GR L 63188; (June, 1990) (Digest)
G.R. No. L-63188, June 13, 1990
FERNANDO, PELAGIO, CARLOS, JULIA and JUANA, all surnamed ARANDA, petitioners, vs. THE HONORABLE COURT OF APPEALS, MARCELO DE LARA, MARIA DE LARA, and DOMINADOR, PEDRO, and LIBRADA, all surnamed RAMOS, respondents.
FACTS
Petitioners Arandas secured a favorable trial court decision in 1967 ordering private respondents De Laras and Ramoses to reconvey several parcels of land. The Arandas obtained execution pending appeal in 1968, transferring titles to them and levying on a jeepney and garnishing funds from Marcelo de Lara. During the pendency of the respondents’ appeal, the Arandas mortgaged ten of the reconveyed lots to third parties Alfredo Cruz and Aurelia Oxiles to secure loans. The mortgages were foreclosed, and the properties were sold to the mortgagees after the Arandas failed to pay.
The Court of Appeals reversed the trial court’s decision in 1977, declaring the De Laras and Ramoses as the true owners. The Supreme Court affirmed this reversal. The trial court then ordered the Arandas to reconvey the properties and return the levied assets. While some titles were reconveyed, the lots already acquired by Cruz and Oxiles could not be recovered by the respondents in the same proceeding.
ISSUE
Whether the Court of Appeals correctly ordered the petitioners to make restitution for the value of the properties they disposed of during the pendency of the appeal, which were later adjudged to rightfully belong to the respondents.
RULING
Yes. The Supreme Court affirmed the decision of the Court of Appeals. The core legal principle is that a party who benefits from an execution of a judgment that is subsequently reversed has a duty to make restitution under Section 5, Rule 39 of the Rules of Court. This rule is mandatory and aims to restore the parties, as much as possible, to their original positions before the execution.
The legal logic is clear: the Arandas’ act of mortgaging the properties during the appeal converted them into cash or loan value, from which they derived benefit. Since the final judgment established that the respondents were the true owners all along, the Arandas’ retention of the benefits from the execution would constitute unjust enrichment at the respondents’ expense. The fact that the specific properties were transferred to innocent mortgagees does not extinguish the petitioners’ personal obligation to restore the value of what they obtained. The Court of Appeals properly ordered restitution for the proceeds of the jeepney sale and the garnished amount, as these were tangible benefits received under the now-reversed judgment. The law and equity demand that a prevailing party on appeal is entitled to be placed in the position they would have occupied had there been no erroneous execution.