Rule 39 Part 1 Cases

7/27/2019 Rule 39 Part 1 Cases

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G.R. No. 126592 October 2, 2001

ROMEO G. DAVID,petitioner,vs.JUDGE TIRSO D.C. VELASCO, SHERIFF ERNESTO L. SULA, andCONTINENTAL WATCHMAN SECURITY AGENCY,respondents.

QUISUMBING, J.:

This is a special civil action for certiorari filed by petitioner Romeo G. David,former administrator of the National Food Authority, seeking (1) annulmentof the order of public respondent Judge Tirso D.C. Velasco dated October 9,1996, granting the motion of private respondent Continental WatchmanSecurity Agency for the issuance of a writ of execution in connection withCivil Case No. Q-93-17139, and its motion for immediate payment, as wellas its manifestation with motion to reiterate payment on services actuallyrendered; (2) annulment of the writ of execution issued pursuant to the orderdated October 9, 1996; and (3) issuance of an order directing the trial court

to conduct pre-trial and trial relative to Civil Case No. Q-93-17139.

The antecedent facts, which are not in dispute, are as follows:

On February 5, 1990, the NFA, under then administrator Gabaldon,conducted a bidding to determine the security agencies that would providesecurity services to NFA. Twelve security agencies, including privaterespondent, were awarded contracts. When the contracts expired, NFAextended them on a periodic basis.

When petitioner became NFA administrator, he initiated a review of allsecurity service contracts and the formulation of new bidding procedures forthe awarding of such contracts. A pre-qualification, bids, and awardscommittee was consequently formed on April 6, 1993. An invitation to pre-qualify and bid for security services was published in a nationwidenewspaper in May 1993. Security agencies with existing contracts with NFAwere also required to pre-qualify and bid in view, among others, of thechange in "bidding jurisdiction". Previously, security agencies providedsecurity for NFA on a regional basis. Under the new rules, security would beprovided on a per area basis.

Private respondent qualified in the pre-bidding held on June 18, 1993.However, the final bidding set for June 30, 1993 was suspended after

security agencies that failed to qualify obtained a temporary restrainingorder.

In a notice dated July 30, 1993, NFA informed private respondent that it nolonger enjoyed the trust and confidence of the former. Hence, its contractwould not be extended beyond August 16, 1993. Security service contractswere, however, awarded to other security agencies on August 4, 1993 on amonth-to-month basis, pending resolution of the injunction issued againstthe bidding.

Unsatisfied, private respondent on August 9, 1993, filed a complaintdocketed as Civil Case No. Q-93-17139, for damages and injunction withprayer for the issuance of a temporary restraining order against NFA andpetitioner. A temporary restraining order and later a writ of preliminaryinjunction were issued.

NFA and petitioner questioned the issuance of said writ before the Court-ofAppeals,

1which partially struck down the writ. The CA ruled that since

private respondent's contract with NFA had already expired, it could nolonger be revived, extended, or renewed via a writ of preliminary injunction.Otherwise, NFA's right to enter into lawful contracts would be violated.However, the CA upheld the writ insofar as it sought to prevent NFA fromawarding security service contracts to other security agencies without therequisite public bidding.

Petitioner and NFA appealed the CA decision to this Court, which upheld itin G.R. Nos. 115121 to 115125.

2When we rendered our decision on

February 9, 1996, petitioner had already been relieved of his post as NFAadministrator.

Civil Case No. Q-93-17139 was remanded to the trial court. Private

respondent then filed a motion for the issuance of a writ of execution on May14, 1996, to obtain payment for its security services worth more than P26.5million.

3Petitioner and NFA opposed the motion since, at that time, the pre-

trial and trial of the case were yet to be held.

Meanwhile, lawyers for NFA informed petitioner that they could no longerrepresent him as he was no longer connected with NFA.

On July 16, 1996, NFA filed an amended answer to private respondent'scomplaint, with a cross-claim against petitioner and a prayer for the issuanceof a writ of preliminary attachment.


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A hearing was held on private respondent's motion4on October 3, 1996,

during which private respondent presented a witness who testified as to theamount being claimed by the former for its security services. Petitionerasserts that he was not informed of said hearing. He claims that an NFAlawyer claimed to represent him during the hearing, without his authority.Another lawyer was already representing petitioner since the NFA had

earlier informed him that NFA lawyers would no longer represent him.

A writ of execution was issued on October 9, 1996. Petitioner did not file amotion for reconsideration before the trial court, arguing that it wasunnecessary since the writ was a patent nullity and that the issue ofprematurity and illegality of the writ was already passed upon by publicrespondent when he ruled on the opposition to the issuance of the writ.

Hence, this petition for certiorari, prohibition, and mandamus, with a prayerfor a temporary restraining order. Petitioner claims that the remedy of appealhas already been foreclosed with the issuance of the questioned writ ofexecution, and that there is no other plain, speedy, and adequate remedy inthe ordinary course of law.

Petitioner cites the following as alleged errors:

I

RESPONDENT JUDGE VIOLATED THE LAW AND GRAVELY ABUSEDHIS DISCRETION AND ACTED WITHOUT JURISDICTION IN GRANTINGTHE WRIT OF EXECUTION AND ISSUING IT IN CIVIL CASE NO. Q-93-17139 WHEN NO PRE-TRIAL AND NO TRIAL HAD BEEN HELD, AND NODECISION HAD BEEN RENDERED IN SAID CASE.

II

THE RESPONDENT JUDGE VIOLATED THE LAW AND GRAVELYABUSED HIS DISCRETION WHEN HE HELD THE HEARING OFOCTOBER 3, 1996 WITHOUT NOTICE TO PETITIONER THUSDEPRIVING HIM OF HIS RIGHT TO DUE PROCESS.

III

THE RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION INISSUING A WRIT OF EXECUTION FOR P8,445,161.00 BASED ON ONEDOCUMENT TESTIFIED TO BY ONE INCOMPETENT WITNESS FOR

SERVICES SUPPOSEDLY RENDEREDAFTERTHE CONTRACT FORSERVICES HAD LAPSED.

IV

EVEN ASSUMINGARGUENDO, THAT THE ORDER . . . WAS THERESPONDENT JUDGE'S DECISION, AND THE SAME WAS VALID, THERESPONDENT JUDGE VIOLATED THE LAW AND GRAVELY ABUSEDHIS DISCRETION WHEN HE IMMEDIATELY ISSUED A WRIT OFEXECUTION EVEN BEFORE 15 DAYS FROM RECEIPT OF SAID ORDERHAD LAPSED.

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On January 13, 1997, we issued a temporary restraining order6to enjoin

respondents from implementing the order dated October 9, 1996 and the writof execution bearing the same date.

On April 28, 1997, we granted the motion filed by NFA to intervene in thiscase.

Petitioner's main contention in this petition is that, under Rule 39, Section 1of the Rules of Court,

7there must be a final judgment before a writ of

execution can be issued. Also, under the Rules of Court, before there couldbe a final judgment in a civil case, there must first be a pre-trial and trial.However, in Civil Case No. Q-93-17139, no pre-trial and trial have been heldand no judgment has as yet been rendered. Thus, no writ of execution maybe issued in relation to the case and its issuance by public respondent is "ablatant disregard of fundamental requirements of the rules of court."

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Petitioner maintains that he was denied his right to due process when hewas not informed of the hearing of October 3, 1996. The appearance of theNFA lawyer on petitioner's behalf was allegedly unauthorized. During said

hearing, private respondent presented a witness who testified on its moneyclaims. Private respondent also submitted a summary of its claims, whichincluded payment for services rendered, moral damages, and attorney'sfees.

On the other hand, private respondent maintains that the motion for theissuance of the writ and the writ of execution itself are valid. It anchors itsclaim on the decision of this Court in G.R. Nos. 115121-25, affirming thedecision of the CA in CA-G.R. SP Nos. 32213, 32230, and 32274-76 thathad already become final. Private respondent points out that a formalhearing was held by the trial court before it issued the writ of execution, and


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that it presented evidence to justify its claim against the NFA. Any error inthe appreciation by the trial court of the evidence presented cannot beassailed through a petition for certiorari, according to private respondent.

Furthermore, private respondent stresses that the questioned writ ofexecution had already been fully satisfied. It appears, per a sheriff's returndated November 5, 1996, that on October 10, 1996, a day after the writ ofexecution was issued, Sheriff Ernesto L. Sula served a copy of the writ to theNFA and garnished the amount of P8,445,161.00 from the NFA's depositwith the Philippine National Bank.

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The NFA, meanwhile, stressed that there was no basis for the issuance ofthe writ of execution and the award of money to private respondent sincethere is as yet no final, valid, and executory judgment rendered by the trialcourt. The case has not even reached the pre-t rial stage.

