Obieta v. Cheok
REITERATIONFacts
The Antecedents: This case originated from an intra-corporate dispute initiated by respondent Edward Cheok against Republic Resources and Development Corporation (REDECO) and petitioner Joaquin P. Obieta, in his capacity as corporate secretary. Respondent sought the issuance of new certificates of stock at a revised par value, replacing his existing street certificates. REDECO and petitioner contested this, asserting that respondent failed to provide proof of endorsement or assignment of the street certificates and that their issuance was not reflected in the corporation's stock and transfer book, thus justifying the denial of the request. Procedural History: The Regional Trial Court (RTC) of Manila, Branch 46, ruled that the street certificates were genuine, given REDECO's admission of their issuance to respondent's stockbrokers, and found petitioner negligent in refusing the request. The RTC ordered REDECO and petitioner to jointly and severally pay respondent P695,873 plus interest and attorney's fees. This decision became final and executory when the appeal by REDECO and petitioner was not perfected. Subsequently, the RTC issued a writ of execution, ordering petitioner to deliver his Valley Golf and Country Club (VGCC) stock certificate for public auction, which petitioner refused, leading to his citation for contempt. Petitioner challenged these contempt orders via a petition for certiorari and prohibition in the Court of Appeals (CA), arguing that a corporate officer should not be held personally liable for corporate obligations and that the RTC lacked legal basis to compel the surrender of his personal stock certificate. The CA initially set aside the RTC's decision and orders, finding no bad faith or gross negligence on petitioner's part and no basis for personal liability. However, upon reconsideration, the CA reversed its decision, noting that the RTC's finding of gross negligence, even if erroneous, had become final and executory, thus reinstating petitioner's solidary liability with REDECO. The Petition: Petitioner, through a petition for review on certiorari under Rule 45 of the Rules of Court, seeks to overturn the CA's resolution that reinstated his solidary liability with REDECO. Petitioner maintains his argument that a corporate officer cannot be held personally liable for a corporate obligation. However, the Supreme Court denies the petition, emphasizing that the matter of solidary liability was settled with finality by the trial court and that a final and executory decision, even if containing erroneous conclusions, becomes immutable and unalterable,able and must be enforced.
Issue(s)
Whether the Court of Appeals erred in holding petitioner Joaquin P. Obieta solidarily liable with REDECO despite the general rule that a corporate officer is not personally liable for corporate obligations; specifically, whether the finality of the RTC decision, even if based on an erroneous finding of gross negligence, rendered the issue immutable. Whether a final and executory decision, even if containing erroneous conclusions of fact or law, can still be modified or set aside; specifically, whether the principle of immutability applies despite potential errors in the original judgment.
Ruling
The petition is denied. The September 6, 2001 decision of the RTC, which held petitioner solidarily liable with REDECO, became final and executory due to the failure to perfect the appeal. As such, it is immutable and unalterable and must be enforced.
Ratio Decidendi
On the issue of petitioner's solidary liability: The Court reiterated the principle that once a decision becomes final and executory, it becomes immutable and unalterable. Despite the CA's initial finding that petitioner did not act in bad faith or with gross negligence, the RTC's decision holding him solidarily liable had already attained finality. The CA, on reconsideration, correctly noted that a finding of gross negligence by the trial court, even if erroneous, does not ipso facto render the judgment void. A judgment contrary to an express provision of a statute is erroneous but not void; if it becomes final and executory, it is binding and effective. The failure of REDECO and petitioner to perfect their appeal meant that the RTC's decision, including the finding of solidary liability, became binding. On the immutability of a final and executory judgment: The Court emphasized the settled rule that once a decision acquires finality, it becomes immutable and unalterable. This principle is fundamental to the administration of justice, ensuring stability and predictability in legal relations. Even if a final and executory judgment contains erroneous conclusions of fact or law, it can no longer be modified. The appeal of the September 6, 2001 decision was not perfected, and neither REDECO nor petitioner assailed the orders dismissing the notice of appeal. Consequently, the decision became final and executory and must be enforced in accordance with its terms. The petition sought to review a matter that had been settled with finality by the trial court, which is impermissible.
Main Doctrine
A final and executory decision, even if erroneous, becomes immutable and unalterable and must be enforced as it is binding and effective.