G.R. No. 182378; March 6, 2013
MERCY VDA. DE ROXAS, represented by ARLENE C. ROXAS-CRUZ, in her capacity as substitute appellant-petitioner, Petitioner, vs. OUR LADY’S FOUNDATION, INC., Respondent.

FACTS

Salve Dealca Latosa filed a complaint for recovery of ownership against Atty. Henry Amado Roxas, alleging he encroached on a portion of her land. In his defense, Roxas filed a Third-Party Complaint against Our Lady’s Foundation, Inc. (OLFI), claiming he only occupied Latosa’s land to compensate for a 92-square-meter portion of his own property that OLFI had trimmed for a subdivision road. The Regional Trial Court (RTC) ruled in favor of Latosa, ordering Roxas to return the encroached area. On the third-party complaint, the RTC ordered OLFI to reimburse Roxas for the value of the 92-square-meter portion, plus legal interest from the time of payment. The decision became final.
During execution, a dispute arose over the valuation of the 92-square-meter property for reimbursement. OLFI insisted on the original purchase price of ₱40 per square meter. The RTC, in a subsequent order, set the reimbursement value at ₱1,800 per square meter, citing fairness and the devaluation of the peso. To collect this amount, the sheriff issued Notices of Garnishment against the bank accounts of OLFI’s general manager, Bishop Robert Arcilla-Maullon. OLFI challenged the RTC’s order and the garnishment via a Rule 65 petition before the Court of Appeals (CA).

ISSUE

The core issues were: (1) Whether the RTC, in its order fixing the reimbursement value at ₱1,800 per square meter, altered the final and executory judgment; and (2) Whether the garnishment of the personal bank accounts of OLFI’s general manager was proper.

RULING

The Supreme Court ruled partially in favor of the petitioner. On the first issue, the Court held that the RTC’s order setting the value at ₱1,800 per square meter did not constitute an alteration of the final judgment. The dispositive portion of the original decision only ordered reimbursement of the “value” of the property, without specifying the amount or the valuation date. This silence created an ambiguity that the trial court, in the exercise of its inherent power to execute a final judgment, had the authority to clarify and implement. The Court found the RTC’s determination to be a legitimate interpretation aimed at achieving substantial justice, preventing the absurd result of reimbursing at a decades-old price that no longer reflected any reasonable value. Thus, the CA erred in reducing the reimbursement rate to ₱40 per square meter, and the RTC’s valuation of ₱1,800 was reinstated.
On the second issue, the Court affirmed the CA’s nullification of the Notices of Garnishment against the general manager’s personal accounts. The judgment debt was a corporate obligation of OLFI. The separate corporate personality shields its officers from personal liability for corporate debts unless the veil of corporate fiction is pierced. Piercing requires clear and convincing evidence of bad faith or that the corporation is a mere alter ego. No such evidence was presented against Bishop Arcilla-Maullon. Therefore, executing the judgment against his personal assets was improper. The garnishment was correctly nullified, as a corporate manager is not the legal owner of corporate funds.