ManilaFIRST
DIVISION
URBANO
JACA and BONIFACIO JACA,
Petitioners,
G. R. No. L-25771
March 29, 1982
-versus-
chanroblesvirtualawlibrary
DAVAO
LUMBER COMPANYand HON. MANASES REYES,
as Judge of the Court of First Instance
of
Davao,
Respondents.
R
E S O L U T I O N
FERNANDEZ, J.:
This is a
Petition for Certiorari with a prayer
for a writ of preliminary injunction filed by Urbano Jaca and Bonifacio
Jaca against the Davao Lumber Company and Honorable Manases Reyes as
Judge
of the Court of First Instance of Davao seeking the following relief:
WHEREFORE, petitioners pray:
1. That a writ of Preliminary
Injunction
be immediately issued restraining the respondent Judge from carrying
out
or enforcing the Orders [Annexes "Z" and "FF"] complained of pending
the
hearing of the merits of the instant petition;
2. After due hearing, that this
Honorable
Court annuls and sets aside the complained Orders [Annexes "Z" and
"FF"];
Petitioners further pray for all other
reliefs
which are just and equitable in the premises.
Davao City, Philippines, February 5,
1966.[1]
In November,
1963, Urbano Jaca and Bonifacio Jaca
filed with the Court of First Instance of Davao, a complaint for
Accounting,
Return of Price Differentials and Damages against the Davao Lumber
Company.
The case was docketed as Civil Case No. 4189. The complaint
alleges
that the plaintiff Urbano Jaca has been, and still is, a licensee of a
logging concession located in the City of Davao and together with his
co-plaintiff,
Bonifacio Jaca, engaged in the logging business of producing timber and
logs for export and/or domestic purposes; that the defendant is a
business
corporation with which plaintiffs had business dealings covering the
sale
and/or exportation of their logs; that sometime in 1954, herein
parties-litigants
entered into an agreement whereby plaintiffs may secure, by way of
advances,
either cash or materials, foodstuffs, and/or equipment from the
defendant
corporation; that the payment of such account was to be made either in
cash and/or by plaintiff's turning over all the logs that they produce
in the aforesaid concession to the defendant, and in the latter case,
the
current prices, either export or domestic, of the logs at the time of
their
delivery was to be considered; that while the aforesaid business
relationship
between the parties was subsisting, defendant made plaintiff Urbano
Jaca
execute in its favor a chattel mortgage, a copy of which instrument.
however,
plaintiffs were never furnished but that as far as they can recollect
the
primary conditions of such chattel mortgage were that plaintiffs would
turn over to defendant corporation all the logs they may produce from
the
aforesaid concession the same to be priced either as export or domestic
and their value to be applied by defendant to, and be credited for, the
account of plaintiff's indebtedness, and further that in case of need,
plaintiffs may secure, by way of advances, either cash, foodstuffs,
materials
or equipment's, under an "open credit account"; that under the
aforementioned
"open credit account" relationship between the plaintiffs and
defendant,
orders were secured by plaintiffs, by way of advances, from the
defendant,
this to be paid by them with plaintiffs' production from their
concession,
liquidating those old accounts and keeping all accounts current; that
in
pursuance to the agreement, as aforestated, plaintiff Urbano Jaca
executed
assignments of letters of credit in favor of the defendant, in order
that
the latter may be able to use, as defendant corporation did in fact
use,
the said letters of credit for bank negotiations of the former in the
exportation
of logs; that the plaintiffs and the defendant had this business
relationship,
as aforementioned, from 1954 up to sometime in August, 1963; that
during
this whole period of time, the plaintiffs had been faithfully
delivering
all their log production to the defendant for export or domestic
purposes;
that before the filing of this complaint, the plaintiff made repeated
demands
on the defendant for a formal accounting of their business relationship
from 1954 up to August, 1963, but that the defendant failed and
refused,
and still fails and refuses, to effect such formal accounting,
asserting
that it had no time as yet to examine into all the details of the
accounting;
that sometime on October 30, 1963, much to their surprise, plaintiffs
received
letters of demand from the defendant in which they were requested to
pay
their accounts in favor of defendant, which according to the latter had
long been overdue; [copies of such letters are hereto attached marked
as
Annexes "A" and "B", and made integral parts of this complaint] that
plaintiffs
are no longer indebted to the defendant, and as a matter of fact, it is
their belief that, if a formal accounting be made, there would still
appear
a claim in their favor in the amount of P250,000.00 more or less,
representing
the price differentials of logs which they delivered to the defendant
from
1954 up to August, 1963; and that further, there was a deliberate fraud
practiced by the defendant on them, especially in defendant's
undergrading
and/or reclassification of logs delivered to it by plaintiffs; that
further,
there were many errors committed in the monthly statements submitted to
the plaintiffs arising from the fact that there were charges of cash,
