Esguerra vs. Holcim Philippines, Inc.

A writ of execution must conform strictly to the dispositive portion of the final and executory judgment; the trial court exceeds its jurisdiction when it alters or modifies the judgment by imposing liabilities not ordained therein. Where a person or corporation examined under Sections 36 and 37 of Rule 39 denies an alleged indebtedness to the judgment obligor, the court may only authorize the judgment obligee to institute a separate action for recovery under Section 43, Rule 39 — it cannot summarily adjudicate the debt and order payment at the execution stage.

Jorge Esguerra filed an action in 1989 to annul the Free Patent of Iluminada de Guzman over land in Norzagaray, Bulacan, claiming that 38,641 square meters of his titled property was included in de Guzman's title. Esguerra later impleaded Hi-Cement Corporation (now HOLCIM Philippines, Inc.) as co-defendant because Hi-Cement was extracting marble from the disputed area under a royalty arrangement with de Guzman. The trial court dismissed the complaint. On appeal, the Court of Appeals reversed and ruled in Esguerra's favor. The Supreme Court, in its December 27, 2002 Decision in G.R. No. 120004, affirmed the Court of Appeals in toto. The judgment became final and executory and was remanded to the trial court for execution. Esguerra died, and his heirs — Ligaya, Lowell, and Liesell Esguerra — substituted him. HOLCIM later acquired de Guzman's property.

• Nature of the Underlying Action: Jorge Esguerra filed an action on December 12, 1989 with the RTC of Malolos, Bulacan, Branch 16, to annul the Free Patent of Iluminada de Guzman. He claimed ownership of Lot 3308-B, located at Matiktik, Norzagaray, Bulacan, covered by TCT No. T-1685-P (M), with an area of 47,000 square meters. De Guzman had been issued Free Patent No. 575674 over a parcel of land in Gidgid, Norzagaray, Bulacan with an area of 20.5631 hectares, covered by OCT No. P-3876. Esguerra alleged that a 38,641-square-meter portion of his property had been encroached upon and included in de Guzman's title. He later impleaded Hi-Cement Corporation (now HOLCIM) because the company was extracting marble from the disputed area under a royalty arrangement with de Guzman.

• The Final Judgment (CA-G.R. CV No. 40140, affirmed in G.R. No. 120004): The Court of Appeals' February 28, 1995 decision, affirmed in toto by the Supreme Court on December 27, 2002, ordered the following: (1) OCT No. P-3876 was declared null and void insofar as the disputed 38,641 square meters; (2) de Guzman was ordered to segregate the area and surrender her title; (3) de Guzman was ordered to vacate and surrender possession to Esguerra; (4) Hi-Cement was ordered to cease and desist from quarrying and to make an accounting of royalties paid to de Guzman; (5) de Guzman was ordered to pay and turn over to Esguerra all amounts received from Hi-Cement as royalties for marbles extracted from the disputed area beginning March 23, 1990; and (6) de Guzman was ordered to pay costs. Notably, no monetary judgment was rendered against Hi-Cement/HOLCIM — its obligation was solely to render an accounting.

• Execution Proceedings: After the case was remanded for execution, the Esguerra heirs filed an Omnibus Motion dated September 28, 2004, asking the trial court to direct the sheriff to submit a return on the writ of execution and to order de Guzman and Hi-Cement (HOLCIM) to appear for examination under Sections 36 and 37, Rule 39 of the Rules of Court. The RTC granted this motion on December 1, 2004.

• Ex Parte Proceedings and Quantification: Contrary to the court's order, de Guzman and HOLCIM were not examined. Instead, the Esguerra heirs presented Engineer Louie Balicanta, who testified that based on topographical maps, the estimated volume of limestone hauled from 1990 to 2003 was 3,535,020.471 cubic meters. The heirs filed a Formal Offer of Exhibits on May 16, 2005. They later filed a Supplement to the Motion for Execution and a Motion for Alias Writ of Execution, claiming royalties at ₱10.00 per metric ton for 9,187,257.67 metric tons of limestone, totaling ₱91,872,576.72.

• The Challenged RTC Orders: On December 1, 2005, the RTC found the motion meritorious and ordered issuance of an alias writ of execution for ₱91,872,576.72. On December 20, 2005, upon motion for clarification, the RTC directed that the alias writ order de Guzman and/or HOLCIM to pay the amount. Alias writs and notices of garnishment on HOLCIM's bank accounts were issued.

