LUISA BRIONES-VASQUEZ, PETITIONER, VS. COURT OF APPEALS AND HEIRS OF MARIA MENDOZA VDA. DE OCAMPO, RESPONDENTS.

Briones-Vasquez versus Heirs of Maria Mendoza Vda. de Ocampo

The Case

This is a petition for certiorari under Rule 65 filed by Luisa Briones-Vasquez against the Court of Appeals and the heirs of Maria Mendoza Vda. de Ocampo. The petitioner asks the Supreme Court to annul two resolutions of the Court of Appeals that refused to clarify a judgment which had already become final and executory. The case matters because it gathers three doctrines in one place: the immutability of final judgments, the narrow office of a nunc pro tunc entry, and the prohibition against pactum commissorium as applied to an equitable mortgage. It is a favorite of examiners because the Court dismisses the petition yet still guides the parties on execution, without altering the final judgment.

Procedural History

The case began in the Regional Trial Court of Pili, Camarines Sur, Branch 32, on a petition for consolidation of ownership filed by the heirs of Maria Mendoza Vda. de Ocampo. The trial court rendered judgment declaring the contract a true pacto de retro sale and giving the defendant thirty days from finality to redeem, subject to Article 1616 of the New Civil Code. The heirs appealed to the Court of Appeals, which set aside the trial court decision and declared the 1970 sale with right of repurchase an equitable mortgage. The heirs moved for reconsideration; the Court of Appeals denied it, and the decision became final and executory with entry of judgment made on July 17, 1996.

Back at the trial court, both sides moved for execution. A writ issued but was returned unserved because the plaintiffs did not pay the sheriff's fees and said they were not interested in implementing it. An alias writ was issued, but the sheriff reported that the plaintiffs refused to withdraw the amount deposited by the defendant so that the mortgage could be released. The defendant then filed an omnibus motion asking that the equitable mortgage be declared discharged and that a writ of possession issue. The trial court denied it, saying a final judgment can no longer be altered, modified, or added to. The defendant filed a motion for clarificatory judgment with the Court of Appeals, which denied it, and denied reconsideration as well. Hence this petition for certiorari before the Supreme Court.

Facts

Under an agreement denominated as a pacto de retro sale, Maria Mendoza Vda. de Ocampo acquired a parcel of land from Luisa Briones, who reserved the right to repurchase it up to December 31, 1970. Maria Mendoza died on May 27, 1979. On June 14, 1990, her heirs, Hipolita Ocampo Paulite and Eusebio Mendoza Ocampo, filed a petition for consolidation of ownership, alleging that the seller never exercised her right to redeem on or before December 31, 1970.

The trial court upheld the sale with right of repurchase and allowed redemption within thirty days from finality. On appeal, the Court of Appeals reversed and declared the contract an equitable mortgage. That decision became final and executory, with entry of judgment made on July 17, 1996.

Execution then stalled. The first writ was returned unserved because the plaintiffs would not pay the sheriff's expenses and declared they were not interested in implementing it. Under the alias writ, the sheriff advised the plaintiffs to withdraw the amount deposited by Luisa Briones so that the mortgage could be deemed released, but they refused to sign and never withdrew the amount. Luisa Briones then asked the trial court to declare the mortgage discharged and to issue a writ of possession; the trial court denied the motion as an impermissible alteration of a final judgment. She then asked the Court of Appeals for a clarificatory judgment, and that too was denied, on the ground that the only issue on appeal was whether the sale was an equitable mortgage, and there was nothing to clarify. She came to the Supreme Court on certiorari.

Issues

• Whether or not the Court of Appeals acted with grave abuse of discretion amounting to lack of jurisdiction in refusing to grant the petitioner's motion for clarificatory judgment.
• Whether or not the petitioner's motion for clarificatory judgment may be treated as a nunc pro tunc amendment of the final and executory decision.
• Whether or not the petitioner retains ownership and the right to possess the subject property after the contract was declared an equitable mortgage.

Applicable Provisions

Article 2088 of the Civil Code provides:

The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void.

This is the textual basis of the prohibition against pactum commissorium, which the Court applies to the equitable mortgage in this case.

Ruling

On the first issue, the Court held that the Court of Appeals did not act with grave abuse of discretion. The decision of the Court of Appeals had already become final and executory when the motion for clarificatory judgment was filed, and the Court restated the settled rule:

… nothing is more settled in the law than that when a final judgment becomes executory, it thereby becomes immutable and unalterable. The judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the Court rendering it or by the highest Court of the land. The only recognized exceptions are the correction of clerical errors or the making of so-called nunc pro tunc entries which cause no prejudice to any party, and, of course, where the judgment is void.

On the second issue, the petitioner invoked the second exception, claiming her motion sought a nunc pro tunc amendment. The Court rejected this. A nunc pro tunc entry records an act actually done at a former time which was not then carried into the record; it may make the record speak the truth but not make it speak what it did not speak but ought to have spoken. It cannot correct judicial error nor supply nonaction by the court. The petitioner never alleged that the Court of Appeals actually took judicial action omitted from its decision by inadvertence, so the general rule of immutability applied.

On the third issue, the Court, while disclaiming any alteration of the final judgment, laid down guidance for execution. Since the contract is a mortgage, Article 2088 governs, and the essence of pactum commissorium is that ownership of the security passes to the creditor by the mere default of the debtor. The only right of a mortgagee upon non-payment is to foreclose and have the property sold to satisfy the obligation; default does not vest ownership in the mortgagee. Applying this to equitable mortgages, consolidation of ownership in the mortgagee in equity upon mere failure to pay would amount to pactum commissorium, and an action for consolidation is an inappropriate remedy; the proper remedy is foreclosure, and if the mortgagee in equity wants title, it may buy at the foreclosure sale. The private respondents neither foreclosed nor purchased at a foreclosure sale, so the petitioner retains ownership, which includes the right to possess.

Doctrine

First, a final and executory judgment is immutable and unalterable and may not be modified in any respect, even to correct a perceived error of fact or law, whether by the court that rendered it or by the highest Court. The only exceptions are the correction of clerical errors, nunc pro tunc entries that cause no prejudice to any party, and void judgments.

Second, a nunc pro tunc entry supplies an omission in the record of action really had but omitted through inadvertence or mistake. It cannot correct judicial error or supply omitted action by the court.

Third, under Article 2088 of the Civil Code, pactum commissorium is void. In an equitable mortgage, consolidation of ownership in the mortgagee in equity upon mere default is pactum commissorium; the proper remedy is foreclosure, and the mortgagee in equity may acquire the property only by buying it at the foreclosure sale.

Disposition

The petition for certiorari was dismissed, and the parties were directed to proceed on the basis of the final decision of the Court of Appeals declaring the contract an equitable mortgage and not a sale, with no costs.

Remember This

Memorize the line that a nunc pro tunc entry may make the record speak the truth but not make it speak what it did not speak but ought to have spoken. Examiners use this case to test the immutability of final judgments and the ban on pactum commissorium in equitable mortgages.