equipment,
materials and foodstuffs in said statements never ordered and/or
received
by the plaintiffs; and still further that the proceeds of the letter of
credit were not fully applied and/or credited to the account of
plaintiffs;
that defendant has, up to the present, denied the plaintiffs the
benefits
of a formal accounting and inasmuch as the invoices, receipts,
vouchers,
requisition slips and other pertinent papers and document of their
business
transactions are in the possession of defendant, it is difficult for
plaintiffs
to ascertain with accuracy the ledger balance between the parties,
unless
a detailed examination of the matter is had; that plaintiffs have
thereby
been constrained to file this case in Court in order to compel
defendant
to have a formal accounting between them, and that it is the desire of
plaintiffs that pending the formal hearing of this case, three
commissioners,
constituting accountants be judicially appointed for the purpose of
examining
all the books, pertinent papers and documents and all other data in
relation
with their business transaction; that in order to protect their
interest
and to litigate this case, the plaintiffs were compelled to secure and
retain the services of attorneys, and that they have thereby suffered
damages
in the sum of Twenty Thousand Pesos [P20,000.00] by way of attorney's
fees.[2]
In December,
1963, the Davao Lumber Company filed
its Answer with Affirmative Defenses and Counterclaim.[3]
In its counterclaim, the Davao Lumber Company alleged that Plaintiffs
Urbano
Jaca and Bonifacio Jaca are the ones indebted to the defendant in the
sum
of P756,236.52 and P91,651.97, respectively; that on January 24, 1961,
the plaintiff Urbano Jaca executed a chattel mortgage in favor of the
defendant
to secure the payment of any and all obligations contracted by him in
favor
of the defendant covering several chattels valued at P532,000.00; that
said obligation of Urbano Jaca totalling P756,236.52 is overdue and
unpaid
despite repeated formal demands for settlement thereof made by
defendant;
that the action brought by the plaintiffs is purely baseless and
malicious
for which the plaintiffs should be required to pay defendant, damages
and
attorney's fees amounting to at least P20.000.00.[4]
In June, 1965,
the respondent Judge rendered a
Decision, the dispositive portion of which reads:
CONSIDERING THE FOREGOING, judgment is
hereby
rendered in favor of defendant and against the plaintiff, ordering that:
1. The complaint for accounting,
return
of price differentials and damages filed by plaintiffs Urbano Jaca and
Bonifacio Jaca versus defendant Davao Lumber Company is dismissed, as
it
is hereby dismissed;
2. Ordering Urbano Jaca, to pay
defendant
the amount of P756,236.52 with legal interest from the date of the
filing
of the counterclaim;
3. Ordering plaintiff Bonifacio
Jaca
to
pay defendant the amount of P91,651.00 with legal interest;
4. Ordering that the chattel
mortgage
executed
by Urbano Jaca in favor of defendant Exhibit "3", be foreclosed as it
is
hereby foreclosed;
5. Ordering plaintiffs to pay
jointly
and
severally P20,000.00 as attorney's fees in favor of defendant.
6. With cost against plaintiffs.
SO ORDERED.
Given at Davao City, on this 11th day
of
June,
1965.[5]
In September,
1965, the Davao Lumber Company filed
a motion for execution pending appeal on the following grounds:
[1] There are good reasons to
authorize
an order of execution pending appeal pursuant to Rule 39, Section 2 of
the Rules of Court, which provides:
Sec. 2. Execution pending
appeal. -
On motion of the prevailing party with notice to the adverse party the
court may, in its discretion, order execution to issue before the
expiration
of the. time to appeal, upon good reasons to be stated in a special
order.
If a record on appeal is filed thereafter, the motion and the special
order
shall be included therein.
[a] In this same civil case, the
court
issued an Order dated November 17, 1964 directing the plaintiffs "to
deliver
to the receiver all the properties, chattels and equipment covered by
the
Chattel Mortgage, the delivery to be made within thirty (30) days," but
plaintiffs did not, comply with said Order of November 17, 1964.
[b] Defendant's counsel filed a
"Motion
to Implement Order ordering Urbano Jaca to deliver Chattels to
Receiver"
dated July 28, 1965, but up this date, plaintiffs have not complied
with
said Order.
[c] That there are various
reports from
the receiver, one of them dated April 19, 1965, stating that the
Receiver
has not taken custody of the mortgaged chattels due to the refusal or
inability
to mortgagor Urbano Jaca to deliver the same to him.
[d] Despite the long lapse of
time from
the Order of November 17, 1964, the court in its Order of September 1,
1965, directed said mortgagor Urbano Jaca to comply forthwith with the
Order dated November 17, 1964 "fifteen (15) days upon receipt of this
Order,"
but up to this date, there has been consistent refusal or failure to
comply
with said order of delivery.
[2] Another good reason for
execution
pending
appeal [Rule 39, Section 2] is the fact that plaintiff Urbano Jaca, the
mortgagor in the deed of chattel mortgage dated January 24, 1961, has
violated
Article 319 of the Revised Penal Code, for he has sold some of the
mortgaged
properties to third persons, particularly, a wrecker, to Teodoro M.
