] we explained that, although a decision that has acquired finality becomes immutable, unalterable, and may no longer be modified in any respect, still there are exceptions to the said rule. Thus:

Fundamental is the rule that where the judgment of a higher court has become final and executory and has been returned to the lower court, the only function of the latter is the ministerial act of carrying out the decision and issuing the writ of execution. In addition, a final and executory judgment can no longer be amended by adding thereto a relief not originally included. In short, once a judgment becomes final, the winning party is entitled to a writ of execution and the issuance thereof becomes a court's ministerial duty. The lower court cannot vary the mandate of the superior court or reexamine it for any other purpose other than execution; much less may it review the same upon any matter decided on appeal or error apparent; nor intermeddle with it further than to settle so much as has been demanded.

Under the doctrine of finality of judgment or immutability of judgment, a decision that has acquired finality becomes immutable and unalterable, and may no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact and law,


and whether it be made by the court that rendered it or by the Highest Court of the land. Any act which violates this principle must immediately be struck down.

But like any other rule, it has exceptions, namely: (1) the correction of clerical errors; (2) the so-called nunc pro tunc entries which cause no prejudice to any party; (3) void judgments; and (4) whenever circumstances transpire after the finality of the decision rendering its execution unjust and inequitable. The exception to the doctrine of immutability of judgment has been applied in several cases in order to serve substantial justice. The early case of City of Butuan vs. Ortiz is one where the Court held as follows:

Obviously a prevailing party in a civil action is entitled to a writ of execution of the final judgment obtained by him within five years from its entry (Section 443, Code of Civil Procedure). But it has been repeatedly held, and it is now well-settled in this jurisdiction, that when after judgment has been rendered and the latter has become final, facts and circumstances transpire which render its execution impossible or unjust, the interested party may ask the court to modify or alter the judgment to harmonize the same with justice and the facts (Molina vs. De la Riva, 8 Phil. 569; Behn, Meyer & Co. vs. McMicking, 11 Phil. 276; Warner, Barnes & Co. vs. Jaucian, 13 Phil. 4; Espiritu vs. Crossfield and Guash, 14 Phil. 588; Flor Mata vs. Lichauco and Salinas, 36 Phil. 809). In the instant case the respondent Cleofas alleged that subsequent to the judgment obtained by Sto. Domingo, they entered into an agreement which showed that he was no longer indebted in the amount claimed of P995, but in a lesser amount. Sto. Domingo had no right to an execution for the amount claimed by him.’ (De la Costa vs. Cleofas, 67 Phil. 686-693).

Shortly after City of Butuan v. Ortiz, the case of Candelario v. Cañizares was promulgated, where it was written that:

After a judgment has become final, if there is evidence of an event or circumstance which would affect or change the rights of the parties thereto, the court should be allowed to admit evidence of such new facts and circumstances, and thereafter suspend execution thereof and grant relief as the new facts and circumstances warrant. We, therefore, find that the ruling of the court declaring that the order for the payment of P40,000.00 is final and may not be reversed, is erroneous as above explained.

These rulings were reiterated in the cases of Abellana vs. Dosdos, The City of Cebu vs. Mendoza and PCI Leasing and Finance, Inc. v. Antonio Milan. In these cases, there were compelling circumstances which clearly warranted the exercise of the Court’s equity jurisdiction.[10] (citations omitted)

          Here, the March 22, 2005 Decision of the CA ordering, inter alia, the respondent to pay the petitioner actual and compensatory damages in the event that the latter is constrained to demolish the said portion of his house, is already final. Pursuant to the doctrine of finality of judgment, the said decision may not be modified in any respect.

Nevertheless, we are loath to apply the doctrine of finality of judgment with regard to the payment of actual and compensatory damages in favor of the petitioner. There are circumstances in the instant case which transpired after the finality of the March 22, 2005 Decision of the CA and which rendered the execution of the same unjust and inequitable with respect to the award of actual and compensatory damages in favor of the petitioner.

After the March 22, 2005 CA Decision had attained finality, the respondent had fully satisfied the judgment in favor of Spouses Beltran by conveying a parcel of land it owned in exchange for the lot encroached upon by the petitioner’s house. It bears stressing that the petitioner has been informed of the fact of the satisfaction of the judgment in favor of Spouses Beltran. Fil-Homes, then, had become the registered owners of the property encroached upon.

Accordingly, the petitioner, in view of the foregoing, could reasonably expect that Spouses Beltran would no longer demand from him the payment of the value of the latter’s lot and, as a practical consequence, there would be no need for the former to cause the demolition of his house. There being no necessity for the demolition of the petitioner’s house, there would likewise be no need for the order directing the respondent to pay the petitioner actual and compensatory damages.

On this point, the CA aptly ruled that:

The foregoing ratiocination failed to take into consideration that the [Spouses Beltran] had lost whatever interest they may have in the case as adjudged in their favor. Their position as party-plaintiffs entitled to a writ of execution enforced against the owner of the structure erected on the subject lots has been transferred to the [respondent]. They have, for all intents and purposes, been considered to have received payment for the value of the lot. Thus, after taking into consideration the subsequent events that transpired, this Court finds and so holds that it will now be unjust to enforce to enforce paragraphs 6 and 7 of the decision. By receiving payment over the value of the lot, [Spouses Beltran] clearly lost their right to alternatively order the demolition of the portions of theMendoza’s house that encroached on their former property. Since [Spouses Beltran] can no longer cause actual damage to Mendoza’s house, the latter cannot be entitled to reimbursement from the [respondent], for it is clear under CA G.R. CV No. 80817 that Mendoza“will suffer an injury which is attributable to Fil-Homes if and when his house will be demolished.”[11] (citation omitted)

Indeed, it would be the height of inequity if the respondent would still be required to pay the petitioner actual and compensatory damages in the amount of P1,323,554.30 after it had fully satisfied the judgment in favor of Spouses Beltran.

Moreover, we agree with the CA that there was evident bad faith on the part of the petitioner when he caused the demolition of his house. The petitioner, despite knowing that the respondent had fully satisfied the judgment in favor of Spouses Beltran, still proceeded with the demolition of his house. Thus, whatever injury that may have been incurred by the petitioner when his house was demolished could only be attributed to him. Thus, the CA stressed that:

What Mendoza did, to the mind of this Court, is a clear case of abuse of right, contrary to the intention of the RTC Decision. He made a mockery of the dispositive portion of the said decision when he demolished his house despite not being ordered to do so by the lot owner. The records will further reveal that Mendoza was notified of the fact that Fil-Homes had become the owner of the said lots, and despite the foregoing, on April 1, 2008, Mendoza, on the pretext of complying with the RTC decision, entered into a contract with A.A. Angeles Concrete Products and Construction Supply for the demolition of his house, and a day after, commenced its demolition. x x x.[12] (citations omitted)

x x x ."