1

G.R. No. 126592

October 2, 2001

security agencies that failed to qualify obtained a temporary restraining order. In a notice dated July 30, 1993, NFA informed private respondent that it no longer enjoyed the trust and confidence of the former. Hence, its contract would not be extended beyond August 16, 1993. Security service contracts were, however, awarded to other security agencies on August 4, 1993 on a month-to-month basis, pending resolution of the injunction issued against the bidding. Unsatisfied, private respondent on August 9, 1993, filed a complaint docketed as Civil Case No. Q-93-17139, for damages and injunction with prayer for the issuance of a temporary restraining order against NFA and petitioner. A temporary restraining order and later a writ of preliminary injunction were issued. NFA and petitioner questioned the issuance of said writ before the Court-of 1 Appeals, which partially struck down the writ. The CA ruled that since private respondent's contract with NFA had already expired, it could no longer 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 from awarding security service contracts to other security agencies without the requisite public bidding. Petitioner and NFA appealed the CA decision to this Court, which upheld it 2 in G.R. Nos. 115121 to 115125. When we rendered our decision on February 9, 1996, petitioner had already been relieved of his post as NFA administrator. 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 May 14, 1996, to obtain payment for its security services worth more than P26.5 3 million. Petitioner and NFA opposed the motion since, at that time, the pretrial and trial of the case were yet to be held. Meanwhile, lawyers for NFA informed petitioner that they could no longer represent him as he was no longer connected with NFA. On July 16, 1996, NFA filed an amended answer to private respondent's complaint, with a cross-claim against petitioner and a prayer for the issuance of a writ of preliminary attachment.

ROMEO G. DAVID, petitioner, vs. JUDGE TIRSO D.C. VELASCO, SHERIFF ERNESTO L. SULA, and CONTINENTAL 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) annulment of the order of public respondent Judge Tirso D.C. Velasco dated October 9, 1996, granting the motion of private respondent Continental Watchman Security Agency for the issuance of a writ of execution in connection with Civil Case No. Q-93-17139, and its motion for immediate payment, as well as its manifestation with motion to reiterate payment on services actually rendered; (2) annulment of the writ of execution issued pursuant to the order dated 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 provide security services to NFA. Twelve security agencies, including private respondent, were awarded contracts. When the contracts expired, NFA extended them on a periodic basis. When petitioner became NFA administrator, he initiated a review of all security service contracts and the formulation of new bidding procedures for the awarding of such contracts. A pre-qualification, bids, and awards committee was consequently formed on April 6, 1993. An invitation to prequalify and bid for security services was published in a nationwide newspaper in May 1993. Security agencies with existing contracts with NFA were also required to pre-qualify and bid in view, among others, of the change in "bidding jurisdiction". Previously, security agencies provided security for NFA on a regional basis. Under the new rules, security would be provided 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

A hearing was held on private respondent's motion on October 3, 1996, during which private respondent presented a witness who testified as to the amount being claimed by the former for its security services. Petitioner asserts that he was not informed of said hearing. He claims that an NFA lawyer 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 a motion for reconsideration before the trial court, arguing that it was unnecessary since the writ was a patent nullity and that the issue of prematurity and illegality of the writ was already passed upon by public respondent when he ruled on the opposition to the issuance of the writ. Hence, this petition for certiorari, prohibition, and mandamus, with a prayer for a temporary restraining order. Petitioner claims that the remedy of appeal has already been foreclosed with the issuance of the questioned writ of execution, and that there is no other plain, speedy, and adequate remedy in the ordinary course of law. Petitioner cites the following as alleged errors: I RESPONDENT JUDGE VIOLATED THE LAW AND GRAVELY ABUSED HIS DISCRETION AND ACTED WITHOUT JURISDICTION IN GRANTING THE WRIT OF EXECUTION AND ISSUING IT IN CIVIL CASE NO. Q-9317139 WHEN NO PRE-TRIAL AND NO TRIAL HAD BEEN HELD, AND NO DECISION HAD BEEN RENDERED IN SAID CASE. II THE RESPONDENT JUDGE VIOLATED THE LAW AND GRAVELY ABUSED HIS DISCRETION WHEN HE HELD THE HEARING OF OCTOBER 3, 1996 WITHOUT NOTICE TO PETITIONER THUS DEPRIVING HIM OF HIS RIGHT TO DUE PROCESS. III THE RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION IN ISSUING A WRIT OF EXECUTION FOR P8,445,161.00 BASED ON ONE DOCUMENT TESTIFIED TO BY ONE INCOMPETENT WITNESS FOR