Alagon
of Davao City on February 12, 1962 for P10,000.00. A copy of the
letter-complaint
addressed by defendant's counsel to the City Fiscal of Davao, dated
February
5, 1964 is attached hereto and made an integral part of this Motion as
Annex "A".
[3] Moreover, plaintiffs have not
only
failed to comply with the Order of the Honorable Court for the delivery
of the properties under receivership to the Receiver [par. 3 of this
Motion]
and in fact has violated the Chattel Mortgage contract [Par. 4 of this
Motion], but plaintiffs have no properties or assets with which to
satisfy
the judgment of this Honorable Court, which amounts to principal items
of P756,326.52, P91,651.00 and P20,000.00, or a total of P867,887.52.
[4] Obviously, the appeal
interposed by
the plaintiffs is to delay the enforcement and/or execution of the
decision
rendered by this Honorable Court, so that when the Decision correctly
rendered
by this Honorable Court should be affirmed on appeal the judgment will
become nugatory.[6]
The respondent
judge granted the motion for execution
pending appeal in an order dated November 29, 1965.[7] Urbano Jaca and Bonifacio
Jaca
filed a motion for reconsideration of the order granting execution
pending
appeal in December, 1965,[8]
but the same was denied in an order dated January 10, 1966.[9]Petitioners Urbano Jaca
and
Bonifacio
Jaca contend that the respondent Judge acted in excess of jurisdiction
and/or with grave abuse of discretion in issuing the order granting
execution
pending appeal and the order denying the motion for reconsideration of
the order granting execution pending appeal because said orders were
issued
in complete disregard of the applicable provisions of the Rules of
Court,
the laws, and the settled decisions of the Honorable Supreme Court.
Petitioners
assail the order granting execution
pending appeal and the order denying the motion for execution pending
appeal
on the following grounds:
[1] granting that execution pending
appeal
will issue in a foreclosure proceedings, the respondent Judge acted in
excess of jurisdiction when he considered, over the objection of
petitioners,
in the motion for reconsideration of the Order granting premature
execution
[Annex "AA"] the alleged sale by Florentina Perez, wife of petitioner,
Urbano Jaca of the two [2] chevrolet trucks which were not part of the
mortgaged chattels to Atty. Raul Nengasca as a reason for execution
pending
appeal in his Order [Annex "FF"] denying the motion for
reconsideration,
since this matter is not among the grounds stated in the motion for
execution
pending appeal [Annex "X"] neither has it been brought out during the
hearing
of said motion, nor is it one of the reasons stated in the Order of
Execution
Pending Appeal [Annex "Z"] which is the Order sought to be reconsidered
and it is a cardinal rule in pleadings that a motion should state the
grounds
upon which it is based [Section 3, Rule 15 of the Rules of Court] and
the
Order sought to be obtained and that no other grounds can be
entertained,
passed upon and considered by the court over the objection of the
adverse
party;
[2] the respondent judge acted with
grave
abuse of discretion equivalent to lack of jurisdiction in finding that
there exists special or good reasons for execution pending appeal
because
discretionary execution under Section 2, Rule 39 of the Rules of Court
will only issue if there are superior circumstances demanding urgency
which
outweigh the injury or damage that the losing party may suffer upon
securing
a reversal of the judgment on appeal considering the merits of his
appeal
[Moran, Comments on the Rules of Court, Vol. 2, Part II, 1963 ed., p.
239
and p. 242, citing Aguilos vs. Barrios, et al. 72 Phil. 285: Ledesma
vs.
Teodoro, 52 O.G. 784; De Leon, et al. vs. Soriano, et al., L-7684,
Sept.