At the outset, this Court would like to point out that petitioner was droppedas a defendant in Civil Case No. Q-93-17139, per order of the trial court

dated June 20, 1997,

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following a joint motion to dismiss filed by petitionerand private respondent before the trial court on June 13, 1997.11

Thequestioned writ of execution which, strangely, was issued prior to June1997

12was directed only against the NFA and not against herein

petitioner. Thus, it appears that petitioner has no more standing to questionthe said writ before this Court, and private respondent has pointed this out tous.

However, in the order authorizing the issuance of the writ, it was expresslystated that while the writ would be issued against NFA, it was withoutprejudice to the latter's cross-claim against petitioner. Therefore, petitioneralso stood to be injured by. the issuance and enforcement of the writ ofexecution in case the NFA decided to pursue its cross-claim against him. We

note that, in fact, the NFA had already sued petitioner to recover more thanP34 million that the NFA paid to another security agency in a case similar tothe present one.

13Petitioner clearly has a personal, substantial interest in

questioning the said writ, an interest in issue and not merely an interest inthe question involved or an incidental interest.

14

The parties do not dispute that no trial on the merits was held and nojudgment was ever rendered in Civil Case No. Q-93-17139. The Rules ofCourt, particularly Section 1 of Rule 39, in force at the time the hereincontroversy arose, provides:

SECTION 1. Execution upon judgments or final orders. Execution shall issue as a matter of right, on motion, upon ajudgment or order that disposes of the action or proceedinguponexpiration of the period to appeal therefrom if no appeal has beenduly perfected.

If the appeal has been duly perfected and f inally resolved, suchexecution may forthwith be applied for in the lower court from whichthe action originated, on motion of the judgment obligee, submittingtherewith certified true copies of the judgment orjudgments or thefinal order or orders sought to be enforcedand of the entry thereof,with notice to the adverse party.

The appellate court may, on motion in the same case, when theinterest of justice so requires, direct the court of origin to issue thewrit of execution. (Emphasis supplied.)

Before a writ of execution may be issued, there must necessarily be a final

judgment or order that disposes of the action or proceeding. The writ ofexecution is the means by which a party can enforce a final judgment ororder of the court. There is nothing to enforce or execute absent a finaljudgment or order; thus, there can be no writ of execution.

In the instant case, the trial court itself was aware that a f inal judgment wasyet to be made concerning Civil Case No. Q-93-17139. Thus, in itsquestioned order dated October 9, 1996, the trial court stated:

xxx xxx xxx

This Court believes that the plaintiff is entitled to recover theamount of P8,445,161.00 representing salaries and wages of its

security guards considering the fact that when this Court issued thepreliminary injunction, it has the effect of preserving the status quobetween the parties during the pendency of the present suit . . .However, reservation is made whether claims for damages can belawfully obtained by the plaintiffpending the final determination ofthis case.

xxx xxx xxx


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Accordingly, the Branch Clerk of this Court is directed to issue aWrit of Execution to be implemented by the Ex-Officio Sheriff or anyof her deputies.

SO ORDERED.15

(Italics supplied.)

Clearly, the final determination of the issues in Civil Case No. Q-93-17139was still pending when the trial court granted the motion for the issuance of awrit of execution, and issued the writ of execution itself, both dated October9, 1996.

Noteworthy, private respondent filed a motion for leave to file supplementalcomplaint, and a supplemental complaint on February 18, 1997,

16four

months after the issuance of the order allowing execution and of the writ ofexecution itself. There is no rhyme nor reason in the filing of the twopleadings, if a final judgment that would justify the issuance of a writ ofexecution had already been rendered in the case.

Private respondent relies on the decision of this Court in G.R. Nos. 115121-25, which affirmed the decision of the CA in CA-G.R. SP Nos. 32213, 32230,and 32274-76. However, what was decided in those cases was the proprietyof the negotiated contracts entered into by the NFA with certain securityagencies. Nothing in those cases settled the issues originally raised byprivate respondent in its complaint in Civil Case No. Q-93-17139.

The issuance of the order dated October 9, 1996, and of the writ ofexecution also on the same date, is patently erroneous. It is without anylegal basis and shows manifest ignorance on the part of public respondentjudge. He did not even have any discretion on the matter, since the trialcourt cannot issue a writ of execution without a final and executoryjudgment.

That the writ of execution had already been satisfied does not perforceclothe it with validity. As we have earlier discussed, a writ of execution mayonly be issued after final judgment. Such a writ issued without final judgmentis manifestly void and of no legal effect. It is as if the writ was not issued atall. Seizure of property under a void writ of execution amounts to deprivationof property without due process of law. This Court may direct that whateveraction taken under such a void writ be undone. Otherwise, we would becondoning a patent violation of a party's right to due process and allowingone party to unjustly enrich himself at the expense of another.

As regards petitioner's contention that the amount awarded to privaterespondent, through the order for the issuance of a writ of execution, iswithout basis and is unconscionable, this is a factual matter that should betaken up in the trial of the case.

WHEREFORE, the petition is GRANTED. The Order of the Regional TrialCourt of Quezon City, Branch 88, dated October 9, 1996, granting privaterespondent's motion for issuance of a writ of execution, motion for immediatepayment, and manifestation with motion to reiterate payment on the servicesactually rendered, and the Writ of Execution issued pursuant to said order,also dated October 9, 1996, are declared NULL and VOID. The RegionalTrial Court of Quezon City, Branch 88, is directed to proceed and resolveCivil Case No. Q-93-17139 with dispatch.

No pronouncement as to costs.

SO ORDERED.

Bellosillo, Mendoza, Buena, and De Leon, Jr., JJ.,concur.

Footnotes

1In CA-G.R. No. 32275. Petitioner and NFA also questioned four

other writs of preliminary injunction before the CA. All cases CA-G.R. Nos. 32230,32274, 32275,32276, and 32213 wereconsolidated.

2National Food Authority, et al. v. Court of Appeals, et al., 253

SCRA 470 (1996).

3Rollo, pp. 55-58.

4Id., at 77.

5Id., at 9-10.

6Id., at 83-85.


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7Petitioner quoted the version of this rule that was in force prior to

its amendment by SC Circular No. 24-94 that took effect on June 1,1994. Thus:

"SECTION 1. Execution upon final judgments or orders. Execution shall issue only upon a judgment or order thatfinally disposes of the action or proceeding. Suchexecution shall issue as a matter of right upon theexpiration of the period to appeal there from if no appealhas been duly perfected.

If the judgment has been duly appealed, execution mayissue as a matter of right from the date of the service ofthe notice provided in section 11 of Rule 51."

The amendment introduced by SC Circular No. 24-94 was the rulein effect when this petition was filed.

8

Rollo, p. 13.

9Id., at 105-106.

10Id., at 147.

11Id., at 145.

12Id., at 78-79.

13Id., at 215-228, 251-264. See also the demand letter, Rollo, p.

190.

14Joya v. Presidential Commission on Good Government, 225

SCRA 568, 576 (1993).

15Rollo, p. 79.

16Id., at 278-283


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G.R. No. 141013 November 29, 2000

PACIFIC MILLS, INC. and GEORGE U. LIM,petitioners,vs.HON. MANUEL S. PADOLINA in his capacity as Presiding Judge of theRTC Pasig Branch 162 and PHILIPPINE COTTON CORPORATION,respondents.

D E C I S I O N

MELO, J. :

On June 23, 1983, private respondent Philippine Cotton Corporation(PHILCOTTON) sued petitioners Pacific Mills, Inc. and George U. Lim forcollection of a sum of money. On January 11, 1984, PHILCOTTON filedanother complaint for collection of a sum of money against petitioners.These two cases, docketed as Civil Cases No. 49881 and 50553, involvedfour promissory notes amounting to P16,598,725.84 executed by petitioners

in favor of PHILCOTTON. The two cases were consolidated and onDecember 27, 1985, the Regional Trial Court of Pasig found in favor ofPHILCOTTON. The judgment was appealed to the Court of Appeals, andthereafter to the Supreme Court as Pacific Mills, Inc. vs. Court of Appeals(206 SCRA 317 [1992]) where, ultimately, petitioners where adjudged liableto PHILCOTTON in the amount of P13,998,725.84, with interests, penalties,and attorneys fees, perponenciaof Justice Feliciano with the concurrenceof Justices Gutierrez (separate opinion), Bidin, Davide (now Chief Justice),and Romero.

However, after the rendition of the above decision, petitioners alleged thatduring the pendency of the case before the Court of Appeals, a condonationhad been effected by PHILCOTTON in their favor, whereby the interests and

penalties awarded by this Court in Pacific Mills vs. CAwere extinguished.Consequently, petitioners filed a motion for reconsideration with the Courtasking that it reduce the amount awarded to PHILCOTTON. The same wasdenied by the Court due to lack of merit, thusly:

Petitioner raised this question of waiver or condonation only in this Court inits Reply to PHILCOTTONs Comment on the Petition for Review, and thenonly in a tangential and speculative manner. In its Rejoinder, PHILCOTTONobjected to petitioners speculative attempt to raise a new matter, a factualissue, before this Court. The defense of condonation should have beenraised in the Court of Appeals where its authenticity and effectivity couldhave been litigated. Petitioner allegedly learned of the supposed

condonations as early as 12 January 1987, long before petitioner filed itsappellants brief with the Court of Appealson 30 June 1988. Yet petitionerdid not plead and litigate the supposed condonation before the Court ofAppeals.

