CORAZON SUYAT, PACITA UY TAN, RODRIGO DE LA ROSA, RUBEN DE LA ROSA, AND BAGUIO GARDEN HOTEL- APARTMENTS, INC., PETITIONERS, VS. HON. ANNIE GONZALES-TESORO, DIRECTOR OF THE SECUR…

Suyat versus Gonzales-Tesoro

The Case

This is a petition for review under Rule 45 brought by Corazon Suyat, Pacita Uy Tan, Rodrigo de la Rosa, Ruben de la Rosa, and Baguio Garden Hotel-Apartments, Incorporated against the Director of the Securities and Exchange Commission and Ester Lau. The petitioners ask the Supreme Court to set aside the decision of the Court of Appeals which upheld the writ of execution issued by the Securities and Exchange Commission in a long-running corporate accounting dispute. The case matters because it is the Court's clean statement of two rules every bar candidate must carry into the examination room: that execution of a final judgment is a matter of right on the part of the prevailing party and a ministerial duty on the part of the issuing tribunal, and that a writ of execution must substantially conform to the dispositive portion of the decision it enforces.

Procedural History

The individual petitioners were charged before the Securities and Exchange Commission with misrepresentation and irregularities in the financial statements of the corporation. On January 15, 1998, the Securities and Exchange Commission, Baguio Extension Office, rendered a decision ordering them to pay various sums to the corporation, to render an accounting of the corporate finances for the years 1994 to 1997 through a certified public accountant, and to distribute surplus profits. That decision was affirmed on appeal by the Commission en banc. The petitioners then appealed, but their appeal was dismissed for being a wrong mode of appeal, and so the decision became final and executory.

Private respondent Ester Lau moved for execution, and a writ of execution was eventually issued. The petitioners moved to stay execution as to the money judgments and to proceed instead with the accounting. The Commission granted the twin motions, quashed the notice of garnishment, and directed that a certified public accountant be appointed. The parties executed a Joint Memorandum appointing Christopher Ismael, and they bound themselves to abide fully by his findings as the sole and irrefutable basis for execution. After the auditor submitted his report, the Commission issued a writ of execution on January 14, 2003, and denied the petitioners' motion to stay execution.

The petitioners then filed a petition for certiorari before the Court of Appeals, seeking to nullify the writ for allegedly altering the terms of the January 15, 1998 decision. The Court of Appeals denied the petition for lack of merit and denied reconsideration. Hence this petition for review before the Supreme Court.

Facts

The petitioners were officers of Baguio Garden Hotel-Apartments, Incorporated. In its decision of January 15, 1998, the Securities and Exchange Commission ordered them to pay the corporation the unaccounted cash of 519,488 pesos and 12 centavos, the amount of 378,123 pesos and 89 centavos disbursed as a loan, and the deficit of Retainer Earnings of 1994 in the amount of 639,057 pesos and 83 centavos. It also ordered individual petitioners to return their cash advances and unpaid rentals, and it ordered a proper accounting of the finances of the corporation for the years 1994 to 1997, with the distribution of surplus profits and the offsetting of the petitioners' shares against their liabilities.

That decision became final and executory. When execution was sought, the petitioners themselves asked that the money judgments be stayed and that the accounting be undertaken first. The Commission agreed, and the parties jointly appointed a certified public accountant, binding themselves to abide by his findings as the sole and irrefutable basis for execution.

After the auditor submitted his report, the Commission issued the assailed writ of execution on January 14, 2003, adopting the amounts found in the report. The petitioners objected, insisting that the writ had varied the judgment because it ordered the corporation to pay Ester Lau more than one million pesos, a figure not appearing in the decision, and because it increased their total liabilities. The Commission denied their motion to stay execution, and the Court of Appeals upheld the Commission.

Issues

• Whether or not the writ of execution dated January 14, 2003 altered or varied the terms of the decision dated January 15, 1998.
• Whether or not the Securities and Exchange Commission acted with grave abuse of discretion in issuing the writ of execution motu proprio, thereby denying the petitioners due process of law.

Applicable Provisions

Article 1159 of the Civil Code provides:

Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.

This governs the Joint Memorandum in which the petitioners bound themselves to abide by the accountant's findings, making that undertaking binding as a contract.

Article 1330 of the Civil Code provides:

An obligation contracted by a person who is incapacitated to give consent, or by one in which consent is vitiated by violence, intimidation, fraud, deceit, or error, is voidable.

This is the ground on which the petitioners could have attacked the Joint Memorandum, and the Court notes that they asserted no such vitiation of consent.

Section 2 of Rule 32 of the Rules of Court provides:

The court may order a reference to a commissioner when the taking of an account becomes necessary to carry out a judgment or an order.

This supports the Court's analogy between the accounting and a submission to a commissioner's findings of fact.

Ruling

On the first issue, the Court held that the writ did not modify the decision; it merely enforced it in full. A writ of execution must substantially conform to the dispositive portion of the decision, and if it varies or goes beyond the judgment it is null and void. Here, the Court found no inconsistency. Although the decision did not literally order the corporation to pay Ester Lau more than one million pesos, it clearly ordered the distribution of surplus profits and the payment of litigation costs and attorney's fees, and the individual petitioners had deprived her of her monthly shares since July 1994. The increase in the petitioners' liabilities resulted from the audit, which revealed their subsisting liabilities, exactly as the decision's proviso on cash advances and unpaid rentals for 1996 and 1997 contemplated. The petitioners themselves had sought the accounting, and they had bound themselves by the Joint Memorandum to accept its results. The Court stressed that execution of a final judgment is a matter of right on the part of the prevailing party and mandatory and ministerial on the part of the issuing court.

On the second issue, the Court held that there was no denial of due process. The private respondent had previously moved for execution, and the second writ was a mere continuation of the first. The parties had been notified that a writ would issue based on the accountant's findings, and they did not object; by their silence they waived objection. Their objections were in fact heard when they filed their motion to stay execution, which the Commission denied with reasons. Having failed to show prejudice, the petitioners could not invoke due process.

Doctrine

First, the execution of a final judgment is a matter of right on the part of the prevailing party and mandatory and ministerial on the part of the court or tribunal issuing the judgment. Once a judgment becomes final, no additions can be made to it and nothing can be done with it except to execute it.

Second, a writ of execution must substantially conform to the dispositive portion of the promulgated decision; it cannot vary or go beyond the terms of the judgment, and if it does, it becomes null and void.

Third, where the parties stipulate that the findings of an accountant or commissioner shall be final, they are bound by those findings under Article 1159 of the Civil Code, and only questions of law may be entertained afterwards.

Disposition

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

Remember This

Memorize this line: execution of a final judgment is a matter of right on the part of the prevailing party and ministerial on the part of the court, and the writ must substantially conform to the dispositive portion. Examiners use this case on the finality of judgments, on the rule that a writ of execution cannot alter the judgment it enforces, and on the binding effect of a stipulation to abide by a commissioner's or accountant's findings.