EN BANC
G.R. No. 212262, August 26, 2020
GOTESCO PROPERTIES, INC., PETITIONER, V. INTERNATIONAL EXCHANGE BANK (NOW UNION BANK OF THE PHILIPPINES), RESPONDENT,
D E C I S I O N
LEONEN, J.:
Acceleration clauses in loans for a fixed term give creditors a choice to: (1) defer collection of any unpaid amounts until the period ends; or (2) invoke the clause and collect the entire demandable amount immediately. This right to choose is rendered meaningless if the loan is made demandable only when the term expires.
This resolves a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, assailing the Decision2 and Resolution3 of the Court of Appeals which found that the 14th Branch of the Regional Trial Court in Nasugbu, Batangas, did not gravely abuse its discretion in Civil Case No. 554 when it granted the motion for reconsideration filed by International Exchange Bank to its June 16, 2010 Order4 and ordered the execution of its December 14, 2001 Judgment5 on the Compromise Agreement.
In 1996, Gotesco Properties, Inc. (Gotesco), as borrower, and International Exchange Bank (IBank), as lender, executed a Credit Agreement. As security, Gotesco executed a real estate mortgage over a 20,673-square-meter property covered by Transfer Certificate of Title No. T-70389. When Gotesco was unable to pay, IBank foreclosed the real estate mortgage and eventually bought the property.6
Gotesco filed a complaint for annulment of foreclosure sale and damages with the Batangas Regional Trial Court, alleging that IBank failed to comply with the posting and publication requirements of Act No. 3135. The case was docketed as Civil Case No. 554.7
Then, on September 27, 2001, Gotesco and IBank executed a Compromise Agreement where Gotesco's P256,740,000.00 loan was restructured. On December 14, 2001, the Regional Trial Court issued a Judgment8 approving the Compromise Agreement.9
On October 27, 2009, IBank filed with the trial court a Motion for Execution.10 It claimed that Gotesco failed to comply with the terms of the Compromise Agreement when it did not pay f>619,179,627.01 as of February 5, 2009.11 In a June 16, 2010 Order,12 the Regional Trial Court, through Judge Wilfredo De Joya Mayor (Judge Mayor), denied the Motion for Execution and found the action premature as the ten-year term loan in the Compromise Agreement, which started on March 31, 2003, would end in 2013.13
IBank filed a Motion for Reconsideration of the June 16, 2010 Order, which the Regional Trial Court granted in an August 18, 2011 Resolution issued by Judge Ernesto L. Marajas (Judge Marajas). The dispositive portion of the August 18,2011 Resolution read: ChanRoblesVirtualawlibrary
Wherefore the order issued by This Court dated June 16, 2010 is hereby set aside. Upon finality of this Resolution let a writ of execution be issued in order to implement the provisions of the Judgment dated December 14,2001.The Regional Trial Court found that the Compromise Agreement provided for the entire loan to be demandable should Gotesco default in the payment of its quarterly amortizations. Gotesco's Motion for Reconsideration of the August 18, 2011 Resolution, was denied in the trial court's March 5, 2013 Resolution.15
SO ORDERED.14cralawlawlibrary
WHEREFORE, premises considered, the instant petition for certiorari is hereby DENIED and ordered DISMISSED.The Court of Appeals held that the Regional Trial Court did not commit any grave abuse of discretion, amounting to lack or excess of jurisdiction, in granting IBank's Motion for Reconsideration and granting the Motion for Execution.18 It found that the Compromise Agreement stated that Gotesco must pay back its loan to IBank in quarterly amortizations of P8,812,214.29.19 Should Gotesco fail to pay any sum due to IBank within 60 days from due date, IBank was entitled to declare Gotesco's entire obligation due and demandable and move for the immediate execution of the judgment.20
No costs.