17, 1954; City of Bacolod vs. Enriquez, 55 O.G. p. 10545], and in the
instant
case, the reasons ultimately relied upon by the respondent Judge in
granting
execution pending appeal as stated in the Order [Annex "FF"], denying
petitioners
motion for reconsideration of the Order granting execution, are not
such
superior circumstances demanding urgency of execution because:
[a] the first reason that
petitioner
Urbano
Jaca sold a wrecker to Teodoro M. Alagon is alleged to have been made
yet
on February 12, 1962, or about over one and half years prior to the
filing
of the instant case on November 22, 1963, and such sale would not show
a fraudulent design on the part of petitioner Urbano Jaca to defeat the
judgment against him by disposing of the mortgaged chattels and thus
would
demand urgency of execution of the judgment;
[b] the second reason regarding
the
sale
of the two chevrolet trucks [not alleged to be a part of the mortgaged
chattels to the respondent Davao Lumber Company] to Atty. Raul Nengasca
does not refer to the property of either of the petitioners, neither
does
it refer to a sale made by anyone of them; rather, it refers to a sale
made by Florentina Perez [wife of petitioner Urbano Jaca], who is not a
party to the action, regarding her own property;
[c] the third and last reason
that the
orders of the court directing petitioner Urbano Jaca to deliver all the
mortgaged chattels to the receiver are valid and must be complied with
could not even be considered any reason at all for immediate execution,
as it does not supply at all any element of a superior circumstance
requiring
urgency of execution for there is, in fact, no legal connection
whatsoever
in the validity of such Orders and their compliance with the propriety
of an immediate execution of the judgment pending appeal; furthermore,
the appeal of petitioners are based on good grounds and could never be
said to be intended merely for delay, and that the amount involved in
the
judgment is huge;
[3] That there are, in fact, good
reasons
for not allowing execution pending appeal considering:
[1] that the amount involved in
the
judgment
is huge;
[2] that the petitioners have
challenged
the Counterclaim, under which the judgment sought to be executed is
rendered,
for lack of cause of action;
[3] that the petitioners have
challenged
the chattel mortgage, under which the judgment of foreclosure has been
rendered, as null and void ab initio and that no cause of action can
arise
therefrom;
[4] that the petitioners have
challenged
the Commissioner's Report to be null and void which is the primary, if
not in fact the sole, evidence of said respondent on its Counterclaim
and
upon which the judgment sought to be executed is based;
[4] no execution pending appeal, in
fact,
can issue on foreclosure proceedings because the ninety-day period
provided
in Section 2, Rule 68 of the Rules of Court is a substantive right
granted
to the mortgagor-debtor which may not be omitted and that upon taking
an
appeal, said period is suspended and is not revived until the judgment
is affirmed by the appellate court and the case returned to the trial
court,
and in the instant case, the respondent judge acted in excess of
jurisdiction
in allowing execution pending appeal when the Counterclaim under which
the judgment sought to be executed is rendered, is for a foreclosure of
chattel mortgage and that petitioners have taken an appeal to the
judgment
rendered against them;
[5] granting, arguendo, that
the
foreclosure proceedings is only against petitioner Urbano Jaca as
mortgagor,
but the action against petitioner Bonifacio Jaca is for a collection of
a sum of money, the respondent Judge acted with grave abuse of
discretion
equivalent to lack of jurisdiction in allowing execution pending appeal
as against said petitioner Bonifacio Jaca because in so far as said
petitioner
is concerned there is no showing of any special or good reasons, in
fact,
there is no showing of any reason at all anywhere in the records of the
case, including the Orders complained of, as a basis for which
discretionary
execution may be issued against him.[10]
The private
respondent maintains that the respondent
judge acted in full compliance with the Rules of Court, the law and
applicable
decisions of this Honorable Court because:
[1] The present case is an action
for
accounting
and not a foreclosure proceeding. Therefore, execution pending appeal
can
be issued pursuant to Sec. 2 of Rule 39, Rules of Court. This provision
of the Rules of Court applies in the present case for there are good
and
valid reasons for the issuance of a writ of execution pending appeal as
stated in respondents' Motion [Annex "X"]. Moreover, petitioners have
no
properties or assets with which to satisfy the judgment of P867,887.52
plus other items stated in the Decision. The respondent Judge,
therefore,
was correct in ordering the issuance of a writ of execution [Annex
"1"].
Furthermore, to stay execution, petitioners should have filed a
supersedeas
bond in accordance with Sec. 3 of Rule 3.
[a] Respondent denies the erroneous and
gratuitous
conclusion of alleged 'excess of jurisdiction' as alleged in par. 44(a)
of the Petition. It further denies the other misleading statements
alleged
therein, the truth of the matter being the grounds enumerated in the
Motion
for Execution Pending Appeal [Annex "X"] and the reasons mentioned in
the
Order [Annex "Z"] granting said motion.
[b] Respondent denies the
erroneous
conclusion
that the respondent Judge acted with grave abuse of discretion,
equivalent
to lack of jurisdiction' as alleged in par. 44(b) of the Petition, and
states that the respondent Judge correctly acted in accordance with
Sec.
