PHILIPPINE VETERANS BANK, PETITIONER, VS. SOLID HOMES, INC., RESPONDENT.

Philippine Veterans Bank versus Solid Homes

The Case

This is a petition for review on certiorari brought by Philippine Veterans Bank against Solid Homes, Incorporated, arising from a compromise agreement executed in April 1992 for the repurchase by Solid Homes of the bank's rights and interests in various mortgaged properties. When the Regional Trial Court of Pasig City rendered a judgment by summary judgment in favor of Solid Homes, the bank launched a long series of attacks against that judgment, all of which failed. The case matters because it fixes the rules on when a final and executory judgment may still be executed: the reckoning of the five-year and ten-year periods, and the narrow exception in which an original petition for certiorari tolls the prescriptive period for execution.

Procedural History

Solid Homes filed a complaint for specific performance, sum of money and damages in the Regional Trial Court of Pasig City. The bank answered that it had validly rescinded the compromise agreement. Solid Homes moved for summary judgment, and the trial court, in a resolution dated February 22, 1994, denied the bank's motion to dismiss and granted the motion for summary judgment. The bank's motion for reconsideration was denied. The bank then filed a notice of appeal out of time, withdrew it, and instead filed a petition for certiorari, which the Court of Appeals dismissed; the Supreme Court denied the petition for review for having been filed out of time.

In 1999, Solid Homes filed a motion for clarification, for entry and issuance of a notice of judgment, which the trial court granted in an order dated May 6, 1999. The bank assailed that order in a petition for certiorari before the Supreme Court, which affirmed the trial court. In 2005, Solid Homes moved for the issuance of a writ of execution, which the trial court granted; a writ of execution issued on July 15, 2005. The bank assailed the order and the writ in a petition for certiorari and prohibition in the Court of Appeals, which dismissed the petition because the bank did not file a motion for reconsideration of the July 12, 2005 order; the motion for reconsideration was likewise denied. The bank then filed this petition for review on certiorari before the Supreme Court.

Facts

On April 3, 1992, Philippine Veterans Bank and Solid Homes executed a compromise agreement providing, among others, for the repurchase by Solid Homes of all the existing rights and interests of the bank in various mortgaged properties for 57,875,931 pesos and 90 centavos. Solid Homes alleged that the bank violated the terms of the agreement, and sued for specific performance, sum of money and damages. The bank countered that Solid Homes failed to pay the agreed amortizations as they fell due, and that the bank merely exercised its right to unilaterally rescind the agreement.

The trial court ruled against the unilateral rescission, holding that nothing in the compromise agreement authorized it, and that even if it did, the alleged breach was not substantial. It granted summary judgment on February 22, 1994, directing the bank to deliver condominium units equivalent to the amount Solid Homes had paid, and directing Solid Homes to pay the remaining balance in six equal quarterly installments with 8 percent interest per annum. The bank received a copy of that resolution on March 10, 1994. It filed a motion for reconsideration on the eleventh day of the fifteen-day period, and received the denial on June 3, 1994. It had only four days left to appeal, but filed its notice of appeal only on June 13, 1994.

Years later, it was discovered that the copy of the February 22, 1994 resolution on file with the trial court had been altered without authority, changing the interest rate from 8 percent to 18 percent per annum. Because of the variance, Solid Homes sought clarification, which the trial court resolved in its favor on May 6, 1999, confirming the 8 percent rate. The bank assailed that order before the Supreme Court and lost. Solid Homes finally moved for execution on June 14, 2005, more than eleven years after the resolution became final.

Issues

• Whether or not the February 22, 1994 resolution had already become final and executory, and from what date the period for its execution should be reckoned.
• Whether or not the various actions filed by the bank tolled the running of the prescriptive period for the execution of the judgment.
• Whether or not Solid Homes may still execute the February 22, 1994 resolution by a mere motion filed beyond the five-year period.

Applicable Provisions

Section 6, Rule 39 of the Rules of Court provides:

Section 6. Execution by motion or by independent action. A final and executory judgment or order may be executed on motion within five years from the date of its entry. After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action. The revived judgment may also be enforced by motion within five years from the date of its entry and thereafter by action before it is barred by the statute of limitations.