SO ORDERED.17cralawlawlibrary
SECTION 1. Grounds of and Period for Filing Motion for New Trial or Reconsideration. — Within the period for taking an appeal, the aggrieved party may move the trial court to set aside the judgment or final order and grant a new trial for one or more of the following causes materially affecting the substantial rights of said party: ChanRoblesVirtualawlibraryThe purpose of a motion for reconsideration is for the moving party to point to purported errors in the assailed judgment or final order which that party views as unsupported by law or evidence.46 It "grant[s] an opportunity for the court to correct any actual or perceived error attributed to it by re-examination of the legal and factual circumstances of the case."47(a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason of which such aggrieved party has probably been impaired in his rights; orWithin the same period, the aggrieved party may also move for reconsideration upon the grounds that the damages awarded are excessive, that the evidence is insufficient to justify the decision or final order, or that the decision or final order is contrary to law.
(b) Newly discovered evidence, which he could not, with reasonable diligence, have discovered, and produced at the trial, and which if presented would probably alter the result.
SECTION 3. Action Upon Motion for New Trial or Reconsideration. —The trial court may set aside the judgment or final order and grant a new trial, upon such terms as may be just, or may deny the motion. If the court finds that excessive damages have been awarded or that the judgment or final order is contrary to the evidence or law, it may amend such judgment or final order accordingly.When a motion for reconsideration is granted, the decision of the court embodying such grant supersedes the original judgment or fmal order.48
It enjoins adherence to judicial precedents. It requires our courts to follow a rule already established in a final decision of the Supreme Court. That decision becomes a judicial precedent to be followed in subsequent cases by all courts in the land. The doctrine of stare decisis is based on the principle that once a question of law has been examined and decided, it should be deemed settled and closed to further argument.50 (Emphasis in the original, citation omitted"Decisions of lower courts or other divisions of the same court are not binding on others."51 No grave abuse of discretion is committed52 when a judge sets aside an earlier ruling rendered by the previous judge in the same trial court branch for the same case, especially when, as in this case, a reversible error had been committed.
Ordinarily, courts have the ministerial duty to grant the execution of a final judgment. The prevailing party may immediately move for execution of the judgment, and the issuance of the writ follows as a matter of course. Execution, being "the final stage of litigation . . . [cannot] be frustrated."Respondent's Motion for Execution was initially denied on the basis of prematurity. According to Judge Mayor in his June 16, 2010 Order, the ten-year term loan in the Compromise Agreement started on March 31, 2003, and would only end in 2013: ChanRoblesVirtualawlibrary
Nevertheless, the execution of a final judgment may be stayed or set aside in certain cases. "Courts have jurisdiction to entertain motions to quash previously issued writs of execution[.]" They "have the inherent power, for the advancement of justice, to correct the errors of their ministerial officers and to control, their own processes."
A writ of execution may be stayed or quashed when "facts and circumstances transpire" after judgment has been rendered that would make "execution impossible or unjust."
In Lee v. De Guzman, the trial court issued a writ of execution directing a car manufacturer to deliver a 1983 Toyota Corolla Liftback to a buyer. The manufacturer moved to quash the writ. Instead of ordering the manufacturer to deliver the car, this Court ordered the manufacturer to pay damages. The cessation of the manufacturer's business operations rendered compliance with the writ of execution impossible.
Another exception is when the writ of execution alters or varies the judgment. A writ of execution derives its validity from the judgment it seeks to enforce. Hence, it should not "vary terms of the judgment . . . [or] go beyond its terms." Otherwise, the writ of execution is void. Courts can neither modify nor "impose terms different from the terms of a compromise agreement" that parties have entered in good faith. To do so would amount to grave abuse of discretion.
Payment or satisfaction of the judgment debt also constitutes as a ground for the quashal of a writ of execution. In Sandico, Sr. v. Piguing, although the sum given by the debtors was less than the amount of the judgment debt, the creditors accepted the reduced amount as "full satisfaction of the money judgment." This justified the issuance of an order recalling the writ of execution.
A writ of execution may also be set aside or quashed when it appears from the circumstances of the case that the writ "is defective in substance," "has been improvidently issued," issued without authority, or was "issued against the wrong party."54 (Citations omitted)
. . . Considering that the subject nature of the compromise agreement especially the amount loaned was restructured into a 10-year term loan. With the duration of the 10-year period as provided in the Compromise Agreement from March 31, 2003 and would end in the year 2013 which renders the motion to issue writ of execution premature. As clearly, the 10-year term loan ends in 2013 when the obligations shall have been fully settled and paid by the plaintiff. Hence, prior thereto, the motion for execution prayed for by the defendant is therefore considered premature.55cralawlawlibraryConcededly, the final whereas clause of the Compromise Agreement did state: ChanRoblesVirtualawlibrary
WHEREAS, the parties have decided to enter into a compromise agreement which would entail the re-structuring of the outstanding loan of Gotesco Properties, Inc. with iBank into a ten (10) year term loan with the mortgage of real estate properties mentioned in Articles 2.1.3 and 2.1.4 hereof and the Real Estate Mortgage and the Surety Agreement mentioned in the First Whereas Clause as its security/collateral.56cralawlawlibraryHowever, this clause must not be read in isolation, but should be reconciled with the rest of the Compromise Agreement. Among the relevant portions are: ChanRoblesVirtualawlibrary
1.1. The parties hereby agree and stipulate that the outstanding balance of the loan that Gotesco availed under its Omnibus Line with iBank mentioned in the First Whereas Clause inclusive of interest at the compromise rate of 12% per annum from December 29, 1997 up to June 30, 2001 amounts to Two Hundred Fifty Six Million Seven Hundred Forty Thousand (Php256,740,000.00).
1.2. Simultaneously with the execution of this Agreement, Gotesco Properties Inc. shall make a partial payment to iBank in the amount of Ten Million Pesos.
1.3. The balance of the principal of its loan in the amount of Two Hundred Forty Six Million Seven Hundred Forty Thousand (Php246,740,000.00) shall be paid by Gotesco Properties Inc. to iBank in twenty-eight (28) equal quarterly amortization(s) of Eight Million Eight Hundred Twelve Thousand Two Hundred Fourteen (Php8,812,214.29) Pesos and 29/100 commencing on March 31, 2003 until full payment. Gotesco Properties Inc. shall execute and deliver a promissory note covering the aforesaid principal amount in form and substance acceptable to iBank dated July 1, 2001.
1.4. The loan (Php246,740,000.00) shall earn interest at the rate of twelve (12%) percent per annum, payable quarterly, the first quarterly payment to commence on October 1, 2001 and the next payment every quarter thereafter until full payment.
. . . .
1.6. A penalty at the rate of twelve (12%) per annum shall be imposed on any unpaid interest and/or principal amortization, from due date thereof, as the case may be, until full payment.
1.7. Should Gotesco Properties Inc. fail to pay any sum due under this Agreement and should it fail to settle or pay the same to iBank within sixty (60) days from the due date thereof, iBank may declare the entire obligation of Gotesco Properties Inc. under this Agreement as due and demandable and avail itself of 4he remedy provided hereunder and/or the law.57
4.1. The parties shall submit this Compromise Agreement to the Regional Trial Court of Makati, Branch 150, and move that a judgment in Civil Case No. 99-168 be issued approving the said compromise and ordering:
Under the terms of the Compromise Agreement, petitioner owed respondent an initial amount of P256,740,000.00, P10,000,000.00 of which was payable upon execution of the Compromise Agreement. The remaining balance of P246,740,000.00 was divided into 28 quarterly amortizations, payable starting March 31, 2003 until the balance was fully paid. The balance was likewise subject to a 12% per annum interest rate, also payable quarterly. Any unpaid interest or principal amortization was further subject to a 12% per annum penalty interest.4.02. The dismissal of the respective claims and counterclaims on the parties; and
4.03. That upon default by Gotesco Properties Inc. and its sureties in the payment of the sum due under the Compromise Agreement or in the performance of any of their obligation thereunder, iBank shall have the right to move for the immediate execution of the total sum due under the said Agreement after deducting the proceeds of the foreclosure sale of the mortgaged properties mentioned in Article 2.1.1 and 2.1.3 hereof in the event iBank opts to institute a separate action for their foreclosure. . . 58
". . . Failure to pay two successive monthly amortizations will cause this loan to be automatically due and payable in its entirety. Notwithstanding the foregoing, this loan shall not run for more than 5 years."Interpreting the above stipulation, the appellants claim that despite the acceleration clause they had five years from January 18, 1961 within which to pay their mortgage debt because of the phrase "notwithstanding the foregoing" in the last sentence. Since the five-year period had not yet expired when the mortgage was foreclosed, said foreclosure, they point out, was premature.
Endnotes:
* Designated additional Member per July 15, 2020 Raffle.
1Rollo, pp. 10-24.
2 Id. at 31-43. The February 10, 2014 Decision in CA-G.R.SP No. No. 129936 was penned by Associate Justice Remedios A. Salazar-Fernando and concurred in by Associate Justices Myra V. Garcia- Fernandez and Samuel H. Gaerlan (now a member of this Court) of the Special Second Division, Court of Appeals, Manila.
3 Id. at 46-48. The April 22, 2014 Resolution in CA-G.R. SP No. No. 129936 was penned by Associate Justice Remedios A. Salazar-Fernando and concurred in by Associate Justices Myra V. Garcia- Fernandez and Samuel H. Gaerlan (now a member of this Court) of the former Special Second Division, Court of Appeals, Manila.
4 Id. at 124-125.
5 Id. at 107-114.
6 Id. at 32.
7 Id.
8 Id at. 107-114.
9 Id. at 34.
10 Id. at 115-122.
11 Id. at 119.
12 Id. at 124-125.
13 Id. at 34.
14 Id. at 32.
15 Id. at 35.
16 Id at 31-43.
17 Id. at 42.
18 Id at 36-37.
19 Id. at 37.
20 Id. at 37-38.
21 Id. at 38.
22 Id. at 39.
23 Id. at 40-41.
24 Id. at 46-48.
25 Id. at 10-25
26 Id. at 18.
27 Id. at 20.
28 Id. at 22.
29 Id. at 23.
30 Id. at 296.
31 Id. at 305-306
32 Id. 308-309.
33 Id. at 312-313.
34 Id. 320-A.
35 Id. 329.
36 Id. at 330.
37 Id. at 353.
38 Id. at 355.
39 Id. at 378.
40 Id. at 365.
41 Id. at 366.
42 Id. at 387.
43 Id. at 388.
44 Id. at 391.
45 Id. at 392-395.
46 Siy v. Court of Appeals, 223 Phil. 136 (1985) [Per J. Gutierrez, Jr., First Division],
47Republic of the Philippines v. Bayao,710 Phil. 279, 287 (2013) [Per J. Leonen, Third Division].
48City of Taguig v. City of Makati, 787 Phil. 367 (2016) [Per J. Leonen, Second Division],
49 504 Phil. 685 (2005) [Per J. Quisimbing, First Division].
50 Id. at 685.
51Yukit v. Tritran, Inc., 800 Phil. 210, 222 (2016) [Per C.J. Sereno, First Division].
52 See Quasha Ancheia Pena Nolasco Law Office v. Court of Appeals Special Sixth Division, 622 Phil. 738 (2009) [Per .1. Chico-Nazario, Third Division]
53 810 Phil. 497 (2017) [Per J. Leonen. Second Division]
54 Id. at 532-534.
55 Rollo, p. 309.
56 Id. at 109-110.
57 Id. at 110-111.
58 Id. at 113.
59 See Selegna Management and Development Corp. v. United Coconut Planters Bank, 522 Phil. 671 (2006) [Per C.J. Panganiban, First Division].
60Mendoza v. Court of Appeals, 340 Phil. 634 (1997) [Per J. Panganiban, Third Division]; Premier Development Bank v. Central Surety & Insurance Company, Inc., 598 Phil. 827 (2009) [Per J. Nachura, Third Division]; and KTConstruction Supply, Inc. v. Philippine Savings Bank, 811 Phil. 626 (2017) [Per J. Mendoza, Second Division].
61 145 Phil. 111 (1970) [Per J. Makalintal, En Banc].
62 Id. at 113-114.
63Mendoza v. Court of Appeals, 340 Phil. 634 (1997) [Per J. Panganiban, Third Division]; and Fortune Homes, Inc. v. Court of Appeals, 214 Phil. 369 (1984) [Per J. Aquino, Second Division].
64Rollo, p. 387.chanRoblesvirtualLawlibrary