Funk v. Santos Ventura Hocorma Foundation
REITERATIONFacts
The Antecedents: Atty. Richard V. Funk represented Teodoro Santos in a collection case and in the transfer of properties to respondent Santos Ventura Hocorma Foundation, Inc. (the Foundation). The agreed attorney's fees were 25% and 10% of the market value of the properties. The Foundation failed to fully pay the attorney's fees. The RTC ordered the Foundation to pay Atty. Funk P150,000.00 for the collection case and P500,000.00 for the property transfer, later increased to P918,919.50. The RTC also declared Atty. Funk co-owner of 10% of the properties. The CA affirmed the RTC decision but removed the co-ownership aspect. This Court, in G.R. No. 131260 (mother case), denied the Foundation's appeal, affirming the RTC and CA findings that the Special Power of Attorney (SPA) was confirmed and approved by the Foundation's Board of Trustees and that the Foundation undertook to implement the retainer agreements. Procedural History: After the mother case became final and executory, Atty. Funk filed a partial motion for execution (first motion). The Foundation paid P1,450,501.02 but remitted P167,735.48 to the BIR as withholding taxes and withheld P20,281.00 for the bill of costs. The RTC, in an order dated February 16, 2009, upheld the remittance of withholding taxes and denied the inclusion of the bill of costs due to Atty. Funk's supposed failure to comply with Section 8, Rule 142 of the Rules of Court. Atty. Funk's urgent motion to this Court for the Clerk of Court to include costs was denied. He then filed a second motion for execution with the RTC for the costs and the withheld taxes. The RTC denied this second motion, citing the finality of the February 16, 2009 order and the BIR's opinion upholding the tax withholding. The CA affirmed the RTC's denial, agreeing that the February 16, 2009 order had become final and that Atty. Funk failed to comply with Section 8, Rule 142, and that the BIR's opinion was binding. The Petition: Atty. Funk filed a petition for review on certiorari, arguing that the CA erred in applying Section 8, Rule 142 of the Rules of Court, claiming the finality of the decision does not bar execution of costs and citing the case of Romulo v. Desalla. He also contended that his motions for execution were filed on time under Section 6, Rule 39 of the Rules of Court, as they were within the five-year period from the entry of judgment. Lastly, he argued that the BIR's opinion on withholding taxes was not binding on the courts and that his fees should not have been subjected to withholding taxes.
Issue(s)
Whether the costs of suit can still be executed. Whether Atty. Funk can recover the amount withheld as taxes.
Ruling
The Supreme Court denied the petition, affirming the decision of the Court of Appeals. The Court held that the RTC's February 16, 2009 order, which denied the first motion for execution and ruled on the issues of costs and withholding taxes, had become final and immutable due to Atty. Funk's failure to move for reconsideration or appeal. Consequently, the second motion for execution raising the same issues was barred by the principle of res judicata (bar by prior judgment). The Court also clarified that an independent action to revive the judgment would likewise be barred for the same reasons. Regarding the withholding of taxes, the Court noted that the RTC had squarely ruled on the issue in its final order, and the amount had already been remitted to the BIR.
Ratio Decidendi
On the Execution of the Costs of Suit: The Court found that the RTC's February 16, 2009 order denying the first motion for execution was a final order. Atty. Funk's failure to move for reconsideration or appeal this order resulted in its immutability. While the RTC and CA incorrectly applied Section 8, Rule 142 of the Rules of Court regarding the timing of notice for taxing costs, this error did not validate the second motion for execution. The Court emphasized that the principle of immutability of judgments dictates that a final order, however erroneous, cannot be changed or revised, and none of the exceptions to this principle were present. Therefore, the denial of the second motion for execution was sustained because the issues it raised had already been definitively passed upon and resolved in the final February 16, 2009 order. The Court clarified that while Section 6, Rule 39 of the Rules of Court allows execution by motion within five years or by independent action within ten years, these modes are not mutually exclusive in the sense that a second motion or an independent action raising the same issues already decided in a final order is barred by res judicata. The denial of the first motion for execution, having become final, barred the second motion and would likewise bar an independent action to revive the judgment on the same issues of costs and taxes. The Court also distinguished the case of Romulo v. Desalla, explaining that Atty. Funk took the ruling out of context and that Romulo did not establish that costs could be executed anytime within the periods provided under Section 6 of Rule 39 without regard to prior rulings on the matter. On the Recovery of Withheld Taxes: The Court reiterated that the RTC's February 16, 2009 order had become final and immutable, and this order had squarely ruled on the issue of withholding taxes, upholding the remittance to the BIR. Consequently, the ruling on the withholding of taxes also became final and immutable. The Court further noted that the sum withheld had already been remitted to the Government, and any claim for refund would require adherence to the procedures under Section 229 of the National Internal Revenue Code, which was not pursued in this petition. Thus, Atty. Funk could not recover the amount withheld as taxes.
Main Doctrine
The Supreme Court reiterated that a final order, such as the RTC's February 16, 2009 order denying a motion for execution, becomes immutable and unalterable. Atty. Funk's failure to move for reconsideration or appeal this order rendered it final and binding, barring any subsequent motion or action raising the same issues. The Court also clarified that while a second motion for execution may be permissible in certain circumstances, it is barred if it raises the same issues already passed upon and denied in a prior motion that has become final, due to the principle of res judicata (bar by prior judgment). The Court further clarified the procedural requirements for taxing costs under Section 8, Rule 142 of the Rules of Court, emphasizing that a five-day written notice to the adverse party is required before costs can be taxed, not necessarily within five days from entry of judgment.