When the decision in Pacific Mills vs. CAbecame final and executory, thesame was remanded to the Regional Trial Court of Pasig City for execution.During the hearing for the issuance of a writ of execution, petitioners allegedthat they had already made partial payments on the amount covered by thepromissory notes and that the penalty charges on the loan had already beencondoned by PHILCOTTON as early as January 12, 1987. Petitionersalleged that these circumstances constituted supervening events thatmerited a deduction in the amount payable by petitioners to PHILCOTTON.The trial court, however, ruled that no supervening event had transpired tomerit changing the tenor of the judgment against petitioners. Observed thusJudge Padolina:

After a thorough scrutiny of the records of the case, the Court opined that nosupervening events transpired. The alleged supervening events narrated by

the defendants which took place between 1987 to 1988, if true, should havebeen brought to the attention of the appellate court and/or to the highesttribunal of the land through the filing of the proper motions. However,considering that defendants failed to exercise such right, they are deemed(to have) waived all defenses available to them. Perforce, making thedecision of the Supreme Court final and executory.

(p. 156, Rollo)

Undeterred, petitioners once again sought the intercession of the Court ofAppeals which acknowledged that, indeed, partial payments had been madeby petitioners to PHILCOTTON. Accordingly, in its decision dated July 19,1999, the appellate court modified the trial courts ruling by takingcognizance of the partial payments, in the amount of P3,597,999.97, madeby petitioners to PHILCOTTON. However, the appellate court still found nomerit in petitioners claim that there had been a condonation effected byPHILCOTTON. Aggrieved, petitioners now come to this Court arguing thatthere was a condonation executed by PHILCOTTON in their favor and thatthe same qualifies as a valid supervening event.

Petitioners argument holds no water.

As correctly pointed out by the Court of Appeals, the issue of condonationhas already been settled by this Court in its Resolution dated July 27, 1992.


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Therein, we stated that the issue of condonation was a matter of fact whichshould have been brought to the attention of the Court of Appeals, as thisCourt is not a trier of facts. Said resolution having attained finality, the samemay no longer be questioned. The general rule is that once a judgmentbecomes final and executory, said judgment can no longer be disturbed,altered, or modified (Seavan Carrier, Inc. vs. GTI Sportswear Corp., 137

SCRA 580 [1985]). And this rule applies regardless of any possible injusticein a particular case. As this Court has stated, "[a]ll litigation must at lastcome to an end, however unjust the result of error may appear. Otherwise,litigation would become even more intolerable than the wrong or injustice itis designed to correct. Considering the litigousness of our people and thevolume of litigation being processed in our legal system, the importance ofthe public policy cannot be overturned (Reinsurance Company vs. CA, 198SCRA 19 [1991]).

Petitioners, however, asseverate that the instant case falls under one of theexceptions to the rule on immutability of judgments, claiming that the fact ofcondonation constitutes a supervening event which, in the higher interest ofjustice, calls for the modification of our previous judgment. It bears

reiteration that the condonation allegedly took place as early as January 12,1987, while the instant case was still pending with the Court of Appeals. InBaclayon vs. CA (182 SCRA 762 [1990]), we stated:

[A]ttempts to frustrate or put off enforcement of an executory judgment onthe basis of facts or events occurring before the judgment became finalcannot meet with success. Facts or events bearing on the substance of theobligation subject of the action should ordinarily be alleged during the issue-formulation stage or otherwise by proper amendment, and proved at the trial;if discovered after the case has been submitted but before the decision isrendered, proved after obtaining a reopening of the case; and if discoveredafter judgment has been rendered but before it becomes final, substantiatedat a new trial which the court in its discretion may grant on the ground of

newly discovered evidence, pursuant to Rule 37, Rules of Court. Once thejudgment becomes executory, the only other remedy left to attempt amaterial alteration thereof is that provided for in Rule 38 of the Rules ofCourt (governing petitions for relief from judgments), or an action to setaside the judgment on account of extrinsic, collateral fraud.1wphi1

There is no other permissible mode of preventing or delaying execution onequitable groundspredicated on facts occurring before finality of judgment.

The alleged condonation purportedly having taken place before thejudgment became final, petitioners may not now claim the same as a

supervening event that will justify modifying our previous judgment in thiscase.

WHEREFORE, the petition is DENIED for lack of merit.

SO ORDERED.

Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.


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G.R. No. 102965 January 21, 1999 JAMES REBURIANO and URBANOREBURIANO, petitioners, vs.HONORABLE COURT OF APPEALS AND PEPSI COLA BOTTLINGCOMPANY OF THE PHILIPPINES INC., respondents.

MENDOZA, J. :

In Civil Case No. Q-35598, entitled "Pepsi Cola Bottling Company of thePhilippines Inc. v. Urbano (Ben) Reburiano and James Reburiano," theRegional Trial Court, Branch 103 rendered on June 1, 1987 a decision, thedispositive portion of which reads:

ACCORDINGY, judgment is hereby rendered in favor of plaintiff Pepsi ColaBottling Co. of the Philippines Inc.

1. Ordering the defendants Urbano (Ben) Reburiano andJames Reburiano to pay jointly and severally the plaintiffthe sum of P55,000.00 less whatever empties (cases and

bottles) may be returned by said defendants valued at therate of P55.00 per empty case with bottles.

2. Costs against the defendants in case of execution.

SO ORDERED.

Private respondent Pepsi Cola Bottling Company of the Philippines Inc.appealed to the Court of Appeals seeking the modification of the portion ofthe decision, which stated the value of the cases with empty bottles asP55.00 per case and obtained a favorable decision. On June 26, 1990,judgment was rendered as follows:

WHEREFORE, the decision appealed from is SET ASIDEand another one is rendered, ordering the defendantappellees to pay jointly and severally the plaintiff-appellantthe sum of P55,000.00 with interest at the legal rate fromJanuary 1982. With costs against defendants-appellees.

After the case had been remanded to it and the judgment had become finaland executory, the trial court issued on February 5, 1991 a writ of execution.

It appears that prior to the promulgation of the decision of the trial court,private respondent amended its articles of incorporation to shorten its termof existence to July 8, 1983. The amended articles of incorporation wasapproved by the Securities and Exchange Commission on March 2, 1984.The trial court was not notified of this fact.

On February 13, 1991, petitioners moved to quash the writ of executionalleging

3. That when the trial of this case was conducted, whenthe decision was rendered by this Honorable Court, whenthe said decision was appealed to the Court of Appeals,and when the Court of Appeals rendered its decision, theprivate respondent was no longer in existence and had nomore juridical personality and so, as such, it no longer hadthe capacity to sue and be sued;

4. That after the [private respondent], as a corporation,

lost its existence and juridical personality, Atty. RomualdoM. Jubay had no more client in this case and so hisappearance in this case was no longer possible andtenable;

5. That in view of the foregoing premises, therefore, thedecision rendered by this Honorable Court and by theHonorable Court of Appeals are patent nullity, for lack ofjurisdiction and lack of capacity to sue and be sued on thepart of the [private respondent];

6. That the above-stated change in the situation of parties,whereby the [private respondent] ceased to exist since 8

July 1983, renders the execution of the decisioninequitable or impossible.

1

Private respondent opposed petitioners' motion. It argued that the jurisdictionof the court as well as the respective parties capacity to sue had alreadybeen established during the initial stages of the case; and that when thecomplaint was filed in 1982, private respondent was still an existingcorporation so that the mere fact that it was dissolved at the time the casewas yet to be resolved did not warrant the dismissal of the case or oust thetrial court of its jurisdiction. Private respondent further claimed that itsdissolution was effected in order to transfer its assets to a new firm of almostthe same name and was thus only for convenience.

2


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On February 28, 1991, the trial court issued an order3denying petitioners'

motion to quash. Petitioners then filed a notice of appeal, but privaterespondent moved to dismiss the appeal on the ground that the trial court'sorder of February 28, 1991 denying petitioners' motion to quash writ ofexecution was not appealable.

4The trial court, however, denied private

respondent's motion and allowed petitioners to pursue their appeal.

In its resolution5of September 3, 1991, the appellate court dismissed

petitioners' appeal. Petitioners moved for a reconsideration, but their motionwas denied by the appellate court in its resolution, dated November 26,1991.

Hence, this petition for review on certiorari. Petitioners pray that theresolutions, dated September 3, 1991 and November 26, 1991, of the Courtof Appeals be set aside and that a new decision be rendered declaring theorder of the trial court denying the motion to quash to be appealable andordering the Court of Appeals to give due course to the appeal.

