THIRD DIVISION
[G.R. No. 232545. October 4, 2017.]
PAN PACIFIC SERVICE CONTRACTORS, INC. AND RICARDO F. DEL ROSARIO, petitioner,vs. BANCO DE ORO UNIBANK, INC. [FORMERLY THE PHILIPPINE COMMERCIAL INTERNATIONAL BANK], respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedOctober 4, 2017, which reads as follows:
"G.R. No. 232545 (Pan Pacific Service Contractors, Inc. and Ricardo F. Del Rosario vs. Banco De Oro Unibank, Inc. [formerly The Philippine Commercial International Bank]). — The present petition is an offshoot of a final and executory case decided by this Court on March 18, 2010 involving the same parties. 1
Before us is a Petition for Review under Rule 45 of the Rules of Court, which seeks to reverse and set aside the Order 2 of the Regional Trial Court (RTC) Branch 59, Makati City, denying Pan Pacific Service Contractors, Inc. (Pan Pacific)'s Motion to Determine the Balance of the Judgment Award in relation to a case it filed against Philippine Commercial International Bank (PCIB). There, the RTC enjoined the parties to adhere to the dispositive portion of the March 18, 2010 final and executory Decision rendered in G.R. No. 169975, ordering PCIB to pay Pan Pacific P1,516,015.07 with interest at the bank lending rate of 18% per annum starting May 6, 1994 until the amount is fully paid.
The facts, as summarized, are as follows:
PCIB engaged the services of Pan Pacific for the mechanical works on its air conditioning system on November 24, 1989, with a contract price of P23,311,410.30. In their contract, it was stipulated, among others, that Pan Pacific shall be entitled to price adjustment in case of increase in labor costs and prices of materials (escalation clause), 3 which shall be determined, in the event of a disagreement, by an appointed engineer, in this case TCGI Engineers (TCGI). 4 Pursuant to the said contract, Pan Pacific commenced its operation in the project site and PCIB Tower II extension building in Makati City. It was completed in June 1992 and accepted as such on July 9, 1992 by PCIB.
In 1990, labor costs and prices of materials escalated, thus, Pan Pacific claimed an adjustment price of P5,165,945.52 pursuant to the escalation clause in their contract, which was reduced to P4,858,548.87 by TCGI, and finally to P3,730,957.07, as recommended by PCIB project managers, and approved by TCGI. Pan Pacific made several demands for the adjustment price as extraordinary increases in the costs of labor and materials caused is operational capital to be inadequate for the purpose, but the same fell on deaf ears. Instead of paying, PCIB offered a partial release of the advance payment in the form of a P1.8 million loan. Against its will and on the strength of PCIB's promise that the adjustment price would be released soon, Pan Pacific, through its president Ricardo Del Rosario (Del Rosario), was constrained to conform to the formality of an approved advance payment and to execute a promissory note in the amount of P1.8 million as a requirement for the loan. A surety bond was also posted by Pan Pacific. The said amount was released directly to laborers and suppliers.
Pan Pacific again made several demands on the adjustment price but PCIB merely kept on promising to release the same. Meanwhile, the promissory note on the P1.8 million matured, thus PCIB demanded payment thereof, plus interest and penalty. This prompted Pan Pacific to file a complaint for declaration of nullity/annulment of promissory note, sum of money and damages against PCIB before the RTC Makati City. It insisted that that it would not have incurred the loan had PCIB released the adjustment price on time and that the note does not express the true agreement of the parties. It also maintained that the P1.8 million should be considered as an advance payment. Therefore, there was really no consideration for the promissory note, hence it is null and void from the beginning.
For its part, PCIB denied that the P1.8 million covered by the promissory note was an advance payment and not loan entered into by Pan Pacific. It further alleged that it already made a total payment of P20,980,261.67, thereby leaving a balance of P2,331,148.63. Pan Pacific, however, was unable to pay its suppliers and laborers, thus PCIB advanced the amount of P4,546,090.63 directly to the suppliers and laborers for the account of Pan Pacific. It also paid Pan Pacific the additional amount of P414,942.00 over the contract price of P23,311,410.30 to cover increases on the cost of labor and withdrawal. It claimed therefore that it overpaid Pan Pacific in the amount of P1.8 million which was converted into a loan as evidenced by the promissory note. As a counterclaim, it prayed for the payment of Pan Pacific's obligation in the total amount of P3,226,186.01, inclusive of interest, penalty and collection charges. CAIHTE
On April 12, 1999, the RTC rendered a Decision 5 in favor of Pan Pacific. It ruled that Del Rosario's consent on the promissory note was vitiated by undue influence as Pan Pacific was under financial distress when it was executed. He was also made to believe that its execution was merely to comply with bank procedure and that the price adjustment would be released soon. PCIB took advantage of Pan Pacific's predicament to escape liability on the adjustment price. In determining the amount due to Pan Pacific, the RTC deducted the following amounts from the adjusted price of P3,730,957.07: P414,942.00, P126,903.97, and P1.8 million, the first two representing the amounts already paid by PCIB and the other the loan amount. Thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against the defendant as follows:
1. Declaring the promissory note (Exhibit "B" null and void);
2. Ordering the defendant to pay the plaintiffs the following amounts:
a. P1,389,111.10 representing the unpaid balance of the adjustment price, with interest thereon at the legal rate of twelve (12%) percent per annum starting May 6, 1994, the date when the complaint was filed, until the amount is fully paid;
b. P100,000.00 representing moral damages;
c. P50,000.00 representing exemplary damages; and
d. P50,000.00 as and for attorney's fees;
3. Dismissing defendant's counterclaim, for lack of merit; and
4. With costs against the defendant. 6
Both parties appealed to the CA — Pan Pacific questioned the deduction of P126,903.07 and asked for an 18% interest, compounded annually on PCIB's payables, while PCIB prayed that the RTC decision be reversed for being contrary to law.