2, Rule 39 of the Rules of Court. It further denies the misleading
statement
therein that the reasons ultimately relied upon by the respondent Judge
are those stated in the Order [Annex "FF"], which is false, because the
good and valid reasons relied upon by the respondent Judge are those
stated
in his Order [Annex "Z"] granting the Motion for Execution Pending
Appeal
[Annex "X"]:
[1] Respondent admits the
allegation
that
petitioner Urbano Jaca sold a wrecker to Teodoro M. Alagon on February
12, 1962 for P10,000.00; and denies the statement that such sale would
not show a fraudulent design on his part to defeat the judgment against
him. It further alleges that it is one of the good and valid reasons
for
execution pending appeal [Rule 39, Sec. 2], because said petitioner,
the
mortgagor in the deed of chattel mortgage dated January 24, 1961, has
violated
Article 319 of the Revised Penal Code in selling the said mortgaged
property;
[2] The misleading allegations
contained
in subparagraphs 2 and 3 of par. 44(b) of the Petition are false, for
they
are matters that arose in the petitioners' Motion for Reconsideration
of
the Order granting execution pending appeal. Respondent further states
that they are not the original and valid reasons given by the
respondent
Judge in his Order [Annex "Z"];
[c] There are goods reasons for
allowing
execution pending appeal considering that:
[1] the amount involved in the
judgment
in favor of respondent Davao Lumber Company is P867,887.52 plus
attorney's
fees of P20,000.00, and the petitioners admitted at the hearing of the
Motion for Execution Pending Appeal that they are insolvent [See Order,
Annex "Z"];
[2] the petitioners have never
challenged
the Counterclaim of respondent Davao Lumber Company during the hearing
on the merits;
[3] the petitioners failed to
present
any
evidence challenging the chattel mortgage under which the counterclaim
for foreclosure has been rendered;
[4] the petitioners have not
disproved
the Commissioner's Report [Annex "K"]. In fact, they failed to present
their own evidence before the Commissioner which might tend to
controvert
the undisputed documentary evidence of respondent Davao Lumber Company;
[5] execution pending appeal
was
properly
issued in the present case, which is an ordinary civil action for
accounting
and not primarily a foreclosure of chattel mortgage the respondent
Judge,
therefore, acted in full compliance with the law and jurisprudence in
allowing
execution pending appeal;
[6] the judgment sought to be
executed
pending appeal sentences petitioner Urbano Jaca to pay respondent Davao
Lumber Company the amount of P756,236.52 with legal interest; sentences
petitioner Bonifacio Jaca to pay said respondent the amount of
P91,651.00
with legal interest; orders the Chattel Mortgage executed by Urbano
Jaca
in favor of said respondent foreclosed; orders petitioners to pay,
jointly
and severally, the amount of P20,000.00 as attorney's fees and costs;
the
said judgment was rendered after hearing on the merits of its action
for
accounting, which is not a proceeding for foreclosure of chattel
mortgage;
the provisions of the Rules of Court on foreclosure proceeding invoked
by petitioners do not find any application in the case at bar; the
respondent
Judge, therefore, in allowing execution pending appeal, precisely acted
in full compliance with Sec. 2 of Rule 39;
[7] as above pointed out, the
judgment
rendered in this case is joint and several, and consequently, the
respondent
Judge was correct in ordering the execution thereof as against both
petitioners
who have no properties or assets to satisfy the judgment in favor of
respondent
company.[11]
The basic issue
in this case is whether or not there
are good reasons justifying the issuance of an order granting premature
execution. Section 2, Rule 39 of the Rules of Court provides that on
motion
of the prevailing party with notice to the adverse party the court may,
in its discretion, order execution to issue even before the expiration
of the time to appeal, upon good reasons to be stated in a special
order.
If a record on appeal is filed thereafter, the motion and the special
order
shall be included therein. The discretionary power of the Court of
First
Instance to grant or deny a motion for execution before the expiration
of the time to appeal will not be interfered with by the appellate
court,
unless it be shown that there has been an abuse thereof or a subsequent
change of conditions.[12]
As provided in
Sec. 2, Rule 39 of the New Rules
of Court, the existence of good reasons is what confers discretionary
power
on a court of first instance to issue a writ of execution pending
appeal.[13]
The reasons allowing execution must constitute superior circumstances
demanding
urgency which will outweigh the injury or damage should the losing
party
secure a reversal of the judgment on appeal.[14]
The decision in Civil Case No. 4189 requires
petitioners to pay the enormous amount of P867,887.52. Clearly,
premature
execution of said decision wig result in irreparable damage to
petitioners
as the collection of said amount may be enforced through the seizure of
money and/or sale of properties used in the logging business of
petitioners.
In other words, execution of the decision in Civil Case No. 4189 may
result
in the termination of petitioner's business. Thus, any damage to the
petitioners
brought about by the premature execution of the decision will be
justified
only upon a finding that the appeal is being taken only for the purpose
of delay and of rendering the judgment nugatory.cralaw:red
The facts of
record show that the petitioner's
appeal is not frivolous and not intended for delay. The findings of the
respondent judge that the petitioners are indebted to the respondent
Davao
Lumber Company are based solely on the report submitted by Estanislao
R.
Lagman, the commissioner appointed by the court. This report was
assailed
by the petitioners as null and void in a motion to strike out the
report
from the records of the case. According to petitioners, the report is
null
and void because the so-called 'findings of the Commissioner in his
report
filed before this Honorable Court is the result of the exercise of
certain
highly irregular function not contemplated by the Rules of Court and,
therefore,
deprived Plaintiffs' their constitutional right to their day in court.cralaw:red
ARGUMENTS:
1. That
among other things, Section 3, Rule
33 of Rules of Court, provides:
Section 3: Subject to the specifications
and
limitations stated in the order the commissioner has and shall exercise
the power to regulate the proceedings in every hearing before him and
to
do all act and take measures necessary or proper for the efficient
performance
of his duties under the order,The trial or hearing before him
shall
proceed in all respect as though the same had been had before the Court.
