THIRD
DIVISION
PHILIPPINE
BANK OF COMMUNICATIONS,
Petitioner,
G. R. No. 126158
September 23, 1997
-versus-
chanroblesvirtualawlibrary
THE
COURT OF APPEALS, HON. PEDRO T.
SANTIAGO,as Judge, RTC of Quezon City
Branch 101, FALCON GARMENTS CORPORATION, QUALITY LABELS, INC.,ROBERT
SY, doing business under the name and
styleJOBERT PRINTING SERVICES;
EUGENIO POA,MAGIN TABUSO, MAKILITO MAHINAY,
EFREN CACHERO, CESAR M. TORIO and EFREN GUMBAC,
Respondents
|
D
E C I S I O N
MELO, J.:
Assailed and
sought to be set aside in the instant
petition is the decision of respondent Court of Appeals promulgated on
September 13, 1996 dismissing herein petitioner Philippine Bank of
Communications'
petition for certiorari impugning an order granting the motion for the
issuance of a writ of execution pending appeal issued by the Regional
Trial
Court of the National Capital Judicial Region [Branch 101, Quezon
City],
in Civil Case No. Q-95-22625, entitled "Falcon Garments Corporation, et
al. vs. Philippine Bank of Communications".
The antecedent
facts of the case as gathered from
the record are as follows:
Sometime in 1989,
private respondent Falcon Garments
Corporation [Falcon] opened Current Account No. 25-00640-7 at the BMA
Quezon
City Branch of petitioner Philippine Bank of Communications [PBCom].
Subsequently,
on November 27, 1992, private respondent Falcon obtained a loan from
petitioner
in the principal sum of Four Million Seven Hundred Thousand Pesos
[P4,700,000.00]
with interest at 17% per annum and penalty at 12% per annum in case of
default. Falcon failed to pay its loan on due date and went in default
in December, 1993.cralaw:red
On February 9,
1995, Falcon filed a complaint
with the Regional Trial Court of Quezon City against PBCom which was
docketed
as Civil Case No. Q-95-22625 and raffled to Branch 78, presided over by
Judge Percival Mandap-Lopez. The complaint prayed for the restoration
to
Falcon's current account of alleged unauthorized withdrawals totaling
P12,729,092.78
which were made from 1990 to 1992, plus interest, damages, and
attorney's
fees.cralaw:red
In its answer,
PBCom denied liability and interposed
a compulsory counterclaim in the sum of P4,700,000.00, plus the
stipulated
interest and penalty, damages, and attorney's fees.cralaw:red
On January 2,
1996, the trial court rendered a
decision against PBCom, the dispositive portion of which reads:
WHEREFORE, defendant is ordered to
restore
immediately
to plaintiff's Current Account No. 25-006407 the sum of P12,729,092.78,
plus interest at the rate of 12% per annum to commence form the date of
the filing of the complaint until the said amount is fully restored and
operate the said account in accordance with the instructions of
plaintiff,
acting through its board of directors. And to pay plaintiffs the
following
sums:
a. P500,000.00 as exemplary damages;
b. P500,000.00 as attorney's fees; and
c. P200,000.00 as litigation expenses.
Plaintiff FALCON is ordered to pay
defendant
its loan at P4,700,000.00 plus interest at the rate of 12% per annum to
commence from the date of filing of the complaint. All other claims and
counterclaims are dismissed for lack of merit. [Rollo, p. 34].
Petitioner
PBCom seasonably filed a notice of appeal,
while private respondent Falcon filed a Motion for Execution Pending
Appeal
dated February 7, 1996. However, before Branch 78 could resolve said
motion,
Judge Lopez inhibited himself and the case was re-raffled to Branch
101,
presided over by Judge Pedro T. Santiago. Private respondent Falcon
filed
an Ex-Parte Manifestation and Motion dated May 7, 1996, claiming that
with
its strained relations with PBCom, it was no longer practicable to bank
with petitioner, and prayed that the money judgment be not restored to
its current account but instead be directly paid to it [Rollo, p. 132].
On the very same
day of the filing of the motion,
Judge Santiago granted the same and authorized the issuance of a writ
of
execution pending appeal. The dispositive portion of said order
provides:
WHEREFORE, premises considered, finding
merit
and justification in plaintiff''s motion, the Court hereby grants its
motion
for execution pending appeal hereby ordering defendant Bank to
immediately
pay plaintiff the sum of P12,2729,092.78 with 12% interest per annum
and
plaintiff's obligation to defendant Bank be likewise paid by plaintiff
in the amount of P4,700,000.00 with interest also at 12% per annum, as
well as the other damages stated in the decision of Branch 78 dated
January
2, 1996, upon a plaintiff''s bond of P5,000,000.00 conditioned to
answer
for whatever damages which defendants may suffer by virtue of this
Order.