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On the other hand, private respondent argues that petitioners knew that ithad ceased to exist during the course of the trial of the case but did not actupon this information until the judgment was about to be enforced againstthem; hence, the filing of a Motion to Quash and the present petition aremere dilatory tactics resorted to by petitioners. Private respondent likewisecites the ruling of this Court in Gelano v. Court of Appeals

7that the counsel

of a dissolved corporation is deemed a trustee of the same for purposes ofcontinuing such action or actions as may be pending at the time of thedissolution to counter petitioners' contention that private respondent lost itscapacity to sue and be sued long before the trial court rendered judgmentand hence execution of such judgment could not be complied with as thejudgment creditor has ceased to exist.

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First. The question is whether the order of the trial court denying petitioners'Motion to Quash Writ of Execution is appealable. As a general rule, noappeal lies from such an order, otherwise litigation will become interminable.There are exceptions, but this case does not fall within any of suchexceptions.

In Limpin, Jr. v. Intermediate Appellate Court, this Court held:9

Certain, it is. . . . that execution of final and executoryjudgments may no longer be contested and prevented,and no appeal should lie therefrom: otherwise, cases

would be interminable, and there would be negation of theovermastering need to end litigations.

There may, to be sure, be instances when an error may becommitted in the course of execution proceedingsprejudicial to the rights of a party. These instances, rare

though they may be, do call for correction by a superiorcourt, as where

1. the writ of execution varies the judgment;

2. there has been a change in the situation of the partiesmaking execution inequitable or unjust;

3. execution is sought to be enforced against propertyexempt from execution;

4. it appears that the controversy has never been

submitted to the judgment of the court;

5. the terms of the judgment are not clear enough andthere remains room for interpretation thereof; or,

6. it appears that the writ of execution has beenimprovidently issued, or that it is defective in substance, oris issued against the wrong party, or that the judgmentdebt has been paid or otherwise satisfied, or the writ wasissued without authority;

In these exceptional circumstances, considerations or

justice and equity dictate that there be some modeavailable to the party aggrieved of elevating the questionto a higher court. That mode of elevation may be either byappeal (writ of error or certiorari) or by a special civil actionof certiorari, prohibition, or mandamus.

In these case, petitioners anchored their Motion to Quash on the claim thatthere was a change in the situation of the parties. However, a perusal of thecases which have recognized such a ground as an exception to the generalrule shows that the change contemplated by such exception is one whichoccurred subsequent to the judgment of the trial court. Here, the change inthe status of private respondent took place in 1983, when it was dissolved,


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during the pendecy of its case in the trial court. The change occurred prior tothe rendition of judgment by the trial court.

It is true that private respondent did not inform the trial court of the approvalof the amended articles of incorporation which shortened its term ofexistence. However, it is incredible that petitioners did not know about the

dissolution of private respondent considering the time it took the trial court todecide the case and the fact that the petitioner Urbano Reburiano was aformer employee of private respondent. As private respondent says,

10since

petitioner Reburiano was a former sales manager of the company, it couldbe reasonably presumed that petitioners knew of the changes occurring inrespondent company. Clearly, the present case does not fall under theexception relied upon by petitioners and, the Court of Appeals correctlydenied due course to the appeal. As has been noted, there are in fact caseswhich hold that while parties are given a remedy from a denial of a motion toquash or recall writ of execution, it is equally settled that the writ will not berecalled by reason of any defense which could have been made at the timeof the trial of the case.

11

Second. The Court of Appeals also held that in any event petitioners cannotraise the question of capacity of a dissolved corporation to maintain ordefend actions previously filed by or against it because the matter had notbeen raised by petitioners before the trial court nor in their appeal from thedecision of the said court. The appellate court stated:

It appears that said motion to quash writ of execution isanchored on the ground that plaintiff-appelee PepsiBottling Company of the Philippines had been dissolvedas a corporation in 1983, after the filing of this case beforethe lower court, hence, it had lost its capacity to sue.However, this was never raised as an issue before thelower court and the Court of Appeals when the same was

elevated on appeal. The decision of this Court, through itsFourth Division, dated June 26, 1990, in CA-G.R. CV No.16070 which, in effect, modified the appealed decision,consequently did not touch on the issue of lack of capacityto sue, and has since become final and executory on July16, 1990, and has been remanded to the court a quoforexecution. It is readily apparent that the same can nolonger be made the basis for this appeal regarding thedenial of the motion to quash writ of execution. It shouldhave been made in the earlier appeal as the same wasalready obtaining at that time.

12

We agree with this ruling. Rules of fair play, justice, and due process dictatethat parties cannot raise for the first time on appeal from a denial of a Motionto Quash a Writ of Execution issues which they could have raised but neverdid during the trial and even on appeal from the decision of the trialcourt.

13

Third. In any event, if the question of private respondent's capacity to suecan be raised for the first time in this case, we think petitioners are in error incontending that "a dissolved and non-existing corporation could no longer berepresented by a lawyer and concomitantly a lawyer could not appear ascounsel for a non-existing judicial person."

14

Sec. 122 of the Corporation Code provides in part:

122. Corporate Liquidation. Every Corporation whosecharter expires by its own limitation or is annulled byforfeiture or otherwise, or whose corporate existence forother purposes is terminated in any other manner, shall

nevertheless be continued as a body corporate for three(3) years after the time when it would have been sodissolved, for the purpose of prosecuting and defendingsuits by or against it and enabling it to settle and close itsaffairs, to dispose of and convey its property and todistribute its assets, but not for the purpose of continuingthe business for which it was established.

At any time during said three (3) years, said corporation isauthorized the empowered to convey all of its property totrustees for the benefit of stockholders, members,creditors, and other persons in interest. From and afterany such conveyance by the corporation of its property intrust for the benefit of its stockholders, members, creditorsand others in interests, all interests which the corporationhad in the property in terminates, the legal interest vests inthe trustees, and the beneficial interest in thestockholders, members, creditors or other persons ininterest.

Petitioners argue that while private respondent Pepsi Cola Bottling Companyof the Philippines, Inc. undertook a voluntary dissolution on July 3, 1983 andthe process of liquidation for three (3) years thereafter, there is no showingthat a trustee or receiver was ever appointed. They contend that 122 of theCorporation Code does not authorize a corporation, after the three-year


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liquidation period, to continue actions instituted by it within said period ofthree years. Petitioners cite the case of National Abaca and Other FibersCorporation v. Pore

15wherein this court stated:

It is generally held, that where a statue continues theexistence of a corporation for a certain period after its

dissolution for the purpose of prosecuting and defendingsuits, etc., the corporation becomes defunct upon theexpiration of such period, at least in the absence of aprovision to the contrary, so that no action can afterwardsbe brought by or against it, and must be dismissed.Actions pending by or against the corporate when theperiod allowed by the statue expires, ordinarily abate.

16

This ruling, however, has been modified by subsequent cases. In Board ofLiquidators v. Kalaw,

17this Court stated:

. . . The legal interest became vested in the trustee the

Board of Liquidators. The beneficial interest remained withthe sole stockholder the government. At no time hadthe government withdrawn the property, or the authority tocontinue the present suit, from the Board of Liquidators. Iffor this reason alone, we cannot stay the hand of theBoard of Liquidators from prosecuting this case to its finalconclusion. The provision of Section 78 (now Section 122)of the Corporation Law the third method of winding upcorporate affairs finds application.

18

Indeed, in Gelano vs. Court of Appeals,19

a case having substantially similarfacts as the instant case, this Court held:

However, a corporation that has a pending action andwhich cannot be terminated within the three-year periodafter its dissolution is authorized under Sec. 78 [now 122]of the Corporation Law to convey all its property totrustees to enable it to prosecute and defend suits by oragainst the corporation beyond the three-year period.Although private respondent did not appoint any trustee,yet the counsel who prosecuted and defended the interestof the corporation in the instant case and who in factappeared in behalf of the may be considered a trustee ofthe corporation at least with respect to the matter inlitigation only. Said counsel had been handling the case

when the same was pending before the trial court until itwas appealed before the Court of Appeals and finally tothis Court. We therefore hold that there was substantialcompliance with Sec. 78 [now 122] of the CorporationLaw and such private respondent Insular Sawmill, Inc.could still continue prosecuting the present case even

beyond the period of three (3) years from the time ofdissolution.

. . . [T]he trustee may commence a suit which can proceedto final judgment even beyond the three-year period. Noreason can be conceived why a suit already commencedby the corporation itself during its existence, not by a meretrustee who, by fiction, merely continues the legalpersonality of the dissolved corporation should not beaccorded similar treatment allowedto proceed to finaljudgment and execution thereof.

