First Integrated Bonding & Insurance Co. v. Isnani
REITERATIONFacts
The Antecedents: First Integrated Bonding & Insurance Co., Inc. (FIBIC) and Marian Realty & Development Corp. (MRDC) sought to prevent the implementation of a writ of execution issued by the Regional Trial Court (RTC) of Pasig, Metro Manila, to satisfy a final judgment in favor of Rizal Commercial Banking Corp. (RCBC). MRDC obtained a P500,000 export financing loan from RCBC, evidenced by a promissory note with compound interest and provisions for liquidated damages and attorney's fees. Security for the loan included a real estate mortgage, a surety bond from FIBIC, and a comprehensive surety agreement from other individuals. MRDC also signed a second promissory note for P250,000. Upon MRDC's default, RCBC filed a collection suit against MRDC and its sureties. MRDC and FIBIC alleged usury, partial payment, and nullity of the mortgage, bond, and surety agreements. Due to the defendants' failure to appear at pre-trial, they were declared in default, and RCBC presented its evidence ex parte. Procedural History: The RTC rendered judgment ordering the defendants to pay RCBC the principal sum, liquidated damages, and attorney's fees. Motions to set aside the default and reconsider the decision were denied. The Appellate Court affirmed the RTC's decision, and this Court denied the subsequent petition for review, leading to the entry of judgment and remand to the trial court for execution. The Petition: Upon RCBC's motion, a writ of execution was issued. Petitioners filed motions to quash the writ, claiming MRDC had paid 50% of the first promissory note, that the second note was a renewal for the balance, and that there was an excess payment from the foreclosure sale. The respondent judge denied these motions, stating that the payments sought to be credited could have been considered during the trial. Petitioners argue that the RTC gravely abused its discretion in denying their motions, citing Naga Development Corporation vs. Court of Appeals.
Issue(s)
Whether the respondent judge gravely abused his discretion in denying the petitioners' motions to quash the writ of execution. Whether payments made after the rendition of a final and executory judgment can be considered during the execution phase to vary the terms of the judgment.
Ruling
The petition is denied for lack of merit. The temporary restraining order issued by this Court is set aside. Costs are against the petitioners.
Ratio Decidendi
On the issue of whether the respondent judge gravely abused his discretion in denying the petitioners' motions to quash the writ of execution: The Court held that the respondent judge did not abuse his discretion. The petitioners' claims of payment and the nature of the second promissory note as a renewal were matters that were either presented or could have been presented during the trial of the case. Since the judgment had become final and executory, affirmed by the Court of Appeals and this Court, these issues could no longer be reopened during the execution phase. The evidence presented by the petitioners in support of their motions to quash were the promissory notes themselves, which the Court found to be proofs of indebtedness rather than payment. The Court also noted that the petitioners failed to present receipts to substantiate their claim of partial payment. On the issue of whether payments made after the rendition of a final and executory judgment can be considered during the execution phase to vary the terms of the judgment: The Court distinguished the present case from Naga Development Corporation vs. Court of Appeals. In Naga, the Supreme Court allowed the presentation of proof of payments during the execution phase because the Court of Appeals' decision was still under review by the Supreme Court. In this case, the judgment was already final and executory. The Court emphasized that allowing such claims during execution would tend to vary the terms of the judgment, which is impermissible. Justice Barredo's dissent in Naga, which was quoted with approval, stated that issues that could have been passed upon before judgment cannot be reopened during execution, as it would lead to endless litigation. The Court found that the petitioners' claim that the second promissory note was a renewal and not an additional loan was contradicted by the trial court's findings based on the evidence presented by the Bank, which indicated that the second note represented a new loan due to the failure to pay the first loan's partial payment and balance on time.
Main Doctrine
A motion to quash a writ of execution based on claims of payment or set-off that were or could have been raised before the rendition of the judgment, which has already become final and executory, may be denied as such claims cannot be reopened during the execution phase without varying the terms of the judgment.