[Rollo, p. 41].
The writ was
issued on May 14, 1996, and on May 16,
1996, the writ was served upon PBCom which sought the intercession of
the
Court of Appeals [CA-G. R. SP No. 40636]. On June 4, 1996, a writ of
preliminary
injunction was issued by the Court of Appeals restraining its
implementation.
On September 13, 1996, the Court of Appeals
eventually
upheld the validity of the writ of execution pending appeal and
forthwith
dissolved the writ of preliminary injunction. On the same day, private
respondent Falcon obtained an alias writ of execution which was served
upon petitioner on that same afternoon.
On September 16,
1996, the present petition was
filed, with prayer for a temporary restraining order, preliminary writ
of injunction and mandatory injunction alleging that:
THE HONORABLE COURT OF APPEALS COMMITTED
GRAVE
ABUSE OF DISCRETION IN AFFIRMING THE ORDER OF JUDGE PEDRO SANTIAGO
GRANTING
THE ISSUANCE OF A WRIT OF EXECUTION PENDING APPEAL CONSIDERING THAT
GOOD
REASONS DO NOT EXIST FOR THE ISSUANCE OF A WRIT OF EXECUTION PENDING
APPEAL
UNDER SECTION 2, RULE 39 OF THE RULES OF COURT. [Rollo, p. 8].
Petitioner
further avers that:
3.01 The private respondents in this case
ILLEGALLY
and UNLAWFULLY implemented the writ of execution pending appeal on 13
September
1996 using an expired writ, and an Order of the Court of Appeals
subject
of this petition which was promulgated only at 10 a.m. of 13 September
1996. On that day, herein petitioner has not receive copy of said
decision
which is not yet final.
3.02 PBCom and counsel became aware of
the
questioned
Decision of the Court of Appeals when PBCom Ayala Branch, Makati City,
called up and told them that private respondents with about 30 people,
brandished the questioned writ and decision enabling private
respondents
to coerced, forced and intimidated the personnel of the said
petitioner's
branch resulting in the unlawful taking of about P1.7 million.
3.03 Private respondents have foisted to
petitioner
and counsel that they (private respondents) will again go to PBCom's
other
branches to "get" in full the balance of the money judgment which is
still
on appeal. [Rollo, pp. 92-93].
Upon the above
representations of petitioner duly
verified by its counsel, Atty. Daniel Y. Laogan of Laogan Silva Baeza
&
Llantino Law Offices, we issued a temporary restraining order at the
same
time requiring private respondents to comment. On November 11, 1996,
the
Court issued a resolution, which among other things, noted petitioner's
urgent manifestation and motion dated September 17, 1996, praying that
[a] counsel for private respondents be required to explain why they
claimed
in their ex parte motion for issuance of an alias writ of execution
pending
appeal before respondent RTC that the Court of Appeals had already
dissolved
the injunction one hour before the promulgation of the Court of
Appeals'
decision in CA-G. R. SP No. 40636; [b] to require Judge Pedro T.
Santiago
of RTC Branch 101, Quezon City, to explain why he issued the order
dated
September 13, 1993 granting the alias writ of execution pending appeal
prior to the court's receipt of its official copy of said decision
dissolving
the injunction and even before the finality of the same.
Judge Santiago
submitted his explanation on December
11, 1996, which the Court noted on January 17, 1997. With the filing of
the memoranda of the parties, the petition is now ripe for resolution.cralaw:red
The pith of the
matter before Us is the existence
of good reasons which would justify execution pending appeal. In the
absence
of such good reasons, it is incumbent upon the reviewing court, such as
the Court of Appeals, to issue the writ of certiorari and failure to do
so would constitute grave abuse of discretion on its part.cralaw:red
It is in this
regard that We find that the Court
of Appeals committed grave abuse of discretion in sustaining the trial
court. When Judge Santiago resolved the first ex parte manifestation
and
motion, the applicable provision was Section 2, Rule 39 of the former
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, 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 prevailing
doctrine and principle then which
continues to be the same as provided in Paragraph 2, Section 2 of Rule
39 of the 1997 Rules of Civil Procedure is that discretionary
execution
is permissible only when good reasons exist for immediately executing
the
judgment before finality or pending appeal or even before the
expiration
of the time to appeal. Good reasons consist of compelling circumstances
justifying the immediate execution lest judgment becomes illusory, or
the
prevailing party may after the lapse of time become unable to enjoy it,
considering the tactics of the adverse party who may apparently have no
case except to delay. A long line of jurisprudence indicates what
constitute
good reasons as contemplated by the Rules, the following being merely
representative
of the same:
1. When in an intestate proceeding which
has
been pending for almost 29 years, one group of heirs has not yet
received
the inheritance due them when the others have already received theirs,
or are about to do so [Borja vs. Encarnacion, 89 Phil 239 (1951)];
2. The Advanced age of the prevailing
party
(Borja
vs. Court of Appeals, 196 SCRA 847 [1991]; De Leon vs. Soriano, supra);
3. When the defeated party is in imminent
danger
of insolvency (Hacienda Navarro vs. Sabrador, 65 Phil. 536 [1938]; Lao
vs. Mencias, 21 SCRA 1021 [1967]; Santos vs. Mojica, 26 SCRA 607
[1969];
City of Manila vs. Court of Appeals, 72 SCRA 98 [1976]; De los Reyes
vs.
