Philippine Supreme Court Resolutions > Year 2007 > June 2007 Resolutions > [G.R. No. 150151 : June 20, 2007] CENIT LIGHTING (PHILS.), INC. V. GENERAL ELECTRIC PHILS., INC., PHILIPPINE ELECTRICAL MANUFACTURING COMPANY AND EDUARDO LIMCANGCO :

Quoted hereunder, for your information, is a resolution of this Court dated 20 JUNE 2007

G.R. No. 150151 (Cenit Lighting (Phils.), Inc. v. General Electric Phils., Inc., Philippine Electrical Manufacturing Company and Eduardo Limcangco). - Before us is a Motion for Reconsideration dated 3 May 2007 filed by petitioner Cenit Lighting Phils., Inc., seeking to set aside the Resolution dated 7 March 2007 which denied the instant petition for lack of merit. Considering that the petition had been given due course by the Court in a Resolution dated 18 September 2002, an extended disposition of the petition is in order. Hence, the present Resolution.

The adjudication of the petition only calls for the simple application of the established rules and principles governing execution pending appeal under Section 2, Rule 39 of the 1997 Rules of Civil Procedure.

An action for damages was brought by petitioner Cenit Lighting (Phils.), Inc. against respondents based on Article 28 of the Civil Code. After trial, the Regional Trial Court of Manila, Branch 49 (RTC) rendered a decision dated 12 August 1999 in favor of petitioner, which was awarded P400,000.00 as temperate damages, P300,000.00 as attorney's fees, and costs of suit.^[1]

On 9 September 1999, petitioner filed a Motion for Execution Pending Appeal, contending that the judgment in its favor may be rendered meaningless or illusory due to procedural delay in the appeal process; that it should be able to enjoy the awarded damages which had been incurred as early as 1995; and that it was ready to file a bond. The motion was set for hearing on 14 September 1999. However, on 10 September, respondents filed a Motion for Time to Comment, seeking ten (10) days within which to comment on petitioner's motion. Despite the plea, the RTC proceeded to hear the motion as scheduled on 14 September. On the same day, the trial court issued an Order granting the motion upon the filing of a P300,000.00 bond. The bond would be posted by petitioner on 20 September and approved the following day by the RTC. The justification given by the RTC for allowing the motion was contained in the following paragraphs of the Order:

One of the well [-] accepted special and good reasons for immediate execution pending appeal is that, [sic] the winning party, offers or posts a bond to answer for damages (Lu v. Valeriano, 1 11 SCRA 87; De Los Reyes v. Capulong, 112 SCRA 631; Roxas v. CA, 157 SCRA 370; City of Manila v. CA, 72 SCRA 98).

In the case at bench, the prevailing party's motion is anchored upon the reason that plaintiff have [sic] long suffered the damages it sought to recover in this case, as early as the year 1995 and apart from that, plaintiff had manifested its willingness to post a bond for the injury or damage that the defendant may sustain should the latter gets (sic) a reversal of this Court's decision.

Apart from the grounds above setforth [sic] however, it must be stated by this Court that before it rendered the Decision subject of this execution, it had judiciously analyzed every iota of evidence that was offered in this case, and it was only after a very prudent scrutiny thereof, that the Court arrived at its verdict, to the effect, that there was indeed unfair competition employed in this case. It may be due to that reason that the statute confers on Courts which render the decision such discretion to foreordain, whether or not to grant execution, even before appeal is interposed.^[2]

Respondents sought reconsideration of the RTC Order, manifesting their willingness to file a supersedeas bond to stay the execution pending appeal. Nonetheless, the RTC issued an Order dated 27 September 1999 denying the Motion for Reconsideration, noting that it would be useless to allow the posting of the supersedeas bond since it had already approved the bond posted by petitioner.

On 1 October 1999, the Branch Sheriff served the Writ of Execution on respondents who complied with the delivery of a manager's check in the amount of P778,000.00. After such payment, the RTC issued an Order directing respondents to inform the trial court whether they were pursuing their appeal despite the compliance with the writ of execution. With respondents' manifestation with the RTC that they were maintaining their appeal, the records were duly elevated to the Court of Appeals.^[3]

After the Branch Sheriff had executed a Sheriff's Return attesting to the due implementation and full satisfaction of the writ of execution pending appeal, respondents filed a petition for certiorari and prohibition with the Court of Appeals, assailing the RTC orders which respectively granted and reaffirmed the allowance of execution pending appeal. The case was docketed as CA-G.R. SP No. 65051.

