REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH), PETITIONER, VS. HEIRS OF CIRILO GOTENGCO, RESPONDENTS.

Republic versus Heirs of Cirilo Gotengco

The Case

This is a petition for review on certiorari brought by the Republic of the Philippines, represented by the Department of Public Works and Highways, against the Heirs of Cirilo Gotengco. The Republic assails the decision and resolution of the Court of Appeals which refused to impute grave abuse of discretion on the Regional Trial Court of Calamba City, Laguna, Branch 35, for amending a modified partial decision that had long become final and executory by adding an award of legal interest. The case matters because it draws the boundary between the general rule of immutability of final judgments and the narrow exception carved out in the Apo Fruits decision, and because it shows that a landowner who sleeps on his right to interest is barred by laches and res judicata.

Procedural History

The Republic filed an expropriation complaint before the Regional Trial Court of Calamba City, Laguna, Branch 35. The trial court rendered a Partial Decision on January 31, 2000, fixing just compensation. On the Republic's motion for reconsideration, the trial court corrected the land areas and adjusted the amounts, issuing a Modified Partial Decision dated February 15, 2001. That decision lapsed into finality, and the trial court granted a motion for its execution on March 30, 2001.

Nine years later, Gotengco filed an Omnibus Motion dated May 19, 2010, asking for interest on the just compensation. The trial court granted it on July 20, 2010, ordering interest at six percent per annum from July 15, 1977, the date of actual taking. On May 6, 2013, the trial court amended the Modified Partial Decision and fixed the interest at six percent per annum from the date of finality of judgment until full payment. The Republic's motion for reconsideration was denied.

The Republic then filed a petition for certiorari under Rule 65 before the Court of Appeals, imputing grave abuse of discretion on the trial court for modifying a final judgment. The Court of Appeals denied the petition on February 26, 2016, and denied reconsideration on August 9, 2016. Hence, the Republic elevated the matter to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

On May 16, 1977, the Republic, through the Department of Public Works and Highways, expropriated the properties of Cirilo Gotengco, Preciosa B. Garcia, and Emilia de Jesus for the construction of the Manila South Expressway Extension, now the South Luzon Expressway. The expropriation complaint was filed before the Regional Trial Court of Calamba City, Laguna, Branch 35.

On January 31, 2000, the trial court rendered a Partial Decision fixing just compensation. On the Republic's motion, the trial court corrected the land areas and adjusted the amounts, issuing a Modified Partial Decision dated February 15, 2001. Gotengco's expropriated property totalled 12,322 square meters, consisting of three lots, referred to as Lot A, Lot B, and Lot C. The decision fixed just compensation at 2,130 pesos per square meter for Gotengco, for a total of 26,245,860 pesos. The decision became final, and the trial court granted execution on March 30, 2001. The Republic and Gotengco then executed a Deed of Absolute Sale over Lot A in the amount of 20,669,520 pesos, and the Republic paid Gotengco in three installments, leaving a balance of 5,576,494.72 pesos.

Nine years after the Modified Partial Decision became final, Gotengco filed an Omnibus Motion dated May 19, 2010, asking for interest on the just compensation. The Republic filed no opposition, and the trial court granted the motion on July 20, 2010. When Gotengco moved for execution of the interest award, the Republic opposed, raising laches. On May 6, 2013, the trial court amended the Modified Partial Decision to impose interest at six percent per annum from the date of finality of judgment until full payment. Meanwhile, the Republic discovered that Gotengco had sold Lots B and C to Mario V. Tiaoqui during the pendency of the case.

Issues

• Whether or not the trial court violated the doctrine of immutability of judgments when it modified its own decision, already final and executory, to grant legal interest.
• Whether or not the exception to the immutability of judgments laid down in Apo Fruits applies to Gotengco.
• Whether or not Gotengco is barred by laches and res judicata from claiming legal interest.

Applicable Provisions

Section 10, Rule 67 of the Rules of Court provides:

Section 10. Rules of Court. The Rules of Court shall govern the proceedings in expropriation cases, insofar as they are not inconsistent with the provisions of this Rule.

This is the provision the Court of Appeals invoked in holding that the payment of interest is a matter of law, a ruling the Supreme Court later set aside.

Section 3, Rule 67 of the Rules of Court provides:

Section 3. Defenses and objections. The defendant shall present his defenses and objections to the complaint within the time and in the manner provided by the Rules of Court, and all objections and defenses not so presented are deemed waived.

This is the provision the Court cites in Urtula versus Republic, which it adopts, to hold that Gotengco's failure to timely raise the issue of interest barred him by res judicata.

Ruling

On the first issue, the Court ruled that the trial court violated the doctrine of immutability of judgments. A judgment that has attained finality can never be altered, amended, or modified, even to correct an erroneous judgment, for the interest of society requires that litigation come to an end. The Court acknowledged exceptions: the correction of clerical errors, nunc pro tunc entries that cause no prejudice, void judgments, and supervening circumstances rendering execution unjust and inequitable. The Court held that the case fell under none of them, because the imposition of six percent legal interest was neither a clerical error nor a nunc pro tunc entry, but a substantial change imposing a considerable burden on the Republic.

On the second issue, the Court held that the doctrine in Apo Fruits is the exception, not the general rule, and does not apply. In Apo Fruits, the trial court had categorically ordered the payment of just compensation with legal interest, and the private owners timely filed their motion for reconsideration within fifteen days from receipt of the judgment. Here, the trial court never adjudicated legal interest at its inception, and Gotengco filed his motion only after nine years from finality.

On the third issue, the Court held that Gotengco was barred by laches and res judicata. Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising diligence, could or should have been done earlier. All its elements were present, and Gotengco, having himself moved for execution of the Modified Partial Decision, could not feign ignorance of it. The Court applied its ruling in Urtula versus Republic, quoting:

As the issue of interest could have been raised in the former case but was not raised, res judicata blocks the recovery of interest in the present case. It is settled that a former judgment constitutes a bar, as between the parties, not only as to matters expressly adjudged, but all matters that could have been adjudged at the time.

Doctrine

A judgment that has attained finality can never be altered, amended, or modified, even to correct an erroneous judgment. The exceptions are the correction of clerical errors, nunc pro tunc entries causing no prejudice, void judgments, and supervening circumstances rendering execution unjust and inequitable. The Apo Fruits relaxation is the exception, not the general rule, and applies only where legal interest was actually adjudicated below and the litigant timely sought reconsideration. A landowner who fails to timely raise the issue of interest in the expropriation case is barred by laches and by res judicata under Section 3, Rule 67 of the Rules of Court, which deems all objections and defenses not presented as waived. Equity aids the vigilant, not those who sleep on their rights.

Disposition

The petition was granted; the Court of Appeals decision and resolution were reversed and set aside, and the Modified Partial Decision ordering the Republic to pay Gotengco just compensation without legal interest was reinstated.

Remember This

Memorize the line: a final judgment can never be altered, amended, or modified, even to correct an error, save for the four narrow exceptions. Examiners use this case to test the immutability of judgments against the Apo Fruits exception, and to test laches and res judicata against a landowner who waits nine years to claim interest.