G.R. No. 175339 December 16, 2008
PREMIERE DEVELOPMENT BANK, petitioner, vs. ALFREDO C. FLORES, in his Capacity as Presiding Judge of Regional Trial Court of Pasig City, Branch 167, ARIZONA TRANSPORT CORPORATION and PANACOR MARKETING CORPORATION, respondents.

FACTS

The case originated from a complaint for specific performance and damages filed by Arizona Transport Corporation and Panacor Marketing Corporation against Premiere Development Bank. The Supreme Court, in a prior decision ( G.R. No. 159352 dated April 14, 2004), affirmed with modification the lower courts’ decisions and awarded damages in favor of the respondent corporations. This decision became final and executory. Subsequently, the mortgaged property securing the loan was foreclosed and purchased by Premiere Development Bank at a public auction. The respondent corporations then filed a motion for execution of the Supreme Court’s final decision to collect the awarded damages. The Regional Trial Court granted the writ of execution, which was affirmed by the Court of Appeals. Premiere Development Bank opposed the execution, arguing that the principles of compensation or set-off should apply because the foreclosure did not preclude it from recovering any loan deficiency from the respondents. It also claimed that a separate civil case (Civil Case No. MC03-2202) pending before the RTC of Mandaluyong City put into issue the validity of its monetary claim and the foreclosure sale, and that executing the damage award would be inequitable as the respondent corporations were in the process of winding up.

ISSUE

Whether the Regional Trial Court properly granted the writ of execution for the final and executory judgment awarding damages to the respondent corporations.

RULING

The Supreme Court ruled that the grant of the writ of execution was proper. A final and executory judgment entitles the prevailing party to a writ of execution as a matter of right, and its issuance is a ministerial duty of the court. None of the recognized exceptions to this rule were present. The Court found Premiere Development Bank’s claim for compensation or set-off unmeritorious. For legal compensation to apply, the debts must be liquidated and demandable. The bank’s alleged deficiency claim against the respondents was not a liquidated debt but a mere claim or a “debt in embryo,” as it had not been admitted by the debtor or pronounced by final judgment. The pendency of the separate civil case in Mandaluyong City, which questioned the validity of the bank’s claim, meant there was a controversy over the alleged debt, precluding compensation. Furthermore, the fact that the respondent corporations were winding up did not make the execution unjust or inequitable; corporations continue to exist for three years after dissolution for the purpose of prosecuting and defending suits. The Court denied the petition and affirmed the assailed Court of Appeals decision.