G.R. No. 95625 - Hiyas Savings and Loan Bank vs. Court of Appeals

Case Summary (G.R. No. 95625)

Factual Background

Civil Case No. 6821-M was an action for annulment of a mortgage contract with a prayer for a preliminary injunction seeking to restrain the foreclosure sale and public auction of mortgaged properties. After trial, the Regional Trial Court rendered a decision in favor of Hiyas Savings, dismissing the plaintiffs’ complaint for lack of merit and ordering the lifting and setting aside the preliminary injunction previously issued.

The dispositive portion ordered the plaintiffs to pay Hiyas Savings, within ninety (90) days from receipt, the following sums: (a) P200,000.00 as principal amount of the loan, with fourteen percent (14%) interest per annum from January 10, 1982 (date of maturity) until fully paid or satisfied out of the sale of the mortgaged properties; (b) ten percent (10%) of the amount due as attorney’s fees; and (c) the costs of the suit. It further provided that in default, two parcels of land covered by TCT Nos. T-8930(M) and T-24.7070(M) would be sold at public auction by the Provincial Sheriff of Bulacan under Rules 39 and 68 of the Revised Rules of Court.

No appeal was taken from the trial court’s decision; hence, it became final and executory. Thereafter, Hiyas Savings moved for execution. On June 7, 1989, the private respondents deposited in court two (2) treasury checks totaling P428,600.00 in satisfaction of the judgment. The petitioner applied P40,735.35 of the deposited amount as attorney’s fees. On August 18, 1989, Hiyas Savings filed an amended motion for execution, asserting that the total liability of the private respondents was P448,941.92 computed as: principal P200,000.00; interest from January 10, 1982 to June 7, 1989 in the amount of P207,436.66; attorney’s fees equal to ten percent of the sum of principal and interest, P40,743.66; and costs and legal expenses P761.60. It claimed that an unsatisfied balance of P20,250.38 remained. The trial court denied the amended motion on September 4, 1989, and it later denied reconsideration on November 16, 1989.

Court of Appeals Proceedings

The private respondents filed a special civil action for certiorari before the Court of Appeals, raising a lone issue: whether the trial judge acted in excess of jurisdiction in stating that the ten percent (10%) attorney’s fees referred to the principal amount only, and in denying reconsideration.

On September 28, 1990, the Court of Appeals dismissed the petition. It held that the trial judge acted correctly in fixing reasonable attorney’s fees and treated the ten percent award as computed from the amount due “as appearing in the agreement of the parties.” The Court of Appeals concluded that the trial judge did not exceed jurisdiction in denying the motion to amend the writ of execution, and it dismissed the certiorari petition for lack of merit.

Parties’ Contentions Before the Supreme Court

Before the Supreme Court, Hiyas Savings reiterated that the trial court could not modify or amend a judgment that had already become final and executory. It argued that the award of attorney’s fees of ten percent of “the amount due” could not be restricted, under the guise of interpreting the judgment, to the principal alone, while excluding interest from the base. It maintained that, absent qualification in the dispositive portion, the words should be given their ordinary and literal meaning, i.e., ten percent of the total amount due on the obligation (principal plus interest).

In support of its position, Hiyas Savings invoked doctrine on the limited authority of courts to clarify a final judgment only to resolve ambiguity caused by omission or mistake. It cited Republic Surety and Insurance Co., Inc. v. IAC (Nos. 71131-32, July 27, 1987, 152 SCRA 309) and Locsin, et al. v. Paredes, et al. ( 63 Phil. 87), which recognized clarification of a final and executory dispositive portion to supply an inadvertently omitted word or to clarify an omission, so that the intended meaning could be carried out. It asserted that such principles did not justify the substantial change applied in the case at bar.

Legal Basis and Reasoning

The Supreme Court addressed the governing rule on the immutability of judgments once they become final and executory. It relied on the articulation in Francisco v. Bautista (G.R. No. 44167, December 19, 1990, 192 SCRA 388), emphasizing that after finality, a judgment can no longer be amended or corrected by the court except for clerical errors or mistakes. Any amendment or alteration that substantially affects a final and executory judgment is void for lack of jurisdiction, even if carried out through proceedings initiated for that purpose.

Applying that rule, the Court examined the trial court’s dispositive portion. It noted that the judgment ordered attorney’s fees in the amount of ten percent (10%) of the amount due and did not qualify that the ten percent should be computed exclusively on the principal. The Court held that where the dispositive language is clear, courts must avoid interpretations that produce a substantial amendment of the final and executory judgment. It also underscored the need for careful drafting and precision in writing decisions, as ambiguities must be avoided and clear dispositions should not be reworked into another substantive result.