SERVICES SUPPOSEDLY RENDERED AFTER THE CONTRACT FOR SERVICES HAD LAPSED. IV EVEN ASSUMING ARGUENDO, THAT THE ORDER . . . WAS THE RESPONDENT JUDGE'S DECISION, AND THE SAME WAS VALID, THE RESPONDENT JUDGE VIOLATED THE LAW AND GRAVELY ABUSED HIS DISCRETION WHEN HE IMMEDIATELY ISSUED A WRIT OF EXECUTION EVEN BEFORE 15 DAYS FROM RECEIPT OF SAID ORDER 5 HAD LAPSED. On January 13, 1997, we issued a temporary restraining order to enjoin respondents from implementing the order dated October 9, 1996 and the writ of execution bearing the same date. On April 28, 1997, we granted the motion filed by NFA to intervene in this case. Petitioner's main contention in this petition is that, under Rule 39, Section 1 7 of the Rules of Court, there must be a final judgment before a writ of execution can be issued. Also, under the Rules of Court, before there could be 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 held and no judgment has as yet been rendered. Thus, no writ of execution may be issued in relation to the case and its issuance by public respondent is "a 8 blatant disregard of fundamental requirements of the rules of court." Petitioner maintains that he was denied his right to due process when he was not informed of the hearing of October 3, 1996. The appearance of the NFA lawyer on petitioner's behalf was allegedly unauthorized. During said hearing, private respondent presented a witness who testified on its money claims. Private respondent also submitted a summary of its claims, which included payment for services rendered, moral damages, and attorney's fees. On the other hand, private respondent maintains that the motion for the issuance of the writ and the writ of execution itself are valid. It anchors its claim on the decision of this Court in G.R. Nos. 115121-25, affirming the decision of the CA in CA-G.R. SP Nos. 32213, 32230, and 32274-76 that had already become final. Private respondent points out that a formal hearing was held by the trial court before it issued the writ of execution, and
6

that it presented evidence to justify its claim against the NFA. Any error in the appreciation by the trial court of the evidence presented cannot be assailed through a petition for certiorari, according to private respondent. Furthermore, private respondent stresses that the questioned writ of execution had already been fully satisfied. It appears, per a sheriff's return dated November 5, 1996, that on October 10, 1996, a day after the writ of execution was issued, Sheriff Ernesto L. Sula served a copy of the writ to the NFA and garnished the amount of P8,445,161.00 from the NFA's deposit 9 with the Philippine National Bank. The NFA, meanwhile, stressed that there was no basis for the issuance of the writ of execution and the award of money to private respondent since there is as yet no final, valid, and executory judgment rendered by the trial court. The case has not even reached the pre-trial stage. At the outset, this Court would like to point out that petitioner was dropped as a defendant in Civil Case No. Q-93-17139, per order of the trial court 10 dated June 20, 1997, following a joint motion to dismiss filed by petitioner 11 and private respondent before the trial court on June 13, 1997. The questioned writ of execution which, strangely, was issued prior to June 12 1997 was directed only against the NFA and not against herein petitioner. Thus, it appears that petitioner has no more standing to question the said writ before this Court, and private respondent has pointed this out to us. However, in the order authorizing the issuance of the writ, it was expressly stated that while the writ would be issued against NFA, it was without prejudice to the latter's cross-claim against petitioner. Therefore, petitioner also stood to be injured by. the issuance and enforcement of the writ of execution 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 than P34 million that the NFA paid to another security agency in a case similar to 13 the present one. Petitioner clearly has a personal, substantial interest in questioning the said writ, an interest in issue and not merely an interest in 14 the question involved or an incidental interest. The parties do not dispute that no trial on the merits was held and no judgment was ever rendered in Civil Case No. Q-93-17139. The Rules of Court, particularly Section 1 of Rule 39, in force at the time the herein controversy arose, provides:

SECTION 1. Execution upon judgments or final orders. Execution shall issue as a matter of right, on motion, upon a judgment or order that disposes of the action or proceeding upon expiration of the period to appeal therefrom if no appeal has been duly perfected. If the appeal has been duly perfected and finally resolved, such execution may forthwith be applied for in the lower court from which the action originated, on motion of the judgment obligee, submitting therewith certified true copies of the judgment or judgments or the final order or orders sought to be enforced and of the entry thereof, with notice to the adverse party. The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of origin to issue the writ 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 of execution is the means by which a party can enforce a final judgment or order of the court. There is nothing to enforce or execute absent a final judgment or order; thus, there can be no writ of execution. In the instant case, the trial court itself was aware that a final judgment was yet to be made concerning Civil Case No. Q-93-17139. Thus, in its questioned order dated October 9, 1996, the trial court stated: xxx xxx xxx

This Court believes that the plaintiff is entitled to recover the amount of P8,445,161.00 representing salaries and wages of its security guards considering the fact that when this Court issued the preliminary injunction, it has the effect of preserving the status quo between the parties during the pendency of the present suit . . . However, reservation is made whether claims for damages can be lawfully obtained by the plaintiff pending the final determination of this case. xxx xxx xxx

Accordingly, the Branch Clerk of this Court is directed to issue a Writ of Execution to be implemented by the Ex-Officio Sheriff or any of her deputies. SO ORDERED.
15

As regards petitioner's contention that the amount awarded to private respondent, through the order for the issuance of a writ of execution, is without basis and is unconscionable, this is a factual matter that should be taken up in the trial of the case. WHEREFORE, the petition is GRANTED. The Order of the Regional Trial Court of Quezon City, Branch 88, dated October 9, 1996, granting private respondent's motion for issuance of a writ of execution, motion for immediate payment, and manifestation with motion to reiterate payment on the services actually rendered, and the Writ of Execution issued pursuant to said order, also dated October 9, 1996, are declared NULL and VOID. The Regional Trial Court of Quezon City, Branch 88, is directed to proceed and resolve Civil Case No. Q-93-17139 with dispatch. No pronouncement as to costs. SO ORDERED. Bellosillo, Mendoza, Buena, and De Leon, Jr., JJ., concur.

(Italics supplied.)

Clearly, the final determination of the issues in Civil Case No. Q-93-17139 was still pending when the trial court granted the motion for the issuance of a writ of execution, and issued the writ of execution itself, both dated October 9, 1996. Noteworthy, private respondent filed a motion for leave to file supplemental 16 complaint, and a supplemental complaint on February 18, 1997, four months after the issuance of the order allowing execution and of the writ of execution itself. There is no rhyme nor reason in the filing of the two pleadings, if a final judgment that would justify the issuance of a writ of execution had already been rendered in the case. Private respondent relies on the decision of this Court in G.R. Nos. 11512125, 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 propriety of the negotiated contracts entered into by the NFA with certain security agencies. Nothing in those cases settled the issues originally raised by private respondent in its complaint in Civil Case No. Q-93-17139. The issuance of the order dated October 9, 1996, and of the writ of execution also on the same date, is patently erroneous. It is without any legal basis and shows manifest ignorance on the part of public respondent judge. He did not even have any discretion on the matter, since the trial court cannot issue a writ of execution without a final and executory judgment. That the writ of execution had already been satisfied does not perforce clothe it with validity. As we have earlier discussed, a writ of execution may only be issued after final judgment. Such a writ issued without final judgment is manifestly void and of no legal effect. It is as if the writ was not issued at all. Seizure of property under a void writ of execution amounts to deprivation of property without due process of law. This Court may direct that whatever action taken under such a void writ be undone. Otherwise, we would be condoning a patent violation of a party's right to due process and allowing one party to unjustly enrich himself at the expense of another.

