Eserjose v. Allied Banking Corporation
REITERATIONFacts
1. The Antecedents: In 1997, Spouses David and Zenaida Eserjose filed a complaint against Allied Banking Corporation (ABC) and its manager, Pacita Uy, for the release of mortgage, reconveyance, cancellation of title, and damages. The Eserjoses alleged that they had fully paid their loan secured by their residential property and another lot, but ABC refused to release the titles. The Regional Trial Court (RTC) ruled in favor of the Eserjoses, ordering ABC and Uy to pay moral damages, exemplary damages, and attorney's fees. 2. Procedural History: The RTC's decision was initially appealed by ABC and Uy, but the appeal was dismissed for being filed out of time. Subsequently, the RTC issued a writ of execution, leading to the auction sale of three of ABC's properties, which were purchased by the Eserjoses. The Court of Appeals (CA) affirmed the RTC's denial of the appeal. This Court, in G.R. 161776, affirmed the CA and RTC decisions but later modified its ruling on a second motion for reconsideration, reducing the awarded damages. Despite the modification, the Eserjoses sought a writ of possession for the auctioned properties. ABC and Uy moved to annul the sale, arguing the execution should yield to the modified Supreme Court ruling. The RTC granted the writ of possession for two lots but denied the motion to nullify the sale. Both parties moved for reconsideration, which the RTC denied. ABC and Uy then filed a petition for certiorari with the CA, which set aside the RTC's resolution, effectively allowing ABC and Uy to pay the judgment debt in cash. 3. The Petition: The Eserjoses filed a petition for review on certiorari before this Court, questioning the CA's decision. They also sought to revive the issue of the Supreme Court's modification of the damages award in G.R. 161776, which is barred by res judicata. The core issue presented is whether the CA erred in reversing the RTC's ruling that allowed the consolidation of ownership and possession of the two lots to the Eserjoses, thereby permitting ABC and Uy to satisfy the monetary award through cash payment instead of property surrender. The petition argues that the CA's decision did not alter the original judgment as modified by this Court, and that the RTC exceeded its jurisdiction by adding legal interest to the damages awarded, which was not granted by either the RTC or this Court. The Court applied Section 5, Rule 39 of the Rules of Civil Procedure, regarding the effect of reversal of an executed judgment, to allow for restitution and reparation of damages, finding that the RTC abused its discretion in not allowing for the restitution of properties improperly auctioned for amounts exceeding the judgment debt.
Issue(s)
Whether the Court of Appeals erred in reversing the Regional Trial Court's ruling that allowed the consolidation of ownership and turnover of possession of two lots to the petitioners, considering the restitution and satisfaction of judgment. Whether Allied Banking Corporation and Pacita Uy should be allowed to satisfy the monetary award by paying the cash amount instead of surrendering the properties, and whether the RTC exceeded its jurisdiction.
Ruling
The Court AFFIRMS the Court of Appeals Decision dated July 24, 2007, and its subsequent Resolution dated October 10, 2007, allowing respondent Allied Banking Corporation to satisfy the monetary award by paying petitioners David and Zenaida Eserjose the cash amount of ₱4,050,000.00 and the prescribed costs.
Ratio Decidendi
On the issue of restitution and satisfaction of judgment: The Court held that when an executed judgment is reversed or modified on appeal, the trial court has the discretion to issue orders of restitution or reparation of damages as equity and justice may warrant, pursuant to Section 5, Rule 39 of the 1997 Rules of Civil Procedure. In this case, the RTC executed a judgment debt of ₱8,050,000.00 (including interest and costs added by the RTC) when the final awarded amount, as modified by this Court, was only ₱4,050,000.00 (₱4 million in damages plus ₱50,000.00 attorney's fees, without legal interest). The RTC exceeded its jurisdiction by adding legal interest on the damages, which was not awarded by this Court. Therefore, the RTC committed grave abuse of discretion in not allowing for the restitution of the properties improperly auctioned for substantially wrong amounts, especially since the registration of titles and turnover of possession had not yet occurred. There was no legal impediment to ABC and Uy being allowed to pay the judgment debt in cash, which is the preferred mode of satisfying a money judgment under Rule 39, Section 9(a) of the Rules of Civil Procedure. The CA correctly reversed the RTC's order and allowed for cash payment, preventing unjust enrichment of the Eserjoses at the expense of ABC and Uy.
Main Doctrine
Where an executed judgment is partially reversed on appeal, the trial court may, on motion, issue orders of restitution or reparation of damages as equity and justice may warrant, considering the discrepancy between the executed judgment amount and the final awarded amount. The CA correctly held that the RTC committed grave abuse of discretion in not allowing restitution of properties improperly auctioned for substantially wrong amounts when registration and turnover of possession had not yet occurred, and that there was no legal impediment to satisfying the monetary award in cash.