• HOLCIM's Opposition: On January 5, 2006, HOLCIM filed a motion for reconsideration, asserting that it did not owe royalties to the Esguerra heirs because the parties had entered into an Agreement dated March 23, 1993 governing their rights regarding extracted limestone. HOLCIM claimed it had paid advance royalties of ₱694,184.22 — more than the ₱218,693.10 due under the Agreement. HOLCIM also filed a Manifestation and Motion for Ocular Inspection, contending that it had not extracted limestone from Esguerra's property and that the photographs presented by the heirs depicted areas outside the disputed land.

• Denial of HOLCIM's Motions: On June 7, 2006, the RTC denied both the motion for reconsideration and the motion for ocular inspection. It held that the heirs had proven their entitlement to ₱91,872,576.72 and that HOLCIM had failed to present its own evidence. The RTC stated that granting the motions would effectively reopen a case already final and executory.

• Estoppel to Question Jurisdiction: Petitioners argued that HOLCIM was estopped from challenging the RTC's jurisdiction to conduct a hearing on the exact amount of royalty because: (a) HOLCIM had expressed willingness to pay royalty to whoever was adjudged the rightful owner; (b) HOLCIM and de Guzman failed to appear at the hearing or oppose the Omnibus Motion; (c) HOLCIM filed no opposition to the Formal Offer of Evidence, Supplement to the Motion for Execution, or Motion for Alias Writ; and (d) HOLCIM, as the new owner of de Guzman's property, had assumed her rights, interests, and liabilities.

• Defective Certification of Non-Forum Shopping: Petitioners contended that HOLCIM's petition for certiorari before the Court of Appeals should have been dismissed because HOLCIM failed to attach a board resolution authorizing its officer to file the petition, violating the rules on Verification and Certification of Non-Forum Shopping.

• Improper Remedy — Certiorari Instead of Appeal: Petitioners maintained that HOLCIM should have filed an appeal, not certiorari, because the RTC was merely implementing the dispositive portion of the final decision when it allowed the heirs to adduce evidence on the exact amount due. Petitioners argued that a court retains supervisory control over execution proceedings, which carry the right to determine questions of fact and law.

• Authority to Determine Amount at Execution Stage: Petitioners contended that the RTC acted within its jurisdiction in receiving evidence to determine the exact amount HOLCIM had to pay, as this was part of implementing the final judgment.

• Compliance with Non-Forum Shopping Requirements: HOLCIM countered that it had substantially complied by attaching a Secretary's Certificate authorizing its Chief Operating Officer, Paul M. O'Callaghan, to appoint counsel and sign pleadings, as well as a Special Power of Attorney and a Verification and Certification of Non-Forum Shopping. HOLCIM later submitted an additional Secretary's Certificate confirming O'Callaghan's authority.

• Certiorari as Proper Remedy: HOLCIM argued that certiorari under Rule 65 was the appropriate remedy because Section 1(f), Rule 41 of the Rules of Court expressly states that no appeal may be taken from an order of execution, and the proper mode of challenge is a special civil action for certiorari when the order is issued with grave abuse of discretion.

• No Estoppel on Jurisdiction: HOLCIM asserted that jurisdiction is conferred by law, not by laches, estoppel, or agreement of the parties, and lack of jurisdiction may be raised at any stage. Its expression of willingness to pay the rightful owner was merely a manifestation of good faith and did not estop it from questioning the RTC's acts.

• Existence of the 1993 Agreement: HOLCIM maintained that it had an Agreement dated March 23, 1993 with the Esguerra heirs governing royalty payments. It had paid ₱694,184.22 — more than the ₱218,693.10 contractually due — and the heirs voluntarily accepted and retained this amount.

• DENR Jurisdiction: HOLCIM argued that the DENR Panel of Arbitrators, not the RTC, had jurisdiction pursuant to Section 77 of the Philippine Mining Act of 1995 over disputes involving mining rights.

• De Guzman's Personal Liability: HOLCIM contended that the obligation to turn over royalties was purely personal to de Guzman and did not attach to the land or transfer to HOLCIM upon its acquisition of de Guzman's property. HOLCIM's ownership of property outside the disputed area had no bearing on the heirs' claim.

• Verification and Certification of Non-Forum Shopping: Whether the Court of Appeals gravely erred in admitting HOLCIM's petition for certiorari despite the alleged absence of a board resolution authorizing its filing.

• Propriety of Certiorari: Whether the Court of Appeals gravely erred in not dismissing HOLCIM's petition for certiorari on the ground that appeal, not certiorari, was the proper remedy.

