GR 133883; (December, 2003) (Digest)
G.R. No. 133883; December 10, 2003
SPOUSES ARTURO AND NICETA SERRANO, petitioners, vs. COURT OF APPEALS AND HEIRS OF EMILIO S. GELI, respondents.
FACTS
Petitioners Spouses Serrano sold a property to Spouses Geli via a Deed of Absolute Sale with Partial Assumption of Mortgage. The Gelis paid a partial sum and assumed the obligation to pay the balance of the vendor’s mortgage loan to the GSIS. The Gelis failed to pay the GSIS, prompting the Serranos to file an action for rescission. The trial court rescinded the sale, ordered the Gelis to vacate, and to pay compensation for use. The Gelis appealed. During the pendency of the appeal, GSIS foreclosed the mortgaged property. Respondent Emilio Geli, without informing the Serranos or the court, redeemed the property from GSIS in 1987, paying the redemption price “for the account of Arturo Serrano.” The CA later dismissed the Gelis’ appeal for non-payment of docket fees, making the rescission judgment final.
ISSUE
Whether the redemption of the foreclosed property by Emilio Geli constitutes a supervening event that renders the execution of the final judgment for rescission unjust and inequitable.
RULING
Yes. The Supreme Court ruled that Geli’s redemption was a supervening event that altered the situation and made execution of the rescission judgment inequitable. A supervening event is a fact that transpires after judgment has become final, which changes the rights of the parties and renders execution impossible or unjust. Here, the redemption occurred before the judgment became final (as the appeal was still pending), but its effects and the discovery of the fact occurred after finality. The Court emphasized that rules of procedure should serve substantial justice. The redemption effectively extinguished the very mortgage obligation that was the cause for rescission. Allowing execution would unjustly enrich the Serranos, as they would recover the property without reimbursing Geli for the redemption amount he paid on their behalf. The legal logic is rooted in equity; a final judgment may be modified in its execution when supervening facts or events transpire which render such execution unjust. The Court ordered the deduction of the redemption price paid by Geli from the amounts awarded to the Serranos in the judgment, achieving a equitable result.