Capulong, 122 SCRA 631 [1983]; PVTA vs. Lucero, 125 SCRA [1983]);
4. When the appeal is dilatory and the
losing
party intends to encumber and/or dispose of the property subject of the
case during the pendency of the appeal in order to defraud or deprive
the
plaintiff of proprietary rights and defeat the ends of justice (Home
Insurance
Company vs. Court of Appeals, 184 SCRA 318 [1990]); and
5. Deterioration of commodities subject
of
litigation
(Federation of United Namarco Distributors, Inc. vs. National Marketing
Corp., 4 SCRA 867 [1962]).
The supposed
good reasons relied upon by Judge Santiago
to justify the discretionary execution pending appeal are spelled out
in
the May 7, 1996 Order, reading in relevant part as follows
This Court has given serious thoughts on
the
restrictive application of Section 2, Rule 39 of the Rules of Court.
Attached
to the "Reply to the Opposition" filed by plaintiffs, are two public
documents.
As Annex A, the original carbon copies of the summons and complaint in
the case entitled Solid Bank Corporation vs. Falcon Garment Corporation
et, al., in Civil Case No. 96-76567, a case for collection of sum of
money
and replevin [hereafter, referred to as Complaint]. And as Annex B, the
original copy of a police blotter of the Center Police District
Command,
Police Station No. 2, Baler St., Quezon City [hereafter referred to as
police blotter]. It is observed that the complaint filed by Solidbank
against
Falcon supports the material allegations of plaintiffs in the hearing
as
reproduced above and as also quoted by defendant in its opposition. The
threats of impending criminal and civil cases as alleged by plaintiffs
are now proven and established to be real. The complaint shows that
Falcon
is now being sued for non-payment of its loan with Solidbank. The
checks
issued by Falcon to Solidbank, forming part as Annexes D, E, F, G, H
and
I of the complaint, bounced for being drawn against insufficient funds.
Annexes J, J-1, J-2, J-3 and J-4 also for the complaint, are written
demands
which carry the threat of criminal action for violation of Batas
Pambansa
Blg. 22 against Falcon Garment Corporation and/or its officers by
Solidbank
on February 14, 1996, seized the machineries, office and factory
equipment
of Falcon. The police blotter even enumerates these machines and office
equipment. With the seizure of plaintiffs' instruments in the operation
of its business, the filing of collection cases against it, the threat
of criminal prosecution against its officers the imminent threat to its
industrial peace, it is not remote that plaintiffs' survival hangs on
the
balance. There is truth therefore to plaintiffs' claim that "its only
hope
for survival and arresting threats of civil and criminal cases, is the
immediate execution of the judgment." This Court, also takes into
consideration,
that plaintiffs' ownership over the funds sought to be reinstated to
Current
Account No. 25-00640-7, is not in dispute. All the circumstances
enumerated
by plaintiffs under par. 3 of its motion combined with the facts
established
by the complaint of Solidbank against Falcon and the police blotter,
viewed
from the above quoted opposition of defendant, to the mind of this
Court,
constitute a sufficient evidence of good reason in support of
plaintiffs'
subject motion. Further and significantly taking into consideration
plaintiffs'
readiness to pay defendant's counterclaim of P4,700,000.00 by deducting
the same from plaintiffs' principal account. [Rollo, pp. 40-41].
The
above-stated order quotes the following transcribed
testimony of Magin Tabuso, witness for private respondents, thus
ATTY. MAHINAY: [on direct examination]
Now, as an overall effect of the
unauthorized
withdrawal or transfer of account of your corporation, can you tell
what
is its effect insofar as the operation of your corporation is concerned?
