BIENVENIDO P. JABAN AND LYDIA B. JABAN, PETITIONERS, VS. HON. COURT OF APPEALS, HON. GERMAN LEE, JR., PRESIDING JUDGE, REGIONAL TRIAL COURT OF CEBU CITY, BRANCH 15, SOCIAL SECUR…

Jaban versus Court of Appeals

The Case

This is a petition for review brought by Bienvenido and Lydia Jaban against the Court of Appeals, the presiding judge of the Regional Trial Court of Cebu City, and the Social Security System. The Jabans challenge the dismissal of their special civil action for certiorari, which they had filed to nullify two trial court orders that, in their view, amended a final and executory judgment. The case matters because it draws the line between an impermissible amendment of a final judgment and a permissible clarification or implementation of it, and it teaches that a judgment is not confined to what appears on its face but includes matters necessarily included therein or necessary thereto.

Procedural History

The Jabans sued the Social Security System in the Regional Trial Court of Cebu City for release of mortgage with damages. The trial court dismissed their complaint, ordered them to pay the balance of their obligation, and awarded attorney's fees and litigation expenses. The Jabans appealed to the Court of Appeals, which affirmed the judgment but deleted the award of attorney's fees and litigation expenses. The Jabans then elevated the matter to the Supreme Court by appeal by certiorari, but the appeal was denied, and the denial became final and executory.

On motion for clarification, the Court of Appeals issued a resolution holding that the computation of the exact amount payable was governed by the rules and regulations on loan payments of the Social Security System, and that only after full payment could the Jabans demand release of the mortgage. The Jabans then moved in the trial court for execution and release of the mortgage. The trial court issued two orders, one requiring the Social Security System to manifest whether the principal obligation had been fully paid, and another ruling that after payment of the amount due on the mortgage insurance and other legitimate impositions, the mortgage may be released. The Jabans filed a special civil action for certiorari with the Court of Appeals, which dismissed it. Hence this petition for review before the Supreme Court.

Facts

In 1979, the Jabans obtained a housing loan from the Social Security System in the amount of 38,300 pesos, payable over fifteen years in monthly amortizations. The loan was split into two obligations bearing different interest rates: 30,000 pesos at six percent per annum and 8,300 pesos at nine percent per annum. To secure the loan, the Jabans executed a promissory note and mortgaged their conjugal lot. Instead of paying according to the monthly schedule, they made advance payments in large amounts.

In 1987, the Jabans computed their payments and concluded that the loan had been fully paid. They asked for the release of the mortgage and the return of their title. The Social Security System refused, claiming that under its rules and policy on priority of payments, the Jabans still owed 6,006.14 pesos as of May 1, 1987. The Jabans then sued for release of mortgage with damages.

The trial court dismissed the complaint and required the Jabans to pay the balance of 6,367.62 pesos up to December 1987, plus such other amounts that may have fallen due under the promissory note, and attorney's fees. The Court of Appeals affirmed but deleted the attorney's fees. After the judgment became final, the Jabans moved for execution and release of the mortgage. The trial court, acting on the Social Security System's manifestation, found that the loan was covered by mortgage redemption insurance, as shown by a payment return and a subsidiary ledger card, and ruled that only after payment of the amount due on the mortgage insurance and other legitimate impositions could the mortgage be released. The Jabans then filed a special civil action for certiorari, which the Court of Appeals dismissed.

Issues

• Whether or not the Court of Appeals committed a reversible error in holding that the questioned orders of the trial court did not amend, alter, or modify the dispositive portion of a final and executory judgment.
• Whether or not the trial court's orders requiring payment of fire insurance and mortgage redemption insurance had legal basis under the final judgment.
• Whether or not the trial court erred in not ordering the release of the mortgage when the dispositive portion of the final judgment had been satisfied.

Applicable Provisions

The decision does not quote a specific statutory provision; it applies the doctrine of finality of judgment and the principle that a judgment includes matters necessarily included therein or necessary thereto. The Court of Appeals resolution, quoted in the decision, provides:

The judgment of this Court which held that the rules on application of payments under the Civil Code are not applicable to the loan contracted by appellant from the appellee and dismissing the complaint filed by the plaintiff-appellant having attained finality, the computation of the exact amount payable by the appellant is governed by the Rules and Regulations on loan payments of the appellee SSS, which is in a better position to make a computation thereof.

This resolution is the key because it authorized the trial court to compute the exact amount due under the Social Security System's rules, which include mortgage redemption insurance and fire insurance.

Ruling

On the first issue, the Court held that the Court of Appeals did not commit a reversible error. The trial court's orders did not amend, alter, or modify the decretal portion of the final judgment. Instead, they clarified the judgment so as to comply with the November 25, 1994 resolution of the Court of Appeals and to enable the judgment to be executed. The Court stressed that a judgment is not confined to what appears on the face of the decision but also includes those necessarily included therein or necessary thereto. The resolution did not fix an exact amount; it merely set the parameters for computation, and the trial court conducted a hearing precisely to determine that amount.

On the second issue, the Court held that the trial court's orders had legal basis. Under the pertinent Social Security System rules, housing loan borrowers must pay mortgage redemption insurance and fire insurance, apart from amortization, interest, and penalties in case of default. The trial court found that the loan was covered by mortgage redemption insurance, as shown by the payment return and the subsidiary ledger card, and the Jabans could not deny this fact, being an estoppel in pais, meaning an estoppel by conduct.

On the third issue, the Court held that the trial court did not err in not ordering the release of the mortgage. The resolution of the Court of Appeals expressly stated that only after full payment of the amount due may the appellant demand release of the mortgage. Since the exact amount had not yet been fully paid, the release was not yet due.

Doctrine

A final and executory judgment may no longer be amended, altered, or modified. However, a judgment is not confined to what appears on the face of the decision but also includes those necessarily included therein or necessary thereto. Orders that merely clarify or implement a final judgment, by computing the exact amount due under the parameters set by the appellate court, do not constitute an amendment or modification. The doctrine of finality of judgment does not bar the trial court from performing the ministerial duty of executing the judgment according to its terms. The rules and regulations on loan payments of the Social Security System govern the computation of the exact amount payable, including mortgage redemption insurance and fire insurance, and only after full payment may the borrower demand release of the mortgage.

Disposition

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals, with costs against the petitioners.

Remember This

A judgment is not confined to what appears on its face but includes matters necessarily included therein or necessary thereto, so an order that merely clarifies or implements a final judgment is not an amendment. Examiners use this case to test the distinction between a prohibited amendment of a final judgment and a permissible clarification or execution, especially in the context of computing the exact amount due under loan rules and regulations.