2. That
on August 22, 1964, without the proper
notice to their respective counsels, the Plaintiffs received the
following
letter from the Commissioner, pertinent portions of which reads as
follows:
and, copy of which letter is attached hereto, forming an integral part
in this Opposition, marked Annex "A" In compliance to the above
order,
I am now to proceed, as ordered by the Court, to examine your books of
accounts and other records for the year 1962 and 1963.
I will be
dropping at your office on August 25,
1964. Kindly have our records ready.cralaw:red
3. That on
August 25, 1964, the Commissioner
went to Plaintiff's' office and asked to see the Books, and if possible
to bring the same with him to his office; that, the plaintiffs' counsel
refused to have said records examined in such manner;
4. That the
Counsel for the Plaintiffs reminded
the Commissioner on many occasions that, the examination of books and
records
of Accounts should be done in a manner provided for under the Rules of
Court and, that in pursuance of said mandate, a hearing and/or
proceedings
be conducted in the presence of all parties, their witnesses and, their
counsels and, the hearing be conducted as if it were taken before the
court
of justice, as said accounts being one controversial and contested in
issues;
5. That
said commissioner refused to conduct
said hearing in accordance to law;
6. That
report is void in law.[15]
In an order dated
November 17, 1964, the respondent
judge approved the commissioners' report in toto As to the allegation
of
the plaintiff that they were denied their day in court, the respondent
judge stated that "plaintiffs deliberately ignored to comply with the
lawful
order of the court directing them to present the pertinent books of
accounts
on the 12th day of October, 1964, at 2:00 P.M. Sala of Branch 11, and
therefore,
their position that they are denied their day in court is clearly
untenable."[16]
Petitioners filed
their motion for reconsideration
of the order approving the commissioner's report in November, 1964,
explaining
that their failure to appear was due to the fact that they received the
order requiring them to appear on October 12, 1964 already after said
date
when it was too late for them to comply with the order of appearance.[17]
Notwithstanding the reasonable explanation of their absence in the
hearing
of October 12, 1964, the respondent judge denied the motion for
reconsideration
in an order dated December 4, 1964.[18]
It is obvious
that the refusal of the respondent
judge to order a hearing before the commissioner was in clear violation
of Section 3, Rule 33, Revised Rules of Court, which specifically
provides
"that the trial or hearing before a commissioner shall proceed in all
respects
as though the same had been had before the court." For this purpose,
Section
5 of the same Rule provides that "upon receipt of the order of
reference,
unless otherwise provided therein, the commissioner shall forthwith set
a time and place for the first meeting of the parties or their
attorneys
to be held within ten [10] days after the date of reference." Pertinent
also is Section 10 of Rule 33 which provides that "Objections to the
report
based upon grounds which were available to the parties during the
proceedings
before the commissioner, other than objections to the findings and
conclusions
therein set forth, shall not be considered by the court unless they
were
made before the commissioner."
The respondent
judge's refusal to order the commissioner
to conduct a hearing in accordance with Section 5, Rule 33 was fatal to
the cause of the petitioners. Under Section 10 of Rule 33, objections
to
the report based upon grounds which were available to the parties
during
the proceedings before the commissioner other than objections to the
findings
and conclusions therein set forth shall not be considered by the court,
unless they were made before the commissioner. Objections to the report
which were available to the parties during the proceedings refer to
objections
to the admissibility or non-admissibility of evidence to be considered
by the commissioner. Since no meeting was held before the commissioner,
petitioners never had the opportunity to object to the admissibility of
evidence of cash, equipment, materials and foodstuff, which they
alleged
in their complaint, were never received by them. Also, they failed to
question
the failure of the commissioner to include in his examination the price
quotations of the logs which, as claimed in the complaint, were
underclassified
and undergraded.cralaw:red
The records show
that respondent Davao Lumber
Company was able to prove its claim against petitioners because
respondent
judge refused to order the commissioner to hold a hearing as required
by
the rules. Thus, objections which petitioners may have against the
claims
of respondent were never considered. In the same manner, the claim of
petitioners
that respondent Davao Lumber Company is indebted to them was not also
considered.
The Commissioner limited his examination to the following:
MR. URBANO LACAS ACCOUNTS:
[a] From Feb. 17, 1961 to Oct.
31,
1962,
Urbano Jaca purchased on account from the Merchandise Dept. of Davao
Lumber
Co. per statement attached, marked schedule 1 - P190:010.41
[b] From July 2, 1960 to Oct.
31,
1962,
Urbano Jaca purchased on account from the Sawmill Dept. of Davao Lumber
Co. per statement hereto attached, marked schedule 2 - P75,075.73
[c] Old vales or cash advances
prior
to
July 25, 1963 which Urbano Jaca replaced with four (4) BPI Checks Nos.