It has great effect on the corporation as
a
whole
because as our credit today we have an amount of P12,000,000.00 plus
and
one of the prominent creditors is PBCom and also Solid Bank.
Q. Do you have complete list of
those
creditors
which you mentioned you have not paid as a result of the unauthorized
withdrawal
or transfer of your account?
A. Yes, we were not able to pay
them as
a result of those unauthorized withdrawals.
Q. There are lists of your
creditors in
paragraph 5.3 of your complaint, are they the same creditors you are
talking
about?
Q. Inasmuch as you said that these
creditors
were not paid, what particular action were undertaken by these
creditors
against your company?
A. Our credit lines from the banks
and
from the other creditors were closed, sir.
A. And we were not able to serve
orders
of valued customers because we're not able to meet the production due
to
financial difficulties.
Q. Your claims of alleged illegal
transfer
of withdrawals, does this affect also the industrial peace of your
company?
A. Yes, sir. There was a growing
threat
in the industrial peace of our company.
Q. How many employees are holding
your
staff?
A. We have about 200 workers, sir.
Q. What particular threat are you
talking
about?
A. Usually these workers are
dependent
from our production and so they started to feel restless and insecure
sometimes
and they feel demoralized, at times which led us to attack, it
paralyzes
the whole operations. [Rollo, pp. 39-40].
The trial court
concluded that the foregoing statements
presented during the hearing of the motion for execution pending appeal
constitute good reasons for the discretionary execution. The Court of
Appeals
agreed, but this Court is of a different persuasion and view. The
reasons
relied upon are not compelling and thus can not constitute good reason.
It is significant to stress that private respondent Falcon is a
juridical
entity and not a natural person. Even assuming that it was indeed in
financial
distress and on the verge of facing civil or even criminal suits, the
immediate
execution of a judgment in its favor pending appeal cannot be justified
as Falcon's situation may not be likened to a case of a natural person
who may be ill or may be of advanced age. Even the danger of extinction
of the corporation will not per se justify a discretionary execution
unless
there are showings of other good reasons, such as for instance,
impending
insolvency of the adverse party or the appeal being patently dilatory.
But even as to the latter reason, it was noted in Aquino vs. Santiago
(161
SCRA 570 [1988]), that it is not for the trial judge to determine the
merit
of a decision he rendered as this is the role of the appellate court.
Hence,
it is not within competence of the trial court, in resolving a motion
for
execution pending appeal, to rule that the appeal is patently dilatory
and rely on the same as its basis for finding good reason to grant the
motion. Only an appellate court can appreciate the dilatory intent of
an
appeal as an additional good reason in upholding an order for execution
pending appeal which may have been issued by the trial court for other
good reasons, or in cases where the motion for execution pending appeal
is filed with the appellate court in accordance with Section 2,
Paragraph
[a], Rule 39 of the 1997 Rules of Court.
What is worse,
only one case was actually filed
against Falcon and this is the complaint for collection filed by
Solidbank.
The other cases are "impending", so it is said. Other than said
Solidbank
case, Falcon's survival as a body corporate can not be threatened by
anticipated
litigation. This notwithstanding, and even assuming that there was a
serious
threat to Falcon's continued corporate existence, We hold that it is
not
tantamount nor even similar to an impending death of a natural person.
The material existence of a juridical person is not on the same plain
as
that of human life. The survival of a juridical personality is clearly
outweighed by the long standing general policy of enforcing only final
and executory judgments.cralaw:red
In the recent
case of David vs. Court of Appeals
[G. R. No. 126556, July 28, 1997], we reiterated our pronouncement in
Roxas
vs. Court of Appeals (157 SCRA 370 [1988]) that:
Execution pending appeal in accordance
with
Section
2 of Rule 39 is, of course, the exception. Normally, execution of a
judgment
should not be had until and unless it has become final and
executory i.e., the right of appeal has been renounced or
waived, the
period
for appeal has lapsed without an appeal having been taken, or appeal
having
been taken, the appeal has been resolved and the records of the case
have
been returned to the court of origin, in which case, execution shall
issue
as a matter of right.
On the other hand, when the period of
appeal
has not expired, execution of the judgment should not be allowed, save
only if there be good reasons therefor, in the court's discretion. As
provided
in Section 2, Rule 39 of the Rules, the existence of good reasons is
what
confers discretionary power on a Court to issue a writ of execution
pending
appeal. The reasons allowing execution must constitute superior
circumstances
demanding urgency which will outweigh the injury or damages should the
losing party secure a reversal of the judgment. [p. 377]
Additionally,
We cannot help observing that the May
7, 1996 order of execution issued by Judge Santiago deliberately
modified
and failed to conform to the dispositive portion of the January 2, 1996
decision rendered by Judge Percival Mandap-Lopez, which is the decision
Judge Santiago's order intended to execute, and that this variance was
upon express motion of Falcon [See prayer of Falcon's Ex-parte
Manifestation
& Motion, Annex 2-Comment, pp. 130-132, Rollo].