This fixes the five-year period for execution by motion and the ten-year period for enforcement by action, which the Court applies to the February 22, 1994 resolution.

Section 2, Rule 36 of the Rules of Court provides:

Section 2. Entry of judgments and final orders. If no appeal or motion for new trial or reconsideration is filed within the time provided in these Rules, the judgment or final order shall forthwith be entered by the clerk in the book of entries of judgments. The date of finality of the judgment or final order shall be deemed to be the date of its entry. The record shall contain the dispositive part of the judgment or final order and shall be signed by the clerk, with a certificate that such judgment or final order has become final and executory.

This supplies the reckoning point, because the date of entry is deemed the date of finality, from which the prescriptive period runs.

Section 7, Rule 65 of the Rules of Court provides:

Section 7. Expediting proceedings; injunctive relief. The court in which the petition is filed may issue orders expediting the proceedings, and it may also grant a temporary restraining order or a writ of preliminary injunction for the preservation of the rights of the parties pending such proceedings. The petition shall not interrupt the course of the principal case unless a temporary restraining order or a writ of preliminary injunction has been issued against the public respondent from further proceeding on the case.

This is the general rule that an original petition for certiorari does not interrupt the course of the principal case, which the Court applies to the bank's earlier petitions.

Ruling

On the first issue, the Court held that the February 22, 1994 resolution became final and executory on June 8, 1994. The bank received a copy on March 10, 1994 and had fifteen days, or until March 25, 1994, to seek reconsideration or appeal. It filed a motion for reconsideration on March 21, 1994, and received the denial on June 3, 1994, leaving it only four days, or until June 7, 1994, to appeal. It filed its notice of appeal only on June 13, 1994. By operation of law, June 8, 1994 is likewise the date of entry of judgment, and the prescriptive period must be reckoned from that date.

On the second issue, the Court held that the earlier petitions for certiorari did not toll the prescriptive period, because an original action for certiorari is an independent action, neither a continuation nor a part of the trial, and does not interrupt the course of the original action absent a writ of injunction. No injunction was issued. But the Court carved out an exception for the bank's petition assailing the May 6, 1999 order. That petition, though an original certiorari proceeding, tolled the period, because the May 6, 1999 order merely clarified the interest rate and rectified a falsification of the copy of the resolution in the records. The Court excluded the period from the filing of the motion for clarification on March 31, 1999 until its final resolution on June 27, 2003, a period of four years, two months and 27 days.

On the third issue, the Court held that Solid Homes' motion for execution, filed on June 14, 2005, or six years and nine months from entry of judgment, was beyond the five-year period but within the ten-year prescriptive period. The Court allowed a mere motion for execution even beyond five years, for reasons of equity, and refused to countenance the bank's use of technicalities to defeat its legal obligation, since the delays were due to its own maneuvers to prolong the case.

Doctrine

A final and executory judgment may be executed by motion within five years from the date of its entry, or by action for revival of judgment within ten years, and the date of entry is deemed the date of finality of the judgment. An original action for certiorari is an independent action that does not interrupt the course of the principal case, and does not toll the prescriptive period for execution, unless a temporary restraining order or writ of preliminary injunction has been issued. By way of exception, where a certiorari proceeding merely clarifies a final and executory judgment and rectifies a falsification of the copy in the records, the time during which it was pending is excluded from the running of the prescriptive period. Finally, a motion for execution filed beyond the five-year period but within the ten-year period may be allowed for reasons of equity, especially where the delay was caused by the judgment debtor's own maneuvers.

Disposition

The petition was denied, with costs against Philippine Veterans Bank, and the execution of the February 22, 1994 resolution in favor of Solid Homes was sustained.

Remember This

Memorize this line: the date of entry is the date of finality, and the ten-year period for execution runs from that date, interrupted only by a certiorari proceeding that actually clarifies the judgment or by an injunction. Examiners use this case to test the reckoning of the prescriptive period for execution and the exception to the rule that certiorari does not toll it.