This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Antonio Mendoza (Mendoza) assailing the Decision^[1] dated July 30, 2010 and Resolution^[2] dated November 24, 2010 issued by the Court of Appeals (CA) in CA-G.R. SP No. 104394 entitled "Fil-Homes Realty Development Corporation v. Regional Trial Court of Lipa, Branch 12 and Antonio Mendoza."

On June 13, 2000, the spouses Roberto and Rebecca Beltran (Spouses Beltran) filed a complaint for specific performance, demolition of improvements with damages, docketed as Civil Case No. 2000-0272, with the Regional Trial Court (RTC) of Lipa City against Mendoza, alleging that the latter constructed a residential house which encroached on their property identified as Lot Nos. 37 and 7, Block 12 of the City Park Subdivision, Barangay Maraouy, Lipa City.

Thereupon, Mendoza filed a third-party complaint for subrogation, indemnity and damages against Fil-Homes Realty Development Corporation (Fil-Homes), claiming that it was the latter which caused him to wrongfully construct a big portion of his house on Spouses Beltran's property. Trial proper ensued thereafter.

On July 17, 2003, the RTC rendered a Decision ordering Mendoza to compensate Spouses Beltran for the value of the lot the petitioner had encroached upon and, should he fail to do so, to demolish the portion of his house which encroached upon the lot owned by Spouses Beltran. On the third-party complaint, the RTC ordered Fil-Homes to reimburse Mendoza the amount of the expenses which the latter may incur in the removal or demolition of the portion of the latter's house which encroached upon the lot of Spouses Beltran. Fil-Homes was likewise ordered to pay the petitioner P100,000.00 as attorney's fees, P500,000.00 as moral damages and P60,000.00 as cost of litigation.

On appeal, the CA, in its Decision dated March 22, 2005, affirmed the July 17, 2003 Decision of the RTC albeit with the following modifications: (1) Fil-Homes was ordered to pay Mendoza actual and compensatory damages in the amount of P1,323,554.30 upon the demolition of the latter's house; and (2) the amount of moral damages was reduced to P100,000.00. The foregoing disposition of the CA became final as the parties therein did not interpose an appeal therefrom.

Herein petitioner then moved for the partial execution of the March 22, 2005 CA Decision with regard to the payment of attorney's fees, moral damages and the cost of litigation. On April 16, 2007, the RTC issued an Order directing the issuance of a writ of execution against herein respondent. Accordingly, on May 2, 2007, the Branch Clerk of Court of the RTC issued the corresponding writ of execution.

On August 30, 2007, the respondent paid the petitioner the amount of P260,000.00 corresponding to the attorney's fees, moral damages and the cost of litigation awarded to the latter. On September 3, 2007, the Sheriff which implemented the writ, submitted to the RTC a Sheriff's Return stating that the writ of execution had been fully satisfied insofar as the award for attorney's fees, moral damages and the cost of litigation.

On March 31, 2008, the respondent filed a Manifestation with the RTC informing the said court that, on August 30, 2007, Spouses Beltran had executed a declaration and acknowledgment attesting that the judgment in their favor had already been fully settled and paid. Apparently, the respondent gave Spouses Beltran a parcel of land they owned in exchange for the lot encroached upon by the petitioner's house.

On April 22, 2008, the petitioner, having demolished the portion of his house which encroached upon the Spouses Beltran's lot, moved for the issuance of a writ of execution against the respondent for the payment of actual and compensatory damages in the amount of P1,323,554.30. The respondent opposed the said motion, alleging that the petitioner had been informed, through the former's March 31, 2008 Manifestation, that it had fully settled the judgment in favor of Spouses Beltran.

On May 14, 2008, Spouses Beltran, through their counsel, confirmed that they indeed executed the August 30, 2007 declaration and acknowledgment which attested to the satisfaction of the judgment in their favor.

On June 10, 2008, the RTC issued an Order in favor of the petitioner, directing the deputy sheriff to enforce the judgment against the respondent for the payment of actual and compensatory damages in the amount of P1,323,554.30. The respondent sought a reconsideration of the said June 10, 2008 Order but it was denied by the RTC in its Order dated July 8, 2008.

Thus, the respondent filed a petition for certiorari under Rule 65 with the CA, claiming that the RTC gravely abused its discretion in issuing the orders dated June 10, 2008 and July 8, 2008.

The Ruling of the CA

On July 30, 2010, the CA rendered the herein assailed Decision,^[3] the decretal portion of which reads:

WHEREFORE, in view of the foregoing, the petition is GRANTED. The RTC Orders dated June 1[0], 2008 and July 8, 2008, respectively, are SET ASIDE for having been issued with grave abuse of discretion. The RTC decision in Civil Case No. 2000-0272 dated July 17, 2003, as affirmed with modification by this Court's 15^th Division in CA G.R. CV No. 80817 on March 22, 2005, is hereby declared fully satisfied and the case is deemed closed and terminated.