20

In the Gelanocase, the counsel of the dissolved corporation was considered

a trustee. In the later case of Clemente v. Court of Appeals, 21we held thatthe board of directors may be permitted to complete the corporate liquidationby continuing as "trustees" by legal implication. For, indeed, as early as1939, in the case of Sumera v. Valencia,

22this Court held:

It is to be noted that the time during which the corporation,through its own officers, may conduct the liquidation of itsassets and sue and be sued as a corporation is limited tothree years from the t ime the period of dissolutioncommences: but ther is no time limit within which thetrustees must complete a liquidation placed in their hands.It is provided only (Corp. Law, Sec. 78 [now Sec. 122])that the conveyance to the trustees must be made within

the three-year period. It may be found impossible tocomplete the work of liquidation within the three-yearperiod or to reduce disputed claims to judgment. Theauthorities are to the effect that suits by or against acorporation abate when it ceased to be an entity capableof suing or being sued (7 R.C.L., Corps., par. 750); buttrustees to whom the corporate assets have beenconveyed pursuant to the authority of Sec. 78 [now Sec.122] may sue and be sued as such in all mattersconnected with theliquidation. . . .

23


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Furthermore, the Corporation Law provides:

145. Amendment or repeal. No right or remedy infavor of or against any corporation, its stockholders,members, directors, trustees, or officers, nor any liabilityincurred by any such corporation, stockholders, members,

directors, trustees, or officers, shall be removed orimpaired either by the subsequent dissolution of saidcorporation or by any subsequent amendment or repeal ofthis Code or of any part thereof.

This provision safeguards the rights of a corporation which is dissolvedpending litigation.

There is, therefore, no reason why the suit filed by private respondent shouldnot be allowed to proceed to execution. It is conceded by petitioners that thejudgment against them and in favor of private respondent in C.A. G.R. No.16070 had become final and executory. The only reason for their refusal toexecute the same is that there is no existing corporation to which they areindebted. Such argument is fallacious. As previously mentioned, the lawspecifically allows a trustee to manage the affairs of the corporation inliquidation. Consequently, any supervening fact, such as the dissolution ofthe corporation, repeal of a law, or any other fact of similar nature would notserve as an effective bar to the enforcement of such right.

WHEREFORE, the resolutions, dated September 3, 1991 and November 26,1991, of the Court of Appeals are AFFIRMED.1wphi1.nt

SO ORDERED.

1 Petition. Annex D; Rollo, pp. 14-15.

2 Id., Annex E; Rollo, pp. 17-18.

3 Id., Annex F; Rollo, p. 22.

4 Id., Annex H; Rollo, p. 24-25.

5 Per Justice Venanciano D. Aldecoa, Jr. and concurred inby Justices Luis L. Victor and Filemon H. Mendoza.

6 Petition, p. 5; Rollo, p. 6.

7 103 SCRA 90 (1981).

8 Comment, pp. 4-6; Rollo, p. 54.

9 147 SCRA 516, 521-523 (1987).

10 Rollo, p. 59.

11 2 VICENTE J. FRANCISCO, THE NEW RULES OFCOURT IN THE PHILIPPINES 648 (1964).

12 Petition, Annex A; Rollo, pp. 8-9.

13 SeeDe la Santa v. Court of Appeals, 140 SCRA 44, 51(1985); Dosch v. National Labor Relations Commission,

123 SCRA 296, 311 (1983).

14 Petition, pp. 4-5; Rollo, pp. 5-6.

15 2 SCRA 989 (1961).

16 Id., at 992.

17 20 SCRA 987 (1967).

18 Id., at 998.

19 103 SCRA 90 (1981).

20 Id., at 98-99 (emphasis added).

21 242 SCRA 717 (1995).

22 67 Phil. 721, 726 (1939).

23 Id., at 726.


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G.R. No. 127851 October 18, 2000

CORONA INTERNATIONAL, INC.,petitioner,vs.THE COURT OF APPEALS and THE PHILIPPINE COCONUTAUTHORITY, respondents.

D E C I S I O N

YNARES-SANTIAGO, J. :

May funds of the Philippine Coconut Authority, a public corporation, begarnished on account of an execution pending appeal?

This is the pivotal issue raised in the instant petition for review which assailsthe January 22, 1997 Decision of respondent Court of Appeals in CA-G.R.SP No. 42829

1holding that such funds are public funds exempt from

garnishment.

The facts are simple:

On September 10, 1996, the Regional Trial Court of Quezon City, Branch99, rendered a Decision

2in Civil Case No. Q-93-14581, entitled "Corona

International, Inc., Plaintiff versus Philippine Coconut Authority, Defendant",disposing of the case as follows -

"WHEREFORE, in view of all the foregoing premises, judgment is herebyrendered -

1. Ordering the defendant to pay plaintiff the total sum of

P9,082,068.00 representing the balance of the contract price forPhase III of the project, the 10% retention for Phases I, II and III ofthe project, and the contract price for Phase IV of the project;

2. Ordering the defendant to indemnify plaintiff the sum equal totwo (2%) per centum of P9,082,068.00 monthly from date of thefiling of the complaint up to March 30, 1995, as actual and fordamages;

3. Ordering the defendant to indemnify plaintiff the sum equal to 1and % per cent of P9,082.068.00 monthly from March 30, 1995

up to the time the full amount is fully paid, as and by way of actualdamages;

4. The sum of P1,000,000.00 as and for attorney's fee; plus thecosts of the suit.

The counterclaim interposed by the defendant is hereby dismissed for lackof evidence to sustain it.

SO ORDERED."3

On September 25, 1996, petitioner filed a Motion for Execution of JudgmentPending Appeal to which private respondent filed an Opposition. Afterhearing, the trial court granted the motion for execution pending appeal "ifonly to prevent the irreparable collapse of" petitioner's business operations.It also considered the appeal taken by private respondent as "patentlyunmeritorious and would only result in the delay of the final disposition of thecase." It, however, required petitioner to post a Twenty Million

(P20,000,000.00) bond to protect private respondent in the event its decisionis reversed on appeal.

With the filing by petitioner of the required bond, a writ of execution wasissued, on the strength of which funds of private respondent with the LandBank of the Philippines, in the amount of Seventeen Million Five HundredTwenty Nine Thousand Three Hundred Sixty Three Pesos and Seventy SixCentavos (P17,529,363.76), was garnished. The bank, however, refused torelease the said amount, prompting petitioner to file a Motion to RequireRelease of Bank Deposit.

Meanwhile, on December 5, 1996, private respondent filed a Motion toQuash Writ of Execution Pending Appeal and Notice of Garnishment

alleging that it had not yet received a copy of the Order granting petitioner'sMotion for Execution of Judgment Pending Appeal which allowed thegarnishment of its funds with the Land Bank of the Philippines. It furthercontended that the bond filed by petitioner did not bear the court's approval.Finally, it expressed its readiness to file a supersedeas bond to stayexecution of the court's judgment. Petitioner filed its Opposition onDecember 10, 1996.

On December 11, 1996, the trial court issued an Order4denying private

respondent's Motion to Quash and ordered the Land Bank of the Philippines
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to release and turn over to the court sheriff the garnished fund of privaterespondent immediately upon its receipt of said Order.

Private respondent then filed a petition for certiorariwith respondent Court ofAppeals. On January 22, 1997, the Court of Appeals rendered the assailedDecision, nullifying and setting aside the Order of the trial court granting the

execution pending appeal. It also issued a writ of preliminary injunctionenjoining the court sheriff from enforcing both the Writ of Execution andNotice of Garnishment against private respondent.

Hence, the instant petition for review anchored upon the following grounds -

"I

THE RESPONDENT COURT OF APPEALS ERRED, AS AMATTER OF LAW, IN HOLDING THAT THE TRIAL COURTCOMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TOLACK OF OR EXCESS OF JURISDICTION IN ISSUING THE

ORDER (ANNEX "F") ALLOWING EXECUTION PENDINGAPPEAL, AND ORDER (ANNEX "I") ORDERING THEGARNISHEE TO RELEASE AND TURN OVER THE FUNDS OFRESPONDENT PCA TO DEPUTY SHERIFF JOSE G. MARTINEZ.

II

THE COURT OF APPEALS ERRED, AS A MATTER OF LAW, INENTERTAINING ISSUES NOT RAISED IN THE LOWER COURTTO SUPPORT ITS DECISION REVERSING THE CHALLENGEDORDERS.

III

THE COURT OF APPEALS ERRED, AS A MATTER OF LAW, INHOLDING THAT THE PHILIPPINE COCONUT AUTHORITY IS ANAGENCY OF THE NATIONAL GOVERNMENT AND IN HOLDINGTHAT ITS FUNDS ARE EXEMPT FROM LEVY ON EXECUTIONAND/OR GARNISHMENT.

IV

THE COURT OF APPEALS ERRED, AS A MATTER OF LAW, INISSUING A WRIT OF PRELIMINARY INJUNCTION."

5

It is apparent from the challenged Decision that the rationale for settingaside the execution pending appeal was its finding that the funds of privaterespondent, being public in nature, cannot be garnished.

