Execution - Effect of reversal of executed judgment. – Where the executed judgment is reversed totally or partially, or annulled, on appeal or otherwise, the trial court may, on motion, issue such orders of restitution or reparation of damages as equity and justice may warrant under the circumstances.

SPS. DAVID ESERJOSE and ZENAIDA ESERJOSE, Petitioners, vs. ALLIED BANKING CORPORATION and PACITA UY, Respondents. G.R. No. 180105, April 23, 2014.


“x x x.

This case is about the effect of a reduction in the course of appeal of the judgment amount after the execution sale of the defendant's properties to satisfy the trial court's judgment had already taken place.

X x x.

Contrary to the Eserjoses’ argument, the CA did not alter the RTC Decision of January 31, 2003 in their favor as modified by this Court’s Resolution of March 19, 2005. Notably, neither the RTC nor this Court awarded legal interest on the amounts due. Consequently, the RTC exceeded its jurisdiction when, in executing the judgment, it added interest on the damages it awarded, raising the total award to over P5,000,000.00. The Eserjoses are entitled to only P4,000,000.00 in damages and P50,000.00 in attorney’s fees.

When this Court substantially reduced the amounts of damages that the RTC awarded the Eserjoses, it in effect partially reversed the executed judgment issued in the case. Section 5, Rule 39 of the 1997 Rules of Civil Procedure applies to such a situation. It provides:

SEC. 5. Effect of reversal of executed judgment. – Where the executed judgment is reversed totally or partially, or annulled, on appeal or otherwise, the trial court may, on motion, issue such orders of restitution or reparation of damages as equity and justice may warrant under the circumstances.

Here, the RTC executed on a judgment debt of P8,050,000 when what was later determined to be due was only P4,050,000. Clearly, the trial court had the discretion to order restitution and reparation of damages. Its exercise of that discretion must, however, be fair to all the parties concerned.

The CA was right in holding that the RTC committed grave abuse of discretion in not allowing for the restitution of the properties improperly auctioned for substantially wrong amounts considering that the registration of titles in the names of the Eserjoses and the turnover of possession of such properties to them had not yet taken place. There is no legal impediment to ABC and Uy being allowed to pay the judgment debt in cash, the preferred mode of satisfaction of money judgment.

X x x.”