D-236619 to D-236622 P50,000.00 each as alleged by DLC -
P200,000.00
[d] From Nov. 3, 1962 to Aug.
30,
1963,
Urbano Jaca purchased on accounts from the Sawmill Dept. various goods,
per attached statement, marked Schedule 3 - P57,459.27
[e] From Nov. 3, 1962 to Aug.
30,
1963,
Urbano Jaca purchased from the Mds. Dept. of DLC various goods, per
attached
statement, marked Scheduled 4 - P68,857.07
[f] From July 25, 1963 to Sept. 16,
1963
Urbano
Jaca obtained cash advances or vales per attached statement, marked
schedule
5 - P164,844.45
[g] Purchase of gasoline made by
Urbano
Jaca from Shell Co., under Davao Lumber Co.'s guaranty - P2,523.60
Total amount due Davao Lumber Co. from
Urbano
Jaca - P758,770.53
The amount of
P2,523.60 due Shell Co. may be deducted
from the total amount if Urbano Jaca can show proof that the account
has
been paid.
MR. BONIFACIO JACAS ACCOUNTS:
[a] From Nov. 3, 1962 to Aug. 8,
1963
Bonifacio
Jaca purchased on account various goods from the Sawmill Dept. of DLC
per
attached statement,. marked schedule 6 - P39,999.69
[b] From Feb. 4, 1963 to Aug. 8,
1963
Bonifacio
Jaca purchased on account from the Mdse. Dept. various goods, per
attached
statement marked schedule 7 - P48,319.08
[c] Purchases of gasoline from
Shell
Co.
guaranteed by Davao Lumber Co. - P5,252.12.
[d] From Aug. 6, 1963 to Aug.
23,
1963,
Bonifacio Jaca obtained cash advances or vales, per attached statement
marked schedule 8 - P3,333.20
Total amount due Davao Lumber Co. from
Mr.
Bonifacio
Jaca P96,904.09.[19]
Clearly, the
examination was only made on advances
made to petitioners. There was not even an attempt to examine receipts
of payments made by petitioners. It is hard to believe that the
petitioners
had not paid any amount for the advances made to them. In fact, the
respondents
stated in paragraph 4 of its answer to the complaint that the
plaintiffs
stopped delivering logs in August, 1963,[20]
indicating that from 1962 to 1963, the years included in the report of
the commissioner, the petitioners had delivered logs to the Davao
Lumber
Company.
There is doubt
that petitioners are really indebted
to respondent Davao Lumber Company in such a big amount as found by the
trial court. The appeal of the petitioner appears to be meritorious.
The
fear of respondent that the judgment of the trial court might not be
satisfied
if not executed at once is not well founded. If the judgment is
executed
now, and on appeal the same is reversed, although there are provisions
for restitution, damages incurred by petitioners can not be fully
compensated.[21]
The reasons
stated in the order of execution pending
appeal are not well founded. The first reason stated in the order
was the consistent refusal of petitioner to deliver the mortgaged
chattels
to the receiver.[22]
The records disclose that respondent Davao Lumber Company is not even
entitled
to the appointment of a receiver. It is an established rule that the
applicant
for receivership must have an actual and existing interest in the
property
for which a receiver is sought to be appointed.[23]
The Davao Lumber Company's proof of interest in the property is the
deed
of chattel mortgage executed by Urbano Jaca in favor of Davao Lumber
Company
on January 24, 1961. This deed of chattel mortgage is void because it
provides
that the security stated therein is for the payment of any and all
obligations
herein before contracted and which may hereafter be contracted by the
Mortgagor
in favor of the Mortgagee.[24]
In the case of Belgian Catholic Missionaries vs. Magallanes Press, this
Court held:
A mortgage that contains a stipulation in
regard
to future advances in the credit will take effect only from the date
the
same are made and not from the date of the mortgage [11 CJ, 448; 5 RCL
420-421]. Where the statute provides that the parties to a chattel
mortgage
must make oath that the debt is a just debt, honestly due and owing
from
the mortgagor to the mortgagee, it is obvious that a valid mortgage
cannot
be made to secure a debt to be thereafter contracted. [11 CJ. 448].[25]
The second
reason stated was the fact that petitioner
Urbano Jaca violated Article 319 of the Revised Penal Code by selling
to
a certain Teodoro Alagon some of the mortgaged properties.[26]
As already discussed, the deed of chattel mortgage executed by Urbano
Jaca
in favor of the Davao Lumber Company is void. Hence, petitioner Urbano
Jaca could not have violated Article 319 of the Revised Penal Code.
Moreover,
the respondent Davao Lumber Company has not successfully refuted the
allegation
of the petitioners that the sale of the wrecker to Teodoro Alagon was
exclusively
negotiated by the lumber company's managing partner, Tian Se, and that
the latter caused Urbano Jaca to sign the deed of sale because he was
the
owner of the wrecker.
The third reason
stated is the fact that petitioners
have no properties and assets to satisfy the judgment.[27]
The basis of respondent judge's conclusion that petitioners do not have
sufficient assets is an unsubstantiated allegation in the motion for
execution
pending appeal of respondent lumber company.[28]
To rectify this omission, respondent lumber company, in its opposition
to the motion for reconsideration of the order of execution pending
appeal,
tried to point out that the sale of two chevrolet trucks by Urbano Jaca
and their failure to file a counterbond indicate that they are without
sufficient assets.[29]
This later attempt to substantiate a baseless allegation in the motion
for execution pending appeal is futile. The trucks alleged to be sold
are
not properties of petitioner Urbano Jaca They are paraphernal
properties
of his wife, Florentina Perez, and the same trucks were in fact sold by
her. And even if said trucks were owned by Urbano Jaca, their sale to
Atty.
Raul Nengasca does not totally indicate insolvency. As has been
repeatedly
observed, petitioner Urbano Jaca is engaged in business. Sale of
property
used in business does not establish insolvency. The sale may have been
prompted by the need for more modern equipment on account of
obsolescence,
or the need to be directed to more profitable endeavor. The same reason
applies to their failure to file a counterbound. The cash needed for
the
counterbound may be utilized for the continuance of the business or to
increase business profits. In short, the acts of petitioner cannot
always
be interpreted as signs of insolvency but may also indicate sound
business
judgment prompted by the need to have liquid reserve of cash.cralaw:red
In its answer to
the petition,[30]
respondent lumber company contends that petitioners, having availed of
the remedy of appeal, are barred from filing a petition for certiorari.
Although Section 1, Rule 65 of the Rules of Court provides that the
special
civil action of certiorari may only be invoked when "there is no
appeal,
nor any plain speedy and adequate remedy in the course of law," this
rule
is not without exception. The availability of the ordinary course of
appeal
does not constitute sufficient ground to prevent a party from making
use
of the extraordinary remedy of certiorari where the appeal is not an
adequate
remedy or equally beneficial, speedy and sufficient.[31]
It is the inadequacy - not the mere absence - of all other legal
remedies
and the danger of failure of justice without the writ, that must
usually
determine the propriety of certiorari.cralaw:red
In the case at
bar, the remedy of appeal is inadequate.
It will not immediately relieve petitioners from the injurious effect
of
the order granting execution. The slow and inexpensive remedy of appeal
will not prevent respondent Judge from executing his decision requiring
petitioners to pay the huge amount of P867,887.52. Moreover, to dismiss
the petition on the ground that petitioner has already availed of the
remedy
of appeal will only aggravate the patent injustice already inflicted on
petitioners.cralaw:red
The reasons
stated in the order granting execution
pending appeal are not sufficient.cralaw:red
WHEREFORE, the
petition for writ of certiorari
is granted and the orders granting execution pending appeal dated
November
29, 1965 and the order denying the motion for reconsideration of the
order
granting execution pending appeal dated January 10, 1966 are nullified
and set aside, without pronouncement as to costs.cralaw:red
SO ORDERED.cralaw:red
Makasiar,
Guerrero, and Melencio-Herrera, JJ.,
concur.
Teehankee (Chairman), J., took no
part.
Plana, J., concurs in the result.cralaw:red
_______________________________
Endnotes
[1]
Petition, Rollo, p. 29.
[2]
Rollo, pp. 31-35.
[3]
Ibid., pp. 38-43.
[4]
Ibid., pp. 41-43.
[5]
Ibid., pp. 103-104.
[6]
Ibid., pp. 112-114.
[7]
Ibid., pp. 126-128.
[8]
Ibid., pp. 129-137.
[9]
Ibid., pp. 162-165.
[10]
Petition, Rollo, pp. 25, 29.
[11]
Ibid., pp. 176-178.
[12]
Naredo et al. vs. Yatco, et al., 80 Phil. 220.
[13]
Lusk v. Stevens, 64 Phil. 154.
[14]
City of Bacolod, et al. vs. Judge Enriquez, et al., 101 Phil. 644.
[15]
Rollo, pp. 71-72.
[16]
Rollo, p. 76.
[17]
Ibid., P. 79.
[18]
ibid., P. 82.
[19]
Rollo, pp. 67-68.
[20]
Ibid., p. 39.
[21]
City of Bacolod vs. Enriquez, 101 Phil. 644.
[22]
Rollo, p. 127.
[23]
Ylarde vs. Enriquez, 78 Phil. 528.
[24]
Rollo, p. 44.
[25]
Belgian Catholic Missionaries vs. Magallanes Press, 49 Phil. 647:
655-656.
[26]
Rollo, p. 127.
[27]
Ibid.
[28]
Ibid., pp. 113-114.
[29]
Ibid., pp. 139-140.
[30]
Ibid., pp. 168-169.
[31]
Silvestre vs. Torres, 57 Phil. 885. |