As argued by petitioner, however, the issue of whether or not the fundsgarnished were public in nature was not raised in the trial court and wasmerely entertained for the first time in the certiorariproceedings before theCourt of Appeals. We agree with petitioner on this ground and so rule thatnot having been raised below, such an issue could no longer be consideredin the Petition for Certioraribefore the Court of Appeals.

6

This leaves us with the question of whether or not there is basis to sustainexecution pending appeal ordered by the trial court.

Section 2, Rule 39 of the 1997 Rules of Civil Pro cedurelays down the

rule for execution pending appeal, categorized as discretionary execution, towit -

"SEC. 2. Discretionary execution. -

(a) Execution of a judgment or final order pending appeal. - On motion of theprevailing party with notice to the adverse party filed in the trial court while ithas jurisdiction over the case and is in possession of either the originalrecord or the record on appeal, as the case may be, at the time of the filingof such motion, said court may, in its discretion, order execution of ajudgment or final order even before the expiration of the period to appeal.

After the trial court has lost jurisdiction, the motion for execution pendingappeal may be filed in the appellate court.

Discretionary execution may only issue upon good reasons to be stated in aspecial order after due hearing."

It is evident from the foregoing that a primary consideration for allowingexecution pending appeal would be the existence of good reasons. In turn,"good reasons" has been held to consist of compelling circumstancesjustifying the immediate execution lest judgment becomes illusory. Suchreasons must constitute superior circumstances demanding urgency which
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will outweigh the injury or damages should the losing party secure a reversalof the judgment.

7

We note that the reason of the trial court in granting execution pendingappeal was to prevent the irreparable collapse of petitioner's businessoperation and that private respondent's appeal is patently unmeritorious and

would only result in the delay of the final disposition of the case.

Does this constitute good reason to order execution pending appeal? Willthis outweigh the injury or damage caused private respondent should thelatter secure a reversal of the judgment against it?

We find that it does not.

To begin with, it would appear that the irreparable collapse of petitioner'sbusiness operation, as feared by the trial court, is illusory. As manifested byprivate respondent, petitioner has an application for the expansion of itsoperations with the National Telecommunications Commission.

8Evidently,

such an application would not have been filed had petitioner truly been in thebrink of financial bankruptcy.1wphi1Moreover, the latest financial reportsubmitted by petitioner to the Securities and Exchange Commission, on therecords, would readily show that its assets exceed its liabilities.

9

We also note that the property bond offered by petitioner and accepted bythe trial court has already been conveyed to Natas-ya Enterprises, Inc. viaaDeed of Exchange dated January 30, 1996 and registered on July 25, 1997.Said Natas-ya Enterprises is now the registered owner of the subjectproperty under Transfer Certificate of Title No. N-179573 of the Register ofDeeds of Quezon City. The same property is further the subject of a casepending before the Quezon City Regional Trial Court. Clearly, then, thisproperty bond can no longer serve its purpose as security for damages that

may be obtained by private respondent on account of execution pendingappeal.

In upholding the disallowance of the execution pending appeal ordered bythe trial court, albeiton different grounds, we are guided by the rule thatexecution pending appeal must be strictly construed being an exception tothe general rule.

10So, too, execution pending appeal is not to be availed of

and applied routinely, but only in extraordinary circumstances.11

Here, withthe alleged collapse of petitioner's business operations rendered doubtful,we find no good reason to order execution pending appeal.

Finally, it is not difficult to see the injury or damage execution pendingappeal would cause private respondent which is a public corporation taskedto implement the national policy of the State to promote the rapid integrateddevelopment and growth of the coconut and palm oil industry and to ensurethat the coconut farmers become direct participants of such developmentand growth.

12Among the funds held by private respondent which would be

subject to execution pending appeal would be coconut levy funds vital bothto the coconut industry and to coconut farmers, which being vested withpublic interest, we are duty bound to protect. Weighed against theseconsiderations, execution pending appeal further proves unwise.

WHEREFORE, for the reasons aforementioned, the Petition for Review ishereby DENIED.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.

Footnotes

1See Petition, Annex "A"; Rollo, pp. 46-56.

2Id., Annex "C"; Rollo, pp. 61-77.

3Id., at p. 77.

4Id., Annex "I"; Rollo, pp. 100-102.

5Petition, p. 12; Rollo, p. 14.

6See Buag v. Court of Appeals, G.R. No. 107364, 303 SCRA 591[1999].

7Yasuda v. Court of Appeals, G.R. No. 112569, 12 April 2000.

8Docketed as National Telecommunications Commission Case No.

92-211.

9Petition for Certiorari, Annex "G"; Records, CA-G.R. SP No.

42829, pp. 44-48.
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10Planters Products, Inc. v. Court of Appeals, G.R. No. 106052, 22

October 1999.

11Molina v. Presiding Judge of RTC, Quezon City, G.R. No.

112564, 277 SCRA 342 [1997].

12Presidential Decree No. 1468, Sections 2 & 3.
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G.R. No. 135128 August 26, 1999

BONIFACIO SANZ MACEDA. JR. and TERESITA MACEDA-DOCENA,petitioners,vs.DEVELOPMENT BANK OF THE PHILIPPINES and the COURT OF

APPEALS,respondents.

PANGANIBAN, J. :

Movants have the burden of showing why the trial court decision should beexecuted without awaiting the result of the appeal. Absent such justification,its execution pending appeal cannot be granted.

The Case

Before this Court is a Petition for Review on Certiorari1under Rule 45 of the

Rules of Court seeking the reversal of the August 14, 1998 Decision2of the

Court of Appeals3(CA) in CA-GR SP No. 47405, the dispositive portion ofwhich reads:

WHEREFORE, based on the foregoing, the instant Petition ishereby GRANTED. The challenged ORDER of respondent Court,dated October 2, 1997, is hereby ANNULLED and SET ASIDEinsofar as it orders partial execution pending appeal. Nopronouncement as to costs.

The Order4annulled by the CA was a modification by the trial court

5of the

latter's Decision6dated February 25, 1997 in Civil Case No. 8737, Bonifacio

Sanz Maceda Jr.and Teresita Maceda-Docena v.Development Bank of thePhilippines and Oscar de Vera.

The Facts

The facts of the case as summarized by the Court of Appeals are as follows:

The case commenced on October 15, 1984, with the filing by [petitioners]7of

a Complaint for Specific Performance with Damages against [privaterespondent]

8and one of its managers, Oscar De Vera. In their Complaint,

[petitioners] alleged that they were the owners of the old Gran Hotel inTacloban City; that pursuant to their plan to build a new Gran Hotel, they

applied for an Eleven Million Pesos (P11,000,000.00) loan with [privaterespondent], submitting to the latter a project study of the new hotel, thePhilippine Tourism Authority's approval of the project, as well as the plansand specifications of the new Gran Hotel; that on July 28, 1976, petitionerapproved a loan of Seven Million Three Hundred Thousand Pesos(P7,300,000.00) after setting the cost of the project at Ten Million Five

Hundred Thousand Pesos (P10,500,000.00); that [private respondent]required them to produce Two Million Nine Hundred Thirty Thousand Pesos(P2,930,000.00) by way of equity, to constitute a first mortgage on severalparcels of land as well as on assets they would acquire out of the proceedsof said loan, to sign a Promissory Note in the amount of Seven Million ThreeHundred Thousand Pesos (P7,300,000.00); that the contract for the newGran Hotel was awarded to Moreman Builders Co., which demolished theold Gran Hotel and proceeded to build the new Gran Hotel; that payment tosaid contractor was to be taken from the approved Seven Million ThreeHundred Thousand Pesos (P7,300,000.00) loan, on a progressive manner,based on actual construction or work accomplishment; that they wererequired to advance, as they did advance, to the contractor their requiredequity; that as of June 24, 1977, they have advanced to the contractor thesum of One Million Two Hundred Sixty Two Thousand Nine Hundred NinetyEight Pesos and Thirty Eight Centavos (P1,262,988.38); that [privaterespondent] had also released a total of One Million Nine Hundred ElevenThousand Three Hundred Sixty Pesos (P1,911,360.00), out of their loan, tothe contractor; that [private respondent], through its officer in charge of theproject, defendant Oscar De Vera, conspired with the contractor to enablethe latter to secure undue fund releases from their loan; that this was doneby the bloating of the value and percentage of construction work; that thecontractor was able to acquire sixty percent (60%) of the cost of theprojected hotel even as its actual accomplishment was only fifteen percent(15%); that [petitioners] were compelled to file a Complaint for Rescission ofContract and Damages against the contractor; that they also filed acomplaint for Estafa against the contractor and defendant Oscar De Vera;that [private respondent] and Oscar De Vera spread negative information

about them, thus influencing their suppliers to sue and repossess the itemsthey had supplied; that [private respondent] engaged in a series of dilatoryeffects in the release of their loan funds until the period of their loanavailment lapsed; that [private respondent] has threatened to foreclose onthe mortgages they had executed for their loan; and that [privaterespondent's] acts prevented them from completing the new Gran Hotel andfrom realizing profits therefrom. [Petitioners] thus prayed (1) that [privaterespondent] be ordered to release the balance of their approved loan, (2)that the interests and other charges imposed on the loan be nullified, (3) that[private respondent] be made to pay them (a) unrealized earnings and/orloss of income, (b) actual damages representing additional costs or priceincrease in construction labor and materials, (c) moral damages, (d)