SO ORDERED.^[4]

The CA held that, although execution of a final decision is merely ministerial, to allow the execution of the judgment for the payment of actual and compensatory damages against the respondent would be inequitable since the petitioner caused the demolition of the said portion of his house in bad faith. The CA explained that actual and compensatory damages may

only be awarded to the petitioner in the event that the latter is ordered to demolish the said portion of his house.

In turn, the demolition of the said portion of the petitioner's house is contingent upon the event that the petitioner fails to pay the value of the portion of the Spouses Beltran's lot which is encroached by the petitioner's house. The CA pointed out that Spouses Beltran made no demand for the payment of the value of the said portion of their lot and, thus, there was no reason for the petitioner to cause the said demolition.

Further, the CA intimated that, when the petitioner commenced the demolition of the portion of his house on April 2, 2008, he had already been informed by the respondent that it had already fully satisfied the judgment in favor of the Spouses Beltran on August 30, 2007.

The petitioner sought a reconsideration^[5] of the said July 30, 2010 Decision but it was denied by the CA in its November 24, 2010 Resolution.^[6]

The Present Petition

Undaunted, the petitioner instituted the instant petition for review on certiorari asserting the following arguments: (1) the CA committed reversible error in its application of the law and committed grave error in its appreciation of facts; (2) the CA committed reversible error in holding that the petitioner was in bad faith when he demolished his house; (3) the CA erred in holding that the payment made by the respondent in favor of the Spouses Beltran made the enforcement of the writ of execution no longer feasible; and (4) the CA erred in ruling that the RTC issued its orders dated June 10, 2008 and July 8, 2008 with grave abuse of discretion.^[7]

In its Comment,^[8] the respondent asserted that the instant petition ought to be denied as it merely raised factual questions. In any case, the respondent claimed that the petitioner caused the demolition of his house in bad faith and an order directing Fil-Homes to pay actual and compensatory damages to the petitioner would be unjust and inequitable.

In sum, the issue for this Court's resolution is whether the CA erred in denying the execution of the judgment for the payment of actual and compensatory damages in favor of the petitioner.

This Court's Ruling
The petition is denied.

The issue presented by the instant case is not novel. In FGU Insurance Corporation v. Regional Trial Court of Makati City,Branch 66, ^[9] we explained that, although a decision that has acquired finality becomes immutable, unalterable, and may no longer be modified in any respect, still there are exceptions to the said rule. Thus:

Fundamental is the rule that where the judgment of a higher court has become final and executory and has been returned to the lower court, the only function of the latter is the ministerial act of carrying out the decision and issuing the writ of execution. In addition, a final and executory judgment can no longer be amended by adding thereto a relief not originally included. In short, once a judgment becomes final, the winning party is entitled to a writ of execution and the issuance thereof becomes a court's ministerial duty. 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.

Under the doctrine of finality of judgment 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 immediately be struck down.

But like any other rule, it has exceptions, namely: (1) the correction of clerical errors; (2) the so-called nunc pro tunc entries which cause no prejudice to any party; (3) void judgments; and (4) whenever circumstances transpire after the finality of the decision rendering its execution unjust and inequitable. The exception to the doctrine of immutability of judgment has been applied in several cases in order to serve substantial justice. The early case of City of Butuan vs. Ortiz is one where the Court held as follows:

Obviously a prevailing party in a civil action is entitled to a writ of execution of the final judgment obtained by him within five years from its entry (Section 443, Code of Civil Procedure). But it has been repeatedly held, and it is now well-settled in this jurisdiction, that when after judgment has been rendered and the latter has become final, facts and circumstances transpire which render its execution impossible or unjust, the interested party may ask the court to modify or alter the judgment to harmonize the same with justice and the facts (Molina vs. De la Riva, 8 Phil. 569; Behn, Meyer & Co. vs. McMicking, 11 Phil. 276; Warner, Barnes & Co. vs. Jaucian, 13 Phil. 4; Espiritu vs. Crossfield and Guash, 14 Phil. 588; Flor Mata vs. Lichauco and Salinas, 36 Phil. 809). In the instant case the respondent Cleofas alleged that subsequent to the judgment obtained by Sto. Domingo, they entered into an agreement which showed that he was no longer indebted in the amount claimed of P995, but in a lesser amount. Sto. Domingo had no right to an execution for the amount claimed by him.' (De la Costa vs. Cleofas, 67 Phil. 686-693).

Shortly after City of Butuan v. Ortiz, the case of Candelario v. Cañizares was promulgated, where it was written that:

After a judgment has become final, if there is evidence of an event or circumstance which would affect or change the rights of the parties thereto, the court should be allowed to admit evidence of such new facts and circumstances, and thereafter suspend execution thereof and grant relief as the new facts and circumstances warrant. We, therefore, find that the ruling of the court declaring that the order for the payment of P40,000.00 is final and may not be reversed, is erroneous as above explained.