The Supreme Court further found support for its interpretation in the related contract instruments referenced in the main controversy. It noted that the promissory note and the real estate mortgage provided for attorney’s fees in litigation as ten percent of the total outstanding obligation, stated as ten percent of the unpaid principal plus interest. Thus, restricting the base of attorney’s fees to principal only, after trial court judgment and finality, would conflict with the dispositive wording and the contractual framework reflected in the case.

Consequently, the Supreme Co

Case Syllabus (G.R. No. 95625)

The petition was for review on certiorari of a Court of Appeals decision dismissing a special civil action for certiorari filed by the petitioner against an order of the Regional Trial Court of Bulacan, Branch 15.
The dispute arose from the execution stage of a final judgment in Civil Case No. 6821-M, titled “Delfin Mendoza, et al. v. Victoriano Evangelista, et al.”, which sought annulment of a mortgage contract and included a prayer for a preliminary injunction to restrain foreclosure.
The petitioner, Hiyas Savings and Loan Bank (Hiyas Savings), had been a defendant in the trial court case.
After the trial court rendered judgment in favor of the petitioner, no appeal was taken, and the decision became final and executory.
During execution, the petitioner sought an amendment of the computation of the money judgment, particularly the attorney’s fees component, which the trial court denied.
The Court of Appeals upheld the trial court and ruled that the trial court did not exceed jurisdiction in denying the motion to amend execution.
The Supreme Court ultimately granted the petition, reversed the Court of Appeals, and granted the amended motion for execution, fixing the remaining unsatisfied judgment debt.

Parties and Procedural Posture

The petitioner was Hiyas Savings and Loan Bank (Hiyas Savings).
The respondents were the Court of Appeals, Spouses Delfin Mendoza and Solita Santos, and Spouses Felix Santos and Demetria Pacheco.
The petitioner challenged the order of the Regional Trial Court of Bulacan, Branch 15 during the execution of a final judgment in Civil Case No. 6821-M.
The trial court had denied the petitioner’s amended motion for execution and the petitioner’s subsequent motion for reconsideration.
The petitioner filed a special civil action for certiorari in the Court of Appeals raising the issue whether the trial judge acted in excess of jurisdiction in the assailed execution order.
The Court of Appeals dismissed the petition for certiorari, concluding that the trial court acted correctly and that the petition was devoid of merit.
The petitioner then filed a petition for review on certiorari before the Supreme Court raising the same core issue.

Key Factual Background

The trial court case involved annulment of a mortgage contract with a prayer for preliminary injunction to restrain foreclosure and public auction of properties subject to the mortgage.
After trial, the trial court dismissed the plaintiffs’ complaint against Hiyas Savings for lack of merit and ordered the lifting of the previously issued preliminary injunction.
The trial court ordered the plaintiffs to pay Hiyas Savings within ninety (90) days from receipt of the decision, including (i) principal, (ii) fourteen percent (14%) interest per annum from January 10, 1982, (iii) ten percent (10%) attorney’s fees, and (iv) costs of suit.
The trial court specified that upon default in paying the money judgment, two mortgaged parcels of land covered by specified TCT Nos. would be sold at public auction under Rules 39 and 68 of the Revised Rules of Court.
No appeal was taken, so the trial court judgment became final.
A motion for execution was filed by the petitioner after the judgment became final.
On June 7, 1989, the private respondents deposited in court two treasury checks totaling P428,600.00 in satisfaction of the judgment.
From the deposited amount, P40,735.35 was applied by the petitioner as attorney’s fees.
On August 18, 1989, the petitioner filed an amended motion for execution, asserting a higher total liability.
The petitioner computed that the total liability was P448,941.92, leaving an alleged unsatisfied balance of P20,250.38.
The trial court denied the amended motion for execution on September 4, 1989.
The trial court likewise denied reconsideration on November 16, 1989.
The petitioner’s theory centered on how ten percent (10%) attorney’s fees should be computed, i.e., whether they were based on principal only or on the total amount due comprising principal plus interest.

Issues Presented for Review

The principal issue was whether the trial judge acted in excess of jurisdiction by stating that the ten percent (10%) attorney’s fees referred to the principal amount rather than the total amount due.
The issue also covered whether the trial judge committed an error correctible by certiorari in denying the petitioner’s amended motion for execution and motion for reconsideration.
The petitioner insisted that, since the dispositive portion awarded ten percent (10%) of the amount due, the literal and ordinary meaning required computation on the total obligation inclusive of interest.
The private respondents, through the Court of Appeals’ ruling, were treated as supporting the trial co