G.R. No. 141209 ; September 17, 2001
ANTONIA HUFANA, et al., petitioners, vs. WILLIAM ONG GENATO, respondent.

FACTS

On October 20, 1989, respondent William Ong Genato filed a Complaint for foreclosure of a real estate mortgage over two parcels of land owned by Oakland Development Resources Corporation (Oakland). The Regional Trial Court (RTC) of Quezon City rendered a Decision on May 21, 1991, ordering Oakland to pay Genato specified sums and, in case of non-payment, directing the sale of the mortgaged properties. This Decision was affirmed by the Court of Appeals (CA) on July 28, 1992, and became final and executory. Genato subsequently obtained a writ of execution, and an auction sale was scheduled.
Various petitions and motions were filed to challenge the foreclosure and restrain the auction, including a Petition for Prohibition filed with the Supreme Court (G.R. No. 108285) by alleged buyers of the mortgaged properties, and a Petition for Relief from Judgment filed by Oakland with the CA. These challenges were ultimately dismissed or denied. Notably, the Supreme Court’s Third Division referred G.R. No. 108285 to the CA, which subsequently dissolved the restraining order and dismissed the petition, affirming the mortgage’s validity.
Despite the finality of the judgment, Genato’s Ex Parte Motion for Execution was opposed by Oakland and the intervenors (herein petitioners) based on a March 20, 1995 Decision of the Housing and Land Use Regulatory Board (HLURB). The HLURB declared the mortgage between Genato and Oakland null and void insofar as third parties were concerned for lack of the written approval required under P.D. 957, declared the buyers to have a superior right over the lots, and directed specific acts including the registration of deeds in favor of the buyers and the surrender of titles. Initially, the trial court denied Genato’s motion citing the HLURB Decision. However, upon reconsideration and Genato’s manifestation that he would respect the deeds executed in favor of the intervenors/petitioners, the RTC issued a Resolution on May 14, 1996, allowing execution to proceed but limiting the auction sale to the lot covered by TCT No. 366380, excluding portions bought and occupied by the intervenors.
Subsequently, Genato filed a Motion for Partial Execution/Alias Writ of Execution, which the trial court denied through a Resolution dated July 1, 1997. This Resolution not only denied the motion but also made substantive determinations, including declaring the HLURB Decision as binding on Genato and ruling that the mortgage could not be foreclosed due to the buyers’ superior rights. Genato appealed this July 1, 1997 Resolution to the Court of Appeals via an ordinary appeal. The CA, in its Decision dated July 22, 1999, set aside the trial court’s Resolution and directed the issuance of the alias writ of execution. The CA held that the trial court’s Resolution was a final order appealable by ordinary appeal because it disposed of the issue of execution on the merits. The CA further ruled that the HLURB Decision did not constitute a legal bar to the execution of the final and executory RTC judgment. Petitioners’ motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals erred in taking cognizance of and granting the ordinary appeal filed by respondent Genato from the trial court’s Resolution dated July 1, 1997, which denied his motion for partial execution.

RULING

No, the Court of Appeals did not err. The Supreme Court affirmed the CA’s decision.
The trial court’s Resolution dated July 1, 1997, was not a mere interlocutory order but a final resolution appealable by ordinary appeal. While generally, an order denying a motion for execution is interlocutory, an exception exists when the order goes beyond the mere grant or denial of the motion and finally determines the substantive rights of the parties regarding execution. In this case, the trial court’s Resolution did not simply deny execution; it delved into the merits by adopting the HLURB’s findings, declaring the HLURB Decision binding on Genato, and ruling that the mortgage could no longer be foreclosed due to the superior rights of the buyers. This constituted a final determination of the rights of the parties concerning the execution of the final judgment. Therefore, it was a final order subject to an ordinary appeal under Rule 41 of the Rules of Court, and the CA correctly entertained the appeal.
On the substantive issue, the Supreme Court upheld the CA’s ruling that the final and executory RTC judgment ordering the foreclosure of the mortgage must be executed. The HLURB Decision, which declared the mortgage void as to third parties and recognized the buyers’ superior rights, could not bar the execution of the prior final judgment from the RTC. A final judgment can only be set aside on grounds of extrinsic fraud, lack of jurisdiction, or that it is void. The HLURB Decision did not fall under any of these grounds. The principle of finality of judgment and the rule on conclusiveness of judgment (bar by prior judgment) demand that litigation must end. The RTC’s judgment had long become final and executory, and the HLURB, in a subsequent case involving different parties (the buyers), could not validly nullify its effects. The rights of the buyers, if any, against Oakland must be pursued in a separate action without impairing the final judgment in favor of Genato.
Thus, the petition was denied, and the Court of Appeals’ Decision directing the issuance of the alias writ of execution was affirmed.