In a Decision dated June 30, 2005 in CA-G.R. CV No. 63966, the CA found no merit in PCIB's appeal, while Pan Pacific's appeal was found to be partially meritorious. 7
First, the CA observed that Pan Pacific never asked for a loan from PCIB. It was insistent from the very beginning that under the escalation clause of the contract, it is entitled to an adjusted rate of the basic contract price, to be determined by TCGI. After evaluating the request for increase, TCGI invited PCIB to a conference to discuss and clarify all questions regarding the adjusted price, but PCIB simply ignored the same, as was its usual noncommittal reaction to Pan Pacific's repeated pleas for price adjustment. In PCIB's own words, "there was really no formal disapproval, there was no approval either." The CA believes that PCIB cannot escape liability and conveniently say that it was Pan Pacific's fault that it was suffering from financial distress. The escalation clause of the contract is clear. It concretely laid down the rules between the parties as to their obligation to each other. In case of dispute, the contract was plain as to the procedure that they should follow. In this regard, the CA found PCIB's superior attitude and its "neither approved nor disapproved" excuse in evading its obligation under the contract unacceptable.
Second, the CA ruled that, indeed, Del Rosario's consent was vitiated when he took up PCIB's offer of "financial assistance in the form of cash advance." During the time that it was offered, Pan Pacific was in dire need of money, to the point that it was willing to pay the lesser adjusted price fixed by TCGI. This, according to the CA, is tantamount to a vitiated consent obtained by undue influence, which is voidable under Article 1330 of the Civil Code.
Finally, the CA found that the RTC should not have deducted P126,903.97. Such amount was PCIB's last payment for the basic contract price and does not form part of the adjusted price. As to the 18% interest, the CA discussed that unlike Pan Pacific's request for price adjustment, it never sought PCIB's approval for the unilateral imposition of 18% interest on the adjusted price. Thus, it maintained that the legal rate of 12% per annum shall be the applicable rate.
The fallo of the aforementioned Decision reads:
WHEREFORE, the foregoing considered, the assailed Decision is MODIFIED ordering defendant-appellant PCIB to pay plaintiffs-appellees P1,516,015.07, with interest thereon at the legal rate of twelve percent (12%) per annum starting 6 May 1994. The Decision is affirmed in other respects.
SO ORDERED.8
Pan Pacific filed a Motion for Partial Reconsideration from the CA's Decision imposition of the legal rate of 12%. It claimed that the interest rate applicable should be the 18% bank lending rate. PCIB likewise filed a Motion for Reconsideration, but the CA denied both motions through Resolution dated October 5, 2005. Thus, Pan Pacific filed a petition for review on certiorari before this Court, docketed as G.R. No. 169975, imputing error in fixing the interest rate at 12% instead of the 18% bank lending rate. 9
On March 18, 2010, this Court granted the petition and ruled that the CA went beyond the intent of the parties by requiring PCIB to give its consent to the imposition of interest before Pan Pacific can hold it liable for it at the current bank lending rate. A review of Section 2.6 of the Agreement and Section 60.10 of the General Conditions, which forms part of their contract, clearly provides that in case any payment is delayed, the contractor, Pan Pacific, may charge interest at the current banking lending rates, without stating that PCIB's consent is needed for its imposition. Pan Pacific sufficiently proved its entitlement to the 18% bank lending rate of interest by presenting the promissory note prepared by PCIB itself. This promissory note, although declared void by the RTC and the CA because it did not express the real intention of the parties, is substantial proof that the bank lending rate at the time of default was 18% per annum.