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exemplary damages, (e) attorney's fees, litigation expenses and costs ofsuit.1wphi1.nt

In their Answer to the Complaint, [private respondent] and Oscar De Veraaverred that releases on the loan of [petitioners] to the contractor were madethrough [Petitioner] Bonifacio Maceda, Jr., that on account of the civil case

filed by [petitioners] against the contractor, [private respondent] wasenjoined from making any further releases on [petitioners'] loan; that whilethe trial court decided in favor of [petitioners], still [private respondent] couldnot make any releases on their loan considering the appeal filed by thecontractor; that while said case was pending, at least two suppliers filedcases against [petitioners] for non-payment of salaries/wages and costs ofsuppliers; that said pending case also caused the construction of the hotelproject to stop and the period of the loan availment to lapse; that during thenegotiation for revival of the loan, [private respondent] requested[petitioners] to submit new cost estimates and quotations inasmuch as theoriginal cost estimates prepared in 1976 were no longer sufficient tocomplete the project because of the intervening price increases in labor andmaterials; that [petitioners] insisted that the project be completed on the

original cost estimates, with the project reduced to fifty (50) instead of theoriginal planned seventy five (75) rooms; that during several conferencesheld between them, [private respondent] informed [petitioners] of the termsand conditions for the resumption of their loan; that on July 18, 1979, itauthorized further releases on [petitioners'] loan; that said releasesamounted to a total of Five Million Three Hundred Forty Seven ThousandFive Hundred Ten Pesos and Ninety Centavos (P5,347,510.90); that nofurther releases were thereafter made in view of [petitioners'] failure tocomply with the equity build up requirement; that [petitioners] applied for anadditional loan of Three Million Four Hundred Thousand Pesos(P3,400,000.00); that on July 29, 1982, [private respondent] informed[petitioners] that it had decided to reduce the approved loan amount to FiveMillion Three Hundred Forty Seven Thousand Five Hundred Ten Pesos andNinety Centavos (P5,347,510.90), which was the amount of the total

releases made on their original loan amount; that notwithstanding saidreduction of amount of the loan, [petitioners] failed to make paymentsaccording to schedule; and that having agreed to all the terms of theirtransactions, [petitioners] are estopped from questioning the conditions ofthe loan as well as the releases thereof. After praying for dismissal of theComplaint, [private respondent] and defendant Oscar De Veracounterclaimed for P200,000.00 by way of attorney's fees and litigationexpenses, P500,000.00 in moral damages and costs of suit.

On February 25, 1997, [the trial] [c]ourt rendered a Decision in favor of[petitioners], disposing of the case as follows

WHEREFORE, in view of all the foregoing premises, the Court rendersjudgment, to wit:

1. The preliminary injunction issued on December 12, 1984 ishereby made permanent;

2. Defendant Development Bank of the Philippines is ordered, towit:

a) To immediately release in favor of plaintiff BonifacioMaceda, Jr. the unreleased loan balance ofP1,952,489.10. In addition, as to the portion thereofamounting to P1.003M, DBP is further directed to payinterest thereon at the rate of 12%per annumbeginningand counted from January 1978;

b) To immediately return to plaintiff Bonifacio Maceda, Jr.the sum of P797,988.95 representing the interest/other

charges for the period October 31, 1979 to April 1, 1980;

c) To pay plaintiff Bonifacio Maceda, Jr. the sum of FiveHundred Thousand Pesos as moral damages;

d) To pay plaintiff Bonifacio Maceda, Jr. the sum of OneHundred Thousand Pesos as exemplary damages;

e) To pay plaintiff Bonifacio Maceda, Jr. the sum ofP17,547,510.90 representing the additional cost tocomplete and finish the New Gran Hotel;

f) To pay plaintiff Bonifacio Maceda, Jr. the sum ofP100,000.00 as attorney's fees and litigation expense.

The counterclaims of defendants are hereby ordered dismissed.

SO ORDERED.

[Private Respondent] filed a Notice of Appeal, while [petitioners] filed aMotion for Reconsideration, seeking to increase the amount awarded tothem by [the trial] [c]ourt. They also filed a Motion for Execution Pending


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Appeal. [Private respondent] filed its corresponding Opposition to the twoMotions.

On October 2, 1997, [the trial] court issued its first questioned Order, (1)modifying its Decision by increasing the amounts awarded to [Petitioner]Bonifacio Maceda, Jr. and (2) granting the Motion for Execution Pending

Appeal of two awards in its Decision; namely, (a) the release of the loanbalance of P1,952.489.10 as well as payment of 12% interest p.a. on theamount of P1.003M, from January, 1978; and (b) the payment ofP17,547,510.90 representing the additional cost to finish the hotel togetherwith 6% interest thereon p.a. from 1987.

On November 5, 1997, [private respondent] filed its Notice of Appeal fromthe February 25, 1997 Decision, as amended by the October 2, 1997 Orderof [the trial] [c]ourt. On the same date, it also filed a Motion forReconsideration of the October 2, 1997 Order insofar as it grants executionpending appeal. Thereafter, or on March 26, 1998, it filed a SupplementalMotion for the approval of a supersedeas as bond in the amount of P35Mand to stay the execution pending appeal in the event that its Motion for

Reconsideration be denied.

On April 3, 1998, [the trial] [c]ourt denied its Motion for Reconsideration andSupplemental Motion.

The Development Bank of the Philippines (DBP) appealed the trial courtDecision to the CA. Thereafter, it also filed with the appellate court a Petitionfor Certiorarichallenging the lower court's October 2, 1997 Order grantingexecution of the said Decision pending appeal.

Ruling of the Court of Appeals

Ruling in favor of respondent bank, the CA concluded that there existed nosufficient ground or compelling reason to allow the execution of the judgmentpending appeal. It held:

There is nothing in the circumstances surrounding the case atbench which is of an urgent nature. As may be gleaned from therecords and as admitted by private respondents, themselves, theproject has reached 85% completion. With private respondents'undenied "seven-figure assets and capability to put in the requiredequity participation", We see no urgent financial need on the part ofprivate respondent. Then, too, with the financial standing of private

respondents and their assets, including the hotel itself which theyclaim to have an appraised value of P16,632,129.40, privaterespondents can very well obtain loans for the project from otherfinancial entities. On the other hand, considering that the amountssubject of the execution pending appeal form only a smallpercentage of the amount it would take to complete the project, We

see no compelling reason to prematurely order its release since itwould have no substantial effect anyway on the project. Moreover,measured against the injury or damage which such executionwould pose on petitioner should it secure a reversal of thejudgment, the reasons relied upon by respondent Court markedlypales in comparison. After all where execution made pendingappeal is overturned, complete restitution is required.

x x x x x x x x x

All things considered, respondent Court should have approved theThirty Five Million (P35,000,000.00) supersedeas bond posted bypetitioner. Said amount can adequately assure performance of

whatever judgment may be awarded in favor of privaterespondents. Neither is there any danger that the awards in favor ofprivate respondents will not be answered or that justice will befrustrated as petitioner is a government owned and controlledfinancial institution with an authorized capital stock of Five BillionPesos (P5,000,000,000.00). With the stable and sound condition ofpetitioner, immediate execution is not justified as there is no dangerof the judgment becoming illusory.

9

Hence, this Petition.10

Issue

The solitary issue in this case is whether or not the Court of Appeals erredwhen it reversed the October 2, 1997 Order of the trial court grantingexecution of the latter's Decision pending appeal. More simply stated, arethere good reasons to justify execution of the trial court judgment pendingappeal?

This Court's Ruling

The Petition is not meritorious.


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Sole Issue:

Execution of Judgment Pending Appeal

The execution of a judgment during the pendency of an appeal isgoverned by Section 2, Rule 39 of the 1997 Rules of Court,

11which

reads:

Sec. 2. Discretionary execution.

(a) Execution of a judgment or final order pending appealOn motion of the prevailing party with notice to theadverse party filed in the trial court while it has jurisdictionover the case and is in possession of either the originalrecord or the record on appeal, as the case may be, at thetime of the filing of such motion, said court may, in itsdiscretion, order execution of a judgment or final ordereven before the expiration of the period to appeal.

After the trial court has lost jurisdiction, the motion forexecution pending appeal may be filed in the appellatecourt.

Discretionary execution may only issue upon goodreasons to be stated in a special order after due hearing.

x x x x x x x x x

This rule is strictly construed against the movant, for "courts lookwith disfavor upon any attempt to execute a judgment which has

not acquired a final character."