The January 2,
1996 decision ordered petitioner
to "restore immediately to plaintiffs Current Account No. 25-00640-7
the
sum of P12,729,092.78, plus interest at the rate of 12% per annum to
commence
from the date of the filing of the complaint until the said amount is
fully
restored, and to operate the said account in accordance with the
instructions
of plaintiffs, acting through its board of directors." In contrast, the
May 7, 1996 order directed petitioner to "immediately pay the sum of
P12,729,092.78,"
plus interest and other damages.cralaw:red
At first glance
the order to restore private respondent's
current account in the aforementioned amount and the order to
immediately
pay the same amount directly to private respondent may seem to be same,
for, after all, upon restoring the said amount, what may prevent the
depositor
from withdrawing the entire amount? However, after more careful and
deliberate
consideration, one will notice a whale of distinction between the two
aforementioned
orders. For one thing, if petitioner PBCom were ordered to credit the
money
judgment to Falcon's current account with its BMA Quezon City Branch
and
to operate said account in accordance with the instructions of the
board
of directors of Falcon, once credited, release of any amount from said
account may be done only upon proper resolution of private respondent
Falcon's
board of directors. On the other hand, the order dated May 7, 1996
directed
the immediate payment to Falcon of the corresponding money judgment
which
may thus be used or misused with or without proper instructions of
Falcon's
board of directors.cralaw:red
Besides, the
harassment complained of by petitioner
bank would not have happened had respondent trial court issued a writ
which
faithfully conformed to the judgment sought to be enforced. If Falcon's
current account were merely credited in accord with the judgment, a
simple
and orderly banking procedure may just have taken place. In fact, it
would
have been absolutely unnecessary to deputize anybody, other than the
sheriff
of the trial court concerned, to enforce the writ ordering petitioner
bank
to restore the current account of private respondent.cralaw:red
It is a
well-settled general principle that a
writ of execution must conform substantially to every essential
particular
of the judgment promulgated. Execution which is not in harmony with the
judgment is bereft of validity. It must conform particularly to that
ordained
or decreed in the dispositive portion of the decision (GSIS vs. Court
of
Appeals, 218 SCRA 233 [1993]). An order of execution which varies the
tenor
of the judgment or exceeds the terms thereof is a nullity (Foremost
Farms,
Inc. vs. Dept. of Labor and Employment, 251 SCRA 123 [1995]; Gamboa's,
Inc. vs. Court of Appeals, 72 SCRA 131 [1976]; Villoria vs. Piccio, 95
Phil. 802 [1954]).cralaw:red
Falcon has
ignored and has remained silent in
regard to PBCom's charge of harassment and irregular resort to armed
policemen
and civilians with acetylene torches in the enforcement of the writ of
execution pending appeal, thus lending credence to PBCom's complaint.
However,
it also appears that petitioner PBCom does not intend to pursue the
administrative
aspect of these alleged irregularities, its prayer in the petition
being
completely silent on these points. Nevertheless, we find it necessary
to
exhort both private respondent and its counsel, as well as public
respondent
sheriffs not to resort to such forms of harassment by using the strong
arms of the law to the prejudice of any party. Barbaric acts such as
those
complained of have no place in a civilized society. It is even more
abhorrent
when such acts are with the participation or at the very least the
acceptance
of a member of the bar who, under his oath, has sworn to uphold the
rule
of law.cralaw:red
WHEREFORE,
premises considered, the instant petition
is GRANTED. The decision of the Court of Appeals dated September 13,
1996
in CA-G. R. SP No. 40636 is hereby ANNULLED and SET ASIDE. The order of
the Regional Trial Court of the National Capital Judicial Region,
Branch
101, stationed at Quezon City, dated May 7, 1996 in Civil Case No.
Q-95-22625
is likewise ANNULLED and SET ASIDE. Accordingly, the trial court is
hereby
ORDERED to determine the exact amount taken by private respondent by
virtue
of the writ or writs of execution issued pursuant to the annulled order
dated May 7, 1996, which amount private respondent is hereby ORDERED to
return to petitioner Philippine Bank of Communications. No special
pronouncement
is made as to costs.cralaw:red
SO ORDERED.
Narvasa, C.J.,
Romero, Francisco and Panganiban,
JJ., concur. |