The dispositive portion of this Court's final and executory Decision in G.R. No. 169975 reads:
WHEREFORE, we GRANT the petition. We SET ASIDE the Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 63966. We ORDER respondent to pay petitioners P1,516,015.07 with interest at the bank lending rate of 18% per annum starting 6 May 1994 until the amount is fully paid.
SO ORDERED. 10
Consequently, Pan Pacific filed a Motion for Execution before the RTC, Branch 59 in Makati City, the court of origin. In its motion, it presented for satisfaction, among other awards: a.) interest at 18% per annum; b.) moral and exemplary damages, attorney's fees and cost of suit. PCIB opposed the same, saying that based on the March 18, 2010 Decision of this Court, Pan Pacific is not entitled to moral and exemplary damages and attorney's fees. Thus, Pan Pacific filed a Motion to Determine the Balance of the Judgment award.
On June 29, 2017, the RTC rendered an Order in this wise:
WHEREFORE, the "Motion to Determine the Balance of the Judgment Award" is hereby DENIED. The parties are hereby enjoined to adhere to the dispositive portion of the judgment rendered in this case.
SO ORDERED. 11
In so doing, the RTC discussed that it is a well-settled rule that a judgment which has become final and executory can no longer be amended or corrected by the court except for clerical errors or mistakes. Once a decision attained finality, it cannot be lawfully altered or modified even by the court which rendered it especially where the alteration or modification is material or substantial. It thus follows that since no moral and exemplary damages, attorney's fees and cost of suit were awarded by this Court in its ruling in G.R. No. 169975, the RTC has no jurisdiction to alter the same.
Hence, this present appeal on pure questions of law.
The Issue
Pan Pacific submits that the RTC committed reversible errors in issuing its June 29, 2017 Order. It pointed out that it is not seeking an amendment nor a modification of a final and executory judgment, but merely a clarification thereof. DETACa
The Ruling of the Court
G.R. No. 169975 is already final,
In FGU Insurance v. RTC, 12 the Court ruled that under the doctrine of finality or immutability of judgment, a decision that has acquired finality becomes immutable and unalterable, and may no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact and law, and whether it be made by the court that rendered it or by the Highest Court of the land. Any act which violates this principle must be immediately struck down. It was further elucidated in this case that once a judgment becomes final, the winning party is entitled to a writ of execution and the issuance thereof becomes the court's ministerial duty. Save for recognized exceptions, 13 the lower court cannot vary the mandate of the superior court or reexamine it, for any other purpose other than execution; much less may it review the same upon any matter decided on appeal or error apparent; nor intermeddle with it further than to settle so much as has been demanded. This doctrine is adhered to by necessity notwithstanding occasional errors that may result thereby, since litigations must somehow come to an end. 14
Companion to this doctrine is the rule that it is the dispositive portion that categorically states the rights and obligations of the parties to the dispute as against each other. Thus, it is the dispositive portion that must be enforced according to its terms to ensure the validity of the execution. Any attempt to insert, change or add matters not clearly contemplated in the dispositive portion violates the rule on immutability of judgments. 15
Here, Pan Pacific, in the guise of asking for a clarification, wishes to alter the already final and executory judgment rendered by this Court. The dispositive portion of the Decision in G.R. No. 169975 is as clear as day and need not be clarified: the Court intended to set aside the Decision and Resolution rendered by the CA. Setting it aside can only mean that the Court intended to render a judgment anew, abandoning whatever reliefs or awards the CA has granted to Pan Pacific. This includes the awards of moral and exemplary damages, attorney's fees and cost of suit in its favor, as it was not included in the dispositive portion.
There is no ambiguity in the
Pan Pacific invokes, as an exception to the doctrine of immutability of judgment, that a final and executory judgment may be rectified or clarified on the ground of ambiguity. Indeed, the early case of Filipino Legion Corporation v. Court of Appeals16 provides that where there is ambiguity caused by an omission or mistake in the dispositive portion of a decision, the court may clarify such ambiguity by an amendment even after the judgment had become final, and for this purpose it may resort to the pleadings filed by the parties, the court's findings of facts and conclusions of law as expressed in the body of the decision. It was also emphasized in the case of Gulang Jr. v. Court of Appeals, 17 a case repeatedly cited in Pan Pacific's petition, that an ambiguity arising from inadvertent omission may indeed be rectified, clarified and supplied by reference primarily to the body of the decision itself.
The only question then is whether there is an ambiguity arising from inadvertent omission in the dispositive portion that would require its modification or clarification.
The Court rules that there is none.