12

In the same vein, the Court hasheld that such execution "is usually not favored because it affectsthe rights of the parties which are yet to be ascertained onappeal."

13

There are three requisites for the grant of an execution of ajudgment pending appeal: "a) there must be a motion by theprevailing party with notice to the adverse party; b) there must be agood reason for execution pending appeal; and c) the good reasonmust be stated in a special order."

14Underscoring the importance

of the requisite "good reasons," the Court ruled in Ong v.Court ofAppeals:

15

It is not intended obviously that execution pending appealshall issue as a matter of course. "Good reasons, special,important, pressing reasons must exist to justify it;otherwise, instead of an instrument of solicitude andjustice, it may well become a tool of oppression andinequity."

16

Moreover, "the reasons allowing execution must constitute superiorcircumstances demanding urgency which will outweigh the injury ordamages should the losing party secure a reversal of thejudgment."

17

In its Order dated October 2, 1997, the trial court ordered executionpending appeal of the following awards:

(a) To immediately release in favor of the plaintiffBonifacio Maceda, Jr. the unreleased loan balance ofP1,952,489.10. In addition, as to the portion thereofamounting to P1.03M, DBP is further directed to payinterest thereof at the rate of 12%per annumbeginningand counted from January 1978;

x x x x x x x x x

(e) To pay plaintiff Bonifacio Maceda Jr. the sum ofP17,547,510.90 representing the additional cost tocomplete and finish the New Gran Hotel,plus six percentinterest (6%)thereon effective as of the year 1987 untilfinality.

18

In other words, the t rial court, pending the appeal, ordered the

immediate release by the bank of (1) the unreleased amount of theloan agreement and (2) the sum needed to complete theconstruction of the hotel, subject to the filing of a bond of equivalentamount.

The "good reason" invoked by the trial court was the urgencyresulting from almost twenty years of delay and the yearly increasein costs that made the completion of the hotel construction moredifficult.

We are not convinced.


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Good Reasons not Established

To repeat, an execution pending appeal is an extraordinaryremedy, being more of the exception rather than the rule. It isallowed only upon showing of "good reasons" by the movant. In thepresent case, we find no justification for the execution, pending

appeal, of the awards of P1,952,489.10 under disposition (a) andmore than P17 million under disposition (e).

There is no guarantee that petitioner can indeed complete theproject, even if the sum referred to in disposition (e) is immediatelyreleased. It must be underscored that this was the amount neededto finish the project way back in 1987 and was based on 1987prices.

Equally unjustified is the release, pending appeal, of the remainingportion of the loan in the amount of P1,952,489.10. As the trialcourt itself has held in 1987, the award of more than P17 millionunder disposition (e) was the amount needed to finish the project.Consequently, there was no urgent need for the unreleased portionof the loan. The said amount was relatively minuscule comparedwith that needed for the remainder of the hotel project and wouldhave little effect on its completion.

More important, the "compelling reason" given by the trial court forallowing execution pending appeal is far outweighed by the injury ordamage that private respondent would suffer if it secures a reversalof the trial court's judgment. If the trial court is reversed on appeal,petitioners would be hard-pressed to make a complete restitution toprivate respondent, to which they already owe more than P5 millionthe amount of their original loan plus accrued interests. In anyevent, we agree with the Court of Appeals that there is no likelihood

that DBP, a government-owned and -controlled corporation, wouldfail to answer its obligation if the trial court Decision is affirmed. Asheld in Valencia v.Court of Appeals:

19

If the judgment is executed and, on appeal, the same isreversed, although there are provisions for restitution,oftentimes damages may arise which cannot be fullycompensated. Accordingly, execution should be grantedonly when these considerations are clearly outweighed bysuperior circumstances demanding urgency and theprovision contained in Rule 39, Section 2, requires a

statement of these circumstances as a security for theirexistence.

Reasons Cited by Petitioners

In their Memorandum, petitioners passionately argue that DBP, as thelending bank, has the obligation to deliver the full amount of the loan. Theyallege that the bank "unilaterally reduced the amount of the approved loanand unilaterally terminated the transaction."

20They also point out that the

project has been delayed for 22 years, and that the award of more than P17million, with interest, for the completion of the hotel "is less in value andpurchasing power than the original estimate of P10.5 M had the hotel beenfinished on its deadline in 1972."

These, however, involve issues that should be resolved in the appeal, not inthese proceedings. The respondent bank itself contends that it could notrelease the remaining amount of the loan, because of the stipulation in theloan agreement that such release is contingent on the amount of workaccomplished. Thus, an order of this Court releasing the balance of the loan,notwithstanding the bank's argument to the contrary, would certainly beconstrued as a definitive judgment on the present issue.

Petitioners' argument that the project has been delayed for twenty-two yearsis not persuasive either. The release of the amount at this time is tantamountto a pronouncement that respondent bank was responsible for the delay.Moreover, petitioners are in effect taking the position that the undertaking ofthe bank was meant to finance the complete construction of the hotel. TheCourt cannot at this time declare that the bank was the cause of the delay,or that it was obliged to finance the construction to its completion. To repeat,these questions pertain to the merits of the case, which is on appeal. It mustbe stressed that the only issue in these proceedings is whether there are"good reasons" to justify the execution of the judgment pending appeal.

In sum, petitioners have failed to present adequate reasons to show that theCourt of Appeals committed reversible errors in overturning the trial court'sOrder. As movants, they have the burden of showing why the lower court'sDecision should be executed without awaiting the result of the appeal.Absent such justification, execution pending appeal cannot begranted.1wphi1.nt

WHEREFORE, the Petition is hereby DENIED. Costs against petitioner.


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SO ORDERED.

Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.

Footnotes

1Rollo, pp. 3-31.

2Rollo, pp. 113-121.

312th Division composed of J. Consuelo Ynares-Santiago,

chairman andponente(now a member of this Court); JJ. Romeo J.Callejo Sr. and Mariano M. Umali, members, concurring.

4Rollo, pp. 94-107.

5Branch 134, National Capital Judicial Region.

6Penned by Judge Ignacio M. Capulong; rollo, pp. 37-107.

7In the assailed Decision, Petitioners Bonifacio Sanz Maceda Jr.

and Teresita Maceda-Docena are referred to as privaterespondents.

8In the assailed Decision, Private Respondent DBP is referred to

as petitioner.

9Assailed Decision, pp. 7-8; rollo, pp. 119-120.

10The case was deemed submitted for resolution on May 12, 1999,

upon receipt by this Court of respondent's Memorandum.

11Before the 1997 amendments to the Rules of Court, the provision

was:

Sec. 2. Execution pending appeal. On motion of theprevailing party with notice to the adverse party, the courtmay, in its discretion, order execution to issue even beforethe expiration of the time to appeal, upon good reasons tobe stated in a special order. If a record on appeal is filedthereafter, the motion and the special order shall be

included therein.

12Valencia v. Court of Appeals, 184 SCRA 561, 568, April 25, 1990

per Regalado, J.

13San Manuel Wood Products, Inc. v. Tupas, 249 SCRA 466, 475,

October 25, 1995, per Puno, J.

14Provident International Resources Corp. v. CA, 259 SCRA 510,

July 26, 1996, per Davide, J. (now CJ); Engineering Construction v.National Power Corporation, 163 SCRA 9, June 29, 1988.

15

203 SCRA 38, 43, October 17, 1991, per Medialdea, J.

16Ibid.

17Ibid.

18RTC Order dated October 2, 1997, p. 14; rollo, p. 107.

19184 SCRA 561, 568, April 25, 1990, per Regalado, J.

20Petitioners' Memorandum, p. 20; rollo, p. 195.


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G.R. No. 135630 September 26, 2000

INTRAMUROS TENNIS CLUB, INC. (ITC), PHILIPPINE TENNISASSOCIATION (PHILTA) and ITC TENNIS PLAYERS, petitioners,vs.PHILIPPINE TOURISM AUTHORITY (PTA), CLUB INTRAMUROS, and

COURT OF APPEALS, Second Division, respondents.

D E C I S I O N

GONZAGA-REYES, J. :

This petition for certiorariassails two resolutions of the Second Division ofthe Court of Appeals which granted private respondents motion forexecution pending appeal and ordered the Regional Trial Court of Manila,Branch 50 to issue the corresponding writ of execution. The antecedent factsare as follows:

Private respondent Philippine Tourism Authority ("PTA") owns the VictoriaTennis Courts located in Intramuros, Manila by virtue of Presidential DecreeNo. 1763. In a Memorandum of Agreement ("MOA") executed on June 11,1987, the PTA transferred the management, operation, administration anddevelopment of the Victoria Tennis Courts to petitioner Philippine TennisAssociation ("PHILTA") for a period of ten (10) years

1commencing on June

15, 1987.2Petitioner Intramuros Tennis Club, Inc. ("ITC") is an affiliate of

PHILTA and has for its members tennis players and en

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