On 26 July 2001, the Court of Appeals granted the petition and set aside the assailed orders of the RTC which had granted the motion for execution pending appeal.^[4] It noted that among the requisites for a valid execution pending appeal is "good reasons for issuing execution," the term "good reason" having been defined as "a superior circumstance demanding inquiry as to outweigh the injury or damage of the losing party should it secure a reversal of the judgment on appeal."^[5] The Court of Appeals observed that the two "good reasons" cited by the trial court-the posting of the bond and the claim that the RTC had judiciously analyzed the evidence offered in the case-did not pass the jurisprudential standard set by the Court for allowing motions for execution pending appeal.

Hence, the present petition, which we find without merit.

Preliminarily, we note the claim of petitioner that the Court of Appeals gave due course and granted the petition for certiorari filed by respondents before it, despite the fact that the said civil action was filed more than sixty (60) days from the time they were given notice of the Order granting execution pending appeal.^[6] While the argument is not extensively insisted upon in the petition, respondents remain silent before us on that claim, as was the Court of Appeals in its assailed Decision. It would have been more desirable had the appellate court addressed that issue in its assailed Decision. Yet we do recognize the discretion on the part of the Court of Appeals to extend the benefit of liberal construction of the Rules and accordingly take cognizance of the belated petition. In this particular case, even a facial examination of the assailed RTC Order reveals infirmities so significant that not only does its nullification serve the ends of substantial justice, the demonstration, through a decision on the merits, on how the RTC gravely abused its discretion is a worthwhile exercise that redounds to educational benefit to the members of the bar and bench.

In ruling that the RTC had acted with grave abuse of discretion in allowing execution pending appeal, the Court of Appeals provided an extensive and learned explanation, grounded in the standards set by this Court, to justify its own conclusion:

What is a good reason which may justify the exercise of judicial discretion to grant execution pending appeal? A good reason is a superior circumstance demanding inquiry as to outweigh the injury or damage of the losing party should it secure a reversal of the judgment on appeal. The rule is very strict: absent any good reason stated in the order of execution the same must be struck down as flawed with grave abuse of discretion. (Camlian v. COMELEC, 271 SCRA 757; Jaca v. Davao Lumber Co., 113 SCRA 107)

In light of the foregoing statutory and decisional rules, it is as clear as a morning dew, that respondent judge gravely abused her discretion in issuing the disputed Orders. To support her holding that the posting of a bond is a good reason to justify the execution of a decision pending appeal, she improvidently relied on decisions which have long been interred in the graveyard of discarded jurisprudence. Even by just a cursory reading of the latest text book on remedial law�let alone a serious research�the respondent judge would have informed herself that in a caravan of cases including Roxas v. Court of Appeals, 157 SCRA 370; Stronghold Insurance Co., Inc. v. Court of Appeals, 179 SCRA 117; Provident International Resources Corporation v. Court of Appeals, 259 SCRA 510; David v. Court of Appeals, 276 SCRA 424; and Philippine Bank of Communication v. Court of Appeals, 211 SCRA 546, it has been uniformly held that posting of a bond by itself is not such a good reason to execute a decision pending appeal. What is difficult to comprehend was the respondent judge's citation at Roxas v. Court of Appeals, supra, as authority for the rule that the posting of a bond was a good reason to grant a motion for execution pending appeal. The ruling in that case was precisely the opposite of the respondent judge's opinion. Thus:

"It is not intended obviously that execution pending appeal shall issue as a matter of course. Good reasons, special, important pressing reasons must exist to justify it; otherwise, instead of an instrument of solicitude and justice, it may well become a tool of oppression and inequity. But to consider the mere posting of a bond a 'good reason' would precisely make immediate execution of a judgment pending appeal routinary, the rule rather than the exception. Judgments would be executed immediately, as a matter of course, once rendered, if all that the prevailing party needed to do was to post a bond to answer for damages that might result therefrom. This is a situation, to repeat, neither contemplated nor intended by law."

The other "good reason" given by the respondent judge was the fact that before rendering the Decision, she prudently studied the case and judiciously analyzed every piece of evidence and through it all, she came upon the conclusion that indeed the petitioners were guilty of unfair competition against private respondent. She was therefore impliedly saying that her judgment ought to be executed despite the appeal because having thoroughly studied the case, there was no way her decision would be modified or reversed by the appellate court. That she studied the case very carefully and painstakingly before she wrote her decision is indeed commendable�though �all judges are supposed to do that�and that she had full trust in her competence in the consequential impregnability of her adjudication is of course admirable. But alas, that reason is not recognized either by law or jurisprudence as good enough to justify the execution of a decision pending appeal.

To recapitulate, there was no good reason given in the Order allowing the execution pending appeal. Consequently, the respondent judge acted without legal basis and, therefore, injudiciously. Since the Order and the Writ of Execution are void, the legal and logical consequence is for the private respondent to restitute what it received in consequence thereof.^[7]

Interestingly, petitioner before us does not dispute the characterization offered by the Court of Appeals on why the grounds cited by the RTC were unmeritorious. Instead, petitioner relies on the ample discretion lodged with the RTC in the allowance or disallowance of such motions. This tack is foolhardy. The fact that the trial court is entitled to discretion whether or not to allow execution pending appeal does not leave whatever decision the lower court undertakes on the matter beyond the pale of review by the higher courts. The consistent interpretation of Section 2, Rule 39 of the 1997 Rules of Civil Procedure, which allows execution pending appeal, mandates that there must exist good reasons for issuing execution, and that such reasons must be stated in a special order.

Petitioner further claims that since Section 2, Rule 39 does not specifically enumerate what these "good reasons" are for allowing execution pending appeal, "[a]ccordingly, when the court issued the order in the exercise of its jurisdiction, the court could not be considered as having gravely abused its discretion, as the law [sic] grants said judicial discretion taking into consideration all the prevailing circumstances surrounding the case."^[8] The unstated implication of this statement of the petitioner is that the choice of trial courts whether or not to allow execution pending appeal is beyond the pale of review or disturbance of the higher courts. This conclusion is obviously erroneous.

An order granting or disallowing execution pending appeal is interlocutory in nature, and thus cannot be assailed by way of appeal.^[9] The only mode of judicial review of such orders is by way of the special civil action of certiorari. It is well-settled that a petition for certiorari under Rule 65 is the proper remedy to question an improvident order granting execution pending appeal and thereby relieve the adverse party from the immediate effects thereof.^[10] Indeed, the writ of certiorari lies against an order granting execution pending appeal where the same is not founded upon good reasons.^[11] These doctrines squarely contradict petitioner's understanding of the function of the special civil action for certiorari, as evidenced by the egregiously amiss claim that "[c]ertiorari or prohibition therefore is not proper to control the discretionary power granted to the court by the Rules." After all, since certiorari is predicated on "grave abuse of discretion" by the courts, the underlying presumption is that the extraordinary writ of certiorari avails to check the exercise of discretion by the lower courts.

Rather than staking its cause on the belief that we are ready to concede to what is offered as an extraordinarily emasculated notion of what certiorari is, petitioner should have instead endeavored to demonstrate before us why the particular reasons cited by the RTC in its 14 September 1999 Order were good reasons to allow execution pending appeal. That burden imposes especially in light of the direct attack posed against said reasons by the Court of Appeals' assailed decision. Even if there existed other reasons which might have warranted provisional execution that remained unstated in the RTC's Orders, still the extraordinary relief would not have been allowed considering the requirement that the "good reasons" for allowing execution pending appeal must be stated in a special order.

This petition cannot be granted for petitioner does not offer any defense to the particular reasons cited by the RTC in its 14 September 1999 Order, apart from the bare assertion that "[t]he grant of said order was premised on 'good reasons.'"^[12] We find the appellate court's conclusions on that score to be worthy of adoption by this Court. "Good reasons" has been held to consist of compelling circumstances justifying the immediate execution lest judgment becomes illusory. Such reasons must constitute superior circumstances demanding urgency which will outweigh the injury or damages should the losing party secure a reversal of the judgment.^[13]

As cited by the Court of Appeals, Roxas v. Court of Appeals^[14] made it clear that the mere posting of a bond is not a good reason to allow execution pending appeal, and if that were the case, executions pending appeal would be cast as a general rule, rather than the exception. We have not hesitated to reaffirm this principle several times in recent years,^[15] and the rule is entrenched as stare decisis.

The other "good reason" cited by the RTC in granting execution pending appeal�the professed "judicious analysis" and "prudent scrutiny" of "every iota of evidence it was offered in the case"�is simply a parody. A "good judge" does not a "good reason" make. The utter correctness of the trial court's decision, much less the mere belief therein, does not translate into a compelling circumstance that justifies immediate execution to thwart the transformation of the victory as illusory. Immediate execution compels not because of the merit of the subject decision itself, but due to attending circumstances that render it necessary to execute the decision immediately. These circumstances stand independent of the merits of the decision itself, and indeed a decision ultimately reversed on appeal could have nonetheless been susceptible to immediate execution if the good reasons had existed.

One last issue worth our ink. Petitioner also argues that since respondents had already voluntarily complied with the writ implementing the execution pending appeal, the issues must become moot and academic and respondents estopped from raising them. The Court cannot see how respondents' compliance with a writ of execution can be characterized as "voluntary," as if they had the legal option to defy the writ. Compliance with the writ of execution comes not out of the free will and beneficence of respondents but the patent compulsive force of the law of which a lawful order of a court of law is a manifestation. That respondents had to comply with the writ of execution does not disqualify them from questioning its legal basis through the available processes.

WHEREFORE, petitioner's Motion for Reconsideration dated 3 May 2007 is DENIED with FINALITY. Costs against petitioner.

Quisumbing, J., on official leave.

Endnotes:

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^[1] See rollo, pp. 20-31; Decision penned by Judge Concepcion S. Alarcon-Vergara.

^[2] Id. at 32-33.

^[3] Said appeal was docketed as CA-G.R. CV No. 65755.

^[4] Through a decision of even date, penned by Associate Justice Hilarion Aquino, and concurred in by Associate Justices Ma. Alicia Austria-Martinez (now Supreme Court Associate Justice) and Jose L. Sabio, Jr. See rollo, pp. 36-40.

^[5] Id. at 38.

^[6] See 1997 RULES OF CIVIL PROCEDURE, Rule 65, Sec. 3.

^[7] Rollo, pp. 38-40. Emphasis supplied.

^[8] Id at 14.

^[9] "An order for execution pending appeal is not appealable pursuant to Paragraph 2(f), Section 1, Rule 41 of the Revised Rules of Court. This provision enumerates the judgments or final orders that may be appealed from. It also specifies the interlocutory or other orders from which no appeal can be taken. In the latter instance, the aggrieved party may resort to a special civil action under Rule 65, i.e., a petition for certiorari." Yasuda v. Court of Appeals, 386 Phil. 594, 604 (2000).

^[10] See Planas v. Reyes, A.M. No. RTJ-05-1905, 23 February 2005, 452 SCRA 146, 156.

^[11] See BF Corporation v. Edsa Shangri-la Hotel, 355 Phil. 541, 550 (1998). This point should also address petitioner's argument that "certiorari is not proper in this case, as there is appeal and adequate remedy in the ordinary course of law [as provided for] in Section 5 of Rule 39." See rollo, p. 16.

^[12] Rollo, p. 14.

^[13] Flexo Manufacturing Corporation v. Columbus Foods, Incorporated, G.R. No. 164857, 11 April 2005, 455 SCRA 272, 277.

^[14] No. L-56960, 28 January 1988, 157 SCRA 370.

^[15] See e.g., Stronghold Insurance v. Felix, G.R. No. 148090, 28 November 2006; Heirs of Makabangkit Sangkay v. National Power Corporation, G.R. No. 141447, 4 May 2006, 489 SCRA 401,417; Flexo Manufacturing Corporation v. Columbus Foods, Incorporated, supra note 13.