An inadvertent error or omission is one that is made unintentionally, marked by carelessness or oversight. 18 Here, it is worth noting that the only issue submitted by Pan Pacific before the Court in G.R. No. 169975 is the 12% interest rate fixed by the CA instead of the 18% bank lending rate as indicated in their contract. However, in the dispositive portion, the Court ruled not only on the issue of the applicable interest rate, but also expressly indicated the unpaid balance of the price adjustment that PCIB owes Pan Pacific, an issue not raised before it. Thus, the unpaid balance should not have been included in the dispositive portion, had the Court unintentionally overlooked issues not presented on appeal, as Pan Pacific suggests. It is therefore clear that its omission in the dispositive portion only means that the Court intended to exclude the award of moral and exemplary damages, attorney's fees and cost of suit by the CA.
The RTC already lost
To the extent of being repetitious, it is emphasized that a judgment which has become final and executory can no longer be amended or corrected. In such a situation, the trial court loses jurisdiction over the case except for execution of the final judgment. Any amendment or alteration made which substantially affects the final and executory judgment is null and void for lack of jurisdiction, including the entire proceedings held for that purpose. 19 The execution of the judgment should strictly conform to every essential particular of the judgment promulgated. Otherwise, the same would be void. 20
The RTC is thus correct in denying Pan Pacific's Motion to Determine the Balance of the Judgment Award, as it already lost its jurisdiction over the case when it became final and executory. What is left to be done is to execute the judgment, which should be in accord with every letter of the dispositive portion sought to be executed.
The Court desires to underscore that Pan Pacific was not left without any remedy. Upon receiving the Court's Decision in G.R. No. 169975, it should have immediately filed before it a Motion for Reconsideration or a motion to clarify the dispositive portion of said case to settle the alleged ambiguity, rather than wait for it to become final and executory, as what it chose to do. Allowing modifications in a case that has long attained finality would be more intolerable than the purported wrong and injustice it seeks to correct.
WHEREFORE, finding no reversible error in the assailed June 29, 2017 Order of the Regional Trial Court, the Court resolves to DENY the Petition and, thus, AFFIRM said Order.
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Pan Pacific Service Contractors, Inc. and Ricardo F. Del Rosario v. Equitable PCIB, formerly The Philippine Commercial International Bank, G.R. No. 169975, March 18, 2010, 616 SCRA 102.
2.Rollo, pp. 29-30. Dated June 29, 2017, issued by Judge Winlove M. Dumayas in Civil Case No. 94-1720.
3. "70.1 Increase or Decrease of Cost
There shall be added to or deducted from the Contract Price such sums in respect of rise or fall in the cost of labor and/or materials or any other matters affecting the cost of the execution of the works as may be determined.
70.2 Subsequent Legislation
If, after the date twenty-eight (28) days prior to the latest date of submission of tenders for the Contract there occur in the country in which the works are being or are to be executed changes to any National or State Statute, Ordinances, Decree of other Law or any regulation or by-law of any local or other duly constituted authority, or the introduction of any such State Statue, Ordinances, Decree of other Law or any regulation or by-law of any local or other duly constituted authority, or the introduction of any such State Statute, Ordinance, Decree, Law, regulation or by-law which causes additional or reduced cost to the contractor, other than under Sub-Clause 70.1 in the execution of the contract such additional or reduced cost shall, after due consultation with the Owner and Contractor, be determined by the Engineer and shall be added to or deducted from the Contract Price and the Engineer shall notify the Contractor accordingly, with a copy to the Owner."
4. Paragraphs 70.1 and 70.2 of the "General Conditions for the Construction of PCIB Tower II Extension."
5.Id. at 94-109.
6.Id. at 109.
7.Id. at 118.
8.Id. at 124.
9.Id. at 7-25.
10.Id. at 15.
11.Id. at 30.
12. G.R. No. 161282, February 23, 2011, 726 SCRA 315.
13. To wit: a) the correction of clerical errors; b) the so-called nunc pro tunc entries which cause no prejudice to any party; c) void judgments; and d) whenever circumstances transpire after the finality of the decision rendering its execution unjust and inequitable. (Gadrinab v. Salamanca, G.R. No. 194560, June 11, 2014).
14.Coca-Cola Bottlers Philippines, Inc., Sales Force Union-PTGWO-BALAIS v. Coca-Cola Bottlers, Philippines, Inc., G.R. No. 155651, July 28, 2005, 464 SCRA 507.
15.Lim v. HMR Philippines, Inc., G.R. No. 201483, August 4, 2014.
16. G.R. No. L-22364 and L-22830, April 30, 1974, 56 SCRA 674.
17. G.R. No. 116155, December 17, 1998.
18.Pagadora v. Ilao, G.R. No. 165769, December 12, 2011, 662 SCRA 14.
19.Ram's Studio and Photographic Equipment, Inc. v. Court of Appeals, G.R. No. 134888, December 1, 2000, 346 SCRA 691.
20.Tumibay v. Soro, G.R. No. 152016, April 13, 2010, 618 SCRA 169.