These rulings were reiterated in the cases of Abellana vs. Dosdos, The City of Cebu vs. Mendoza and PCI Leasing and Finance, Inc. v. Antonio Milan. In these cases, there were compelling circumstances which clearly warranted the exercise of the Court's equity jurisdiction.^[10] (citations omitted)

Here, the March 22, 2005 Decision of the CA ordering, inter alia, the respondent to pay the petitioner actual and compensatory damages in the event that the latter is constrained to demolish the said portion of his house, is already final. Pursuant to the doctrine of finality of judgment, the said decision may not be modified in any respect.

Nevertheless, we are loath to apply the doctrine of finality of judgment with regard to the payment of actual and compensatory damages in favor of the petitioner. There are circumstances in the instant case which transpired after the finality of the March 22, 2005 Decision of the CA and which rendered the execution of the same unjust and inequitable with respect to the award of actual and compensatory damages in favor of the petitioner.

After the March 22, 2005 CA Decision had attained finality, the respondent had fully satisfied the judgment in favor of Spouses Beltran by conveying a parcel of land it owned in exchange for the lot encroached upon by the petitioner's house. It bears stressing that the petitioner has been informed of the fact of the satisfaction of the judgment in favor of Spouses Beltran. Fil-Homes, then, had become the registered owners of the property encroached upon.

Accordingly, the petitioner, in view of the foregoing, could reasonably expect that Spouses Beltran would no longer demand from him the payment of the value of the latter's lot and, as a practical consequence, there would be no need for the former to cause the demolition of his house. There being no necessity for the demolition of the petitioner's house, there would likewise be no need for the order directing the respondent to pay the petitioner actual and compensatory damages.

On this point, the CA aptly ruled that:

The foregoing ratiocination failed to take into consideration that the [Spouses Beltran] had lost whatever interest they may have in the case as adjudged in their favor. Their position as party-plaintiffs entitled to a writ of execution enforced against the owner of the structure erected on the subject lots has been transferred to the [respondent]. They have, for all intents and purposes, been considered to have received payment for the value of the lot. Thus, after taking into consideration the subsequent events that transpired, this Court finds and so holds that it will now be unjust to enforce to enforce paragraphs 6 and 7 of the decision. By receiving payment over the value of the lot, [Spouses Beltran] clearly lost their right to alternatively order the demolition of the portions of the Mendoza's house that encroached on their former property. Since [Spouses Beltran] can no longer cause actual damage to Mendoza's house, the latter cannot be entitled to reimbursement from the [respondent], for it is clear under CA G.R. CV No. 80817 that Mendoza "will suffer an injury which is attributable to Fil-Homes if and when his house will be demolished."^[11] (citation omitted)

Indeed, it would be the height of inequity if the respondent would still be required to pay the petitioner actual and compensatory damages in the amount of P1,323,554.30 after it had fully satisfied the judgment in favor of Spouses Beltran.

Moreover, we agree with the CA that there was evident bad faith on the part of the petitioner when he caused the demolition of his house. The petitioner, despite knowing that the respondent had fully satisfied the judgment in favor of Spouses Beltran, still proceeded with the demolition of his house. Thus, whatever injury that may have been incurred by the petitioner when his house was demolished could only be attributed to him. Thus, the CA stressed that:

What Mendoza did, to the mind of this Court, is a clear case of abuse of right, contrary to the intention of the RTC Decision. He made a mockery of the dispositive portion of the said decision when he demolished his house despite not being ordered to do so by the lot owner. The records will further reveal that Mendoza was notified of the fact that Fil-Homes had become the owner of the said lots, and despite the foregoing, on April 1, 2008, Mendoza, on the pretext of complying with the RTC decision, entered into a contract with A.A. Angeles Concrete Products and Construction Supply for the demolition of his house, and a day after, commenced its demolition. x x x.^[12] (citations omitted)

WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The assailed Decision dated July 30, 2010 and Resolution dated November 24, 2010 issued by the Court of Appeals in CA-G.R. SP No. 104394 are AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Brion, Perez, and Sereno, JJ., concur.

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^[1] Penned by Associate Justice Stephen C. Cruz, with Associate Justices Isaias P. Dicdican and Danton Q. Bueser, concurring; rollo, pp. 22-39.

^[2] Id. at 41-42.

^[3] Supra note 1.

^[4] Rollo, p. 38.

^[5] Id. at 43-46.

^[6] Supra note 2.

^[7] Rollo, pp. 13-14.

^[8] Id. at 59-65.

^[9] G.R. No. 161282, February 23, 2011.

^[10] Id.

^[11] Rollo, p. 36.

^[12] Id. at 34-35.