Footnotes
1

In CA-G.R. No. 32275. Petitioner and NFA also questioned four other writs of preliminary injunction before the CA. All cases CAG.R. Nos. 32230,32274, 32275,32276, and 32213 were consolidated.
2

National Food Authority, et al. v. Court of Appeals, et al., 253 SCRA 470 (1996).
3

Rollo, pp. 55-58. Id., at 77. Id., at 9-10. Id., at 83-85.

Petitioner 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 that finally disposes of the action or proceeding. Such execution shall issue as a matter of right upon the expiration of the period to appeal there from if no appeal has been duly perfected. If the judgment has been duly appealed, execution may issue as a matter of right from the date of the service of the notice provided in section 11 of Rule 51." The amendment introduced by SC Circular No. 24-94 was the rule in effect when this petition was filed.
8

Rollo, p. 13. Id., at 105-106. Id., at 147. Id., at 145. Id., at 78-79.

10

11

12

13

Id., at 215-228, 251-264. See also the demand letter, Rollo, p. 190.
14

Joya v. Presidential Commission on Good Government, 225 SCRA 568, 576 (1993).
15

Rollo, p. 79. Id., at 278-283

16

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 the RTC Pasig Branch 162 and PHILIPPINE COTTON CORPORATION, respondents. DECISION MELO, J.: On June 23, 1983, private respondent Philippine Cotton Corporation (PHILCOTTON) sued petitioners Pacific Mills, Inc. and George U. Lim for collection of a sum of money. On January 11, 1984, PHILCOTTON filed another complaint for collection of a sum of money against petitioners. These two cases, docketed as Civil Cases No. 49881 and 50553, involved four promissory notes amounting to P16,598,725.84 executed by petitioners in favor of PHILCOTTON. The two cases were consolidated and on December 27, 1985, the Regional Trial Court of Pasig found in favor of PHILCOTTON. The judgment was appealed to the Court of Appeals, and thereafter to the Supreme Court as Pacific Mills, Inc. vs. Court of Appeals (206 SCRA 317 [1992]) where, ultimately, petitioners where adjudged liable to PHILCOTTON in the amount of P13,998,725.84, with interests, penalties, and attorneys fees, per ponencia of Justice Feliciano with the concurrence of Justices Gutierrez (separate opinion), Bidin, Davide (now Chief Justice), and Romero. However, after the rendition of the above decision, petitioners alleged that during the pendency of the case before the Court of Appeals, a condonation had been effected by PHILCOTTON in their favor, whereby the interests and penalties awarded by this Court in Pacific Mills vs. CA were extinguished. Consequently, petitioners filed a motion for reconsideration with the Court asking that it reduce the amount awarded to PHILCOTTON. The same was denied by the Court due to lack of merit, thusly: Petitioner raised this question of waiver or condonation only in this Court in its Reply to PHILCOTTONs Comment on the Petition for Review, and then only in a tangential and speculative manner. In its Rejoinder, PHILCOTTON objected to petitioners speculative attempt to raise a new matter, a factual issue, before this Court. The defense of condonation should have been raised in the Court of Appeals where its authenticity and effectivity could have been litigated. Petitioner allegedly learned of the supposed

condonations as early as 12 January 1987, long before petitioner filed its appellants brief with the Court of Appeals on 30 June 1988. Yet petitioner did not plead and litigate the supposed condonation before the Court of Appeals. When the decision in Pacific Mills vs. CA became final and executory, the same was remanded to the Regional Trial Court of Pasig City for execution. During the hearing for the issuance of a writ of execution, petitioners alleged that they had already made partial payments on the amount covered by the promissory notes and that the penalty charges on the loan had already been condoned by PHILCOTTON as early as January 12, 1987. Petitioners alleged that these circumstances constituted supervening events that merited a deduction in the amount payable by petitioners to PHILCOTTON. The trial court, however, ruled that no supervening event had transpired to merit changing the tenor of the judgment against petitioners. Observed thus Judge Padolina: After a thