G.R. No. 179675 ; June 8, 2011
SPOUSES JUANITO MAHUSAY and FRANCISCA MAHUSAY, Petitioners, vs. B.E. SAN DIEGO, INC., Respondent.

FACTS

Petitioners Spouses Juanito and Francisca Mahusay purchased several lots from respondent B.E. San Diego, Inc., covered by two Contracts to Sell executed in 1973 and 1975. Petitioners defaulted on their monthly amortizations starting October 1978. Respondent filed a case for cancellation, which was dismissed. The parties then entered into a Compromise Agreement on October 13, 1989, but only Francisca Mahusay signed it. Petitioners again failed to comply, prompting respondent to file a Complaint for Specific Performance. The Regional Trial Court (RTC) ruled in favor of respondent, ordering petitioners to comply with the Compromise Agreement and pay damages. On appeal, the Court of Appeals (CA), in its Decision dated December 20, 2001, affirmed the RTC with modification: it declared the Compromise Agreement null and void ab initio for lack of Juanito Mahusay’s consent, deleted the award of actual damages, and ordered petitioners to pay “all the unpaid amortization including amortization yet to be paid until the expiration of the contract to sell.” This Decision became final and executory on January 19, 2002. During execution, a dispute arose over the computation. Respondent filed a Motion for Clarification, praying for the inclusion of penalties and interest in the unpaid amortizations. The CA, in a Resolution dated October 11, 2004, clarified that its Decision “includes the payment of all penalties and interest due on the unpaid amortizations.” Petitioners filed motions to delete this Resolution, arguing it amended the final and immutable judgment. The CA denied these motions. Petitioners elevated the case, contending the Resolution violated the principle of immutability of judgments.

ISSUE

Whether the Court of Appeals Resolution dated October 11, 2004, which clarified that its final and executory Decision included the payment of penalties and interest, constituted a prohibited amendment or a permissible clarification of a judgment.

RULING

The Supreme Court ruled that the CA Resolution was a permissible clarification, not a prohibited amendment. The principle of immutability of judgments prohibits the substantive alteration of a final decision, except to correct clerical errors or mistakes. Clarification is allowed when there is an ambiguity in the dispositive portion, and the court may resort to the body of the decision and the pleadings to resolve it. In this case, the CA’s original Decision ordered payment of “all the unpaid amortization.” This created an ambiguity because the underlying Contracts to Sell, which were the source of the obligation and were never denied by petitioners, expressly stipulated the payment of 12% interest per annum on the purchase price. The obligation to pay interest was integral to the contracts and thus part of the “unpaid amortizations.” The clarification merely spelled out what was already due under the very contracts that gave rise to the petitioners’ debt. Therefore, the CA did not err in issuing the clarifying Resolution. The petition was denied.