• Estoppel to Question Jurisdiction: Whether the Court of Appeals gravely erred in not holding that HOLCIM was estopped from questioning the trial court's jurisdiction to conduct a hearing on the exact amount of royalty.

• Grave Abuse of Discretion in Execution: Whether the Court of Appeals gravely erred in holding that the trial court committed grave abuse of discretion by receiving evidence and determining the exact monetary liability of HOLCIM during execution proceedings.

• Modification of Final Judgment: Whether the Court of Appeals gravely erred in holding that the trial court's orders modified the final and executory decision of the Court of Appeals in CA-G.R. CV No. 40140.

• Verification and Certification of Non-Forum Shopping: The Court of Appeals did not err in admitting the petition. HOLCIM attached a Secretary's Certificate authorizing O'Callaghan to appoint counsel and sign pleadings, a Special Power of Attorney, and a Verification and Certification of Non-Forum Shopping. While a board resolution was not initially attached, HOLCIM subsequently submitted a Secretary's Certificate dated July 17, 2006 confirming O'Callaghan's authority. This constituted substantial compliance under General Milling Corporation v. NLRC, as the rules of procedure are intended to promote, not frustrate, the ends of justice.

• Propriety of Certiorari: Certiorari under Rule 65 was the proper remedy. Section 1(f), Rule 41 of the Rules of Court explicitly provides that no appeal may be taken from an order of execution. An order of execution issued with grave abuse of discretion amounting to lack or excess of jurisdiction may properly be challenged through a special civil action for certiorari under Rule 65.

• Estoppel to Question Jurisdiction: HOLCIM was not estopped from challenging the RTC's acts. Jurisdiction is conferred by law, not by laches, estoppel, or agreement of the parties. HOLCIM's expression of willingness to pay the rightful owner was a manifestation of good faith and did not constitute a waiver of jurisdictional objections. The trial court committed grave abuse of discretion in proceeding ex parte without affording HOLCIM the chance to be heard.

• Grave Abuse of Discretion in Execution: The trial court committed grave abuse of discretion. The dispositive portion of the final judgment controls execution. The final judgment in CA-G.R. CV No. 40140 did not direct HOLCIM to pay any monetary amount — it merely required HOLCIM to make an accounting of royalties paid to de Guzman. By instead receiving evidence to quantify the volume of extracted limestone and imposing direct monetary liability on HOLCIM, the trial court altered the judgment. When a decision's monetary award is undetermined, the trial court must receive evidence from both parties — not only from one side. HOLCIM's Manifestation and Motion for Ocular Inspection was denied, depriving it of the opportunity to rebut the petitioners' evidence.

• Modification of Final Judgment: The RTC orders effectively modified the final judgment. The dispositive portion of the CA decision, affirmed by the Supreme Court, ordered HOLCIM only to account for royalties paid to de Guzman. The RTC exceeded its authority by adjudicating a direct ₱91,872,576.72 liability against HOLCIM. Where HOLCIM denies any indebtedness beyond what it paid under the 1993 Agreement, the proper recourse under Section 43, Rule 39 is for the RTC to authorize the judgment obligee to institute a separate independent action for recovery — not to summarily adjudicate the disputed debt at the execution stage. Execution can only be issued against a party to the action who had their day in court; due process bars binding a non-party through execution proceedings.

• Doctrine of Immutability of Final Judgments — A final and executory judgment cannot be altered, modified, or varied by the trial court at the execution stage, except to correct clerical errors, misprisions, or omissions. The dispositive portion of the decision controls the execution of judgment. The trial court exceeds its jurisdiction when it imposes liabilities not ordained in the final judgment.

• Propriety of Certiorari from Execution Orders — Under Section 1(f), Rule 41 of the Rules of Court, no appeal may be taken from an order of execution. The exclusive remedy to challenge an order of execution issued with grave abuse of discretion amounting to lack or excess of jurisdiction is a special civil action for certiorari under Rule 65.

• Substantial Compliance with Verification Requirements — The absence of a board resolution authorizing the filing of a petition does not warrant outright dismissal where the petitioner subsequently submits the required documents. Substantial compliance — attaching a Secretary's Certificate and later confirming authority — is sufficient where rigid enforcement would frustrate substantial justice. (Citing General Milling Corporation v. NLRC, 442 Phil. 425 (2002); Bank of the Philippine Islands v. Court of Appeals, G.R. No. 168313, October 6, 2010.)

• Proceedings Under Section 43, Rule 39 — Denial of Indebtedness by Third Party — Where a person or corporation examined under Sections 36 and 37 of Rule 39 claims an interest adverse to the judgment obligor or denies the debt, the court may only authorize the judgment obligee to institute a separate action for recovery and may forbid transfer of the interest or debt within 120 days. The court has no authority to order such person or corporation to pay the judgment obligee directly. A summary determination of a disputed debt at the execution stage violates due process.

• Jurisdiction Cannot Be Conferred by Estoppel — Jurisdiction over the subject matter is conferred by law and cannot be acquired through laches, estoppel, waiver, or agreement of the parties. Lack of jurisdiction may be raised at any stage of the proceedings, even on appeal.

• "At the execution stage, the only thing left for the trial court to do is to implement the final and executory judgment; and the dispositive portion of the decision controls the execution of judgment. The final judgment of this Court cannot be altered or modified, except for clerical errors, misprisions or omissions."

• "Nothing in the Rules gives the court the authority to order such person or corporation to pay the judgment obligee and the court exceeds its jurisdiction if it orders the person who denies the indebtedness to pay the same."

• "Execution of a judgment can only be issued against one who is a party to the action, and not against one who, not being a party thereto, did not have his day in court. Due process dictates that a court decision can only bind a party to the litigation and not against innocent third parties." (Citing Atilano II v. Asaali, G.R. No. 174982, September 10, 2012.)

• "The rules of procedure are intended to promote, rather than frustrate, the ends of justice, and while the swift unclogging of court dockets is a laudable objective, it, nevertheless, must not be met at the expense of substantial justice." (Citing General Milling Corporation v. NLRC.)

• De Guzman v. Court of Appeals, 442 Phil. 534 (2002) [G.R. No. 120004] — The earlier final decision in the same underlying dispute, which affirmed the Court of Appeals' judgment ordering HOLCIM to render an accounting and ordering de Guzman to turn over royalties. This precedent constituted the res judicata foundation defining the scope of permissible execution.

• Shimizu Philippines Contractors, Inc. v. Magsalin, G.R. No. 170026, June 20, 2012, 674 SCRA 65 — Cited for the principle that a petition may be given due course when its attachments are sufficient to resolve the controversy, notwithstanding technical deficiencies.

• Bank of the Philippine Islands v. Court of Appeals, G.R. No. 168313, October 6, 2010, 632 SCRA 322 — Applied for the rule that strict application of procedural rules is the general rule, while relaxation is the exception where there is substantial compliance.

• General Milling Corporation v. NLRC, 442 Phil. 425 (2002) — Applied as controlling authority for the principle that subsequent submission of required documents constitutes substantial compliance justifying relaxation of procedural rules in the interest of substantial justice.

• Atilano II v. Asaali, G.R. No. 174982, September 10, 2012, 680 SCRA 345 — Followed for the doctrine that execution cannot issue against one not a party to the action who did not have their day in court.

• Heirs of Dialdas v. CA, 412 Phil. 491 (2001) — Cited for the principle that when a decision's monetary award is undetermined, the trial court must receive evidence from both parties to determine the exact amount due.

• Section 1(f), Rule 41, Rules of Court — "No appeal may be taken from [...] an order of execution." Applied to hold that certiorari under Rule 65, not appeal, is the proper remedy to challenge an execution order issued with grave abuse of discretion.

• Section 36, Rule 39, Rules of Court — Examination of judgment obligor when judgment unsatisfied. This provision was invoked by the petitioners but misapplied by the trial court, which proceeded to receive evidence on damages rather than examining the judgment debtors as the rule requires.

• Section 37, Rule 39, Rules of Court — Examination of obligor of judgment obligor. The trial court's order granting examination was proper, but its subsequent ex parte proceeding and monetary adjudication exceeded the scope of this provision.

• Section 43, Rule 39, Rules of Court — Proceedings when indebtedness denied or another person claims the property. Held to be the governing rule where HOLCIM denied indebtedness beyond what it paid under the 1993 Agreement. The proper recourse is authorization for the judgment obligee to file a separate action, not summary adjudication at execution.

• Section 77, Republic Act No. 7942 (Philippine Mining Act of 1995) — Raised by HOLCIM as vesting jurisdiction in the DENR Panel of Arbitrators, though the Court did not rule on this point given the disposition on other grounds.

Chief Justice Maria Lourdes P. A. Sereno (Chairperson), Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Lucas P. Bersamin, Associate Justice Martin S. Villarama, Jr. — all concurred without separate opinions.

N/A — The decision was unanimous.