G.R. No. L-18841 - Republic vs. Philippine Long Distance Telephone Co.

Petitioner: Stronghold Insurance Company, Inc. (“Stronghold”).
Respondents: Pamana Island Resort Hotel and Marina Club, Inc. (“Pamana”) and Flowtech Construction Corporation (“Flowtech”).
The case arises from an action for a sum of money based on a Contractor's All Risk Bond amounting to P9,047,960.14 obtained by Flowtech in connection with a construction project owned by Pamana on Pamana Island, Subic Bay.

On January 27, 1992, a fire broke out in the project, burning down cottages under construction by Flowtech.
The incident resulted in substantial losses to Pamana, prompting an action for sum of money against Stronghold.
The Regional Trial Court (RTC) of Makati City, Branch 135, rendered a Decision on October 14, 1999, declaring Stronghold liable for:

Payment of the insurance proceeds totaling P4,728,297.82.
Award of exemplary damages of P500,000.00 and attorney’s fees of P100,000.00.
Payment of interest at double the applicable rate as provided under Section 243 of the Insurance Code, with the original computation based on the period “from the date of demand until fully paid.”

After the RTC decision, Stronghold’s appeal was denied by both the Court of Appeals (CA) and the Supreme Court (SC).
On March 4, 2005, Flowtech filed a motion for execution with the RTC which was subsequently granted on May 10, 2005, and a Writ of Execution was issued on May 12, 2005.
Stronghold filed an Urgent Motion to Suspend Execution and to Rationalize Enforcement of the Decision on August 16, 2005, contending that the imposed interest penalty was unconscionable and iniquitous.
Pamana opposed the motion, emphasizing that the RTC judgment had become final and that its terms, including the imposition of double interest per Section 243, were binding.

On November 22, 2005, the RTC rendered an Order granting Stronghold’s motion, substantially reducing the computed interest by:

Stating that interest should be reckoned from the date of promulgation of the judgment (October 14, 1999) until its finality (December 15, 2004) rather than from the date of demand.
Adjusting the applicable interest rate to 6% per annum, thereby reducing the originally mandated double interest rate from 12% per annum.

The Order disallowed additional claims such as execution fees and related expenses due to lack of basis.

On July 20, 2006, the CA rendered a decision annulling the RTC’s Order, holding that:

The RTC’s modifications were impermissible as the judgment had already become final and executory.
Essential particulars of a final judgment, including interest computation, cannot be altered once the judgment has reached finality.

The CA maintained that the determination of double interest should follow the original terms of the RTC decision based on Section 243 of the Insurance Code.

Stronghold appealed to the Supreme Court seeking reversal of the CA’s decision.
The Supreme Court denied the petition and affirmed the CA decision with modification.

It held that, once final and executory, a judgment may not be substantively modified except in cases of clerical errors, nunc pro tunc corrections, or void judgments.
The Court also ruled on the appropriate computation of interest, considering adjustments brought about by a BSP Circular effective July 1, 2013.

The Court rejected Stronghold’s argument on estoppel, finding insufficient evidence that receipt of checks by Pamana constituted full satisfaction of the claim.

Whether the RTC’s recalculation of the interest — changing the computation period and lowering the rate from a double interest (12% per annum) to an interest rate of 6% per annum — was allowed, given that the judgment had already become final and executory.

Whether the applicable interest rate for computing damages under Section 243 of the Insurance Code should be 6% per annum or 12% per annum, considering the nature of Stronghold’s liability and the special provisions of the Insurance Code.
The issue also involves the prospective application of the BSP Circular reducing the rate from 12% to 6% per annum effective July 1, 2013.

Whether the receipt by Pamana of checks issued under the RTC’s earlier execution order would estop Pamana from asserting further claims for the interest or other amounts under the judgment.

Whether the execution of the judgment must conform strictly to the essential particulars of the final judgment, without any modifications that substantially alter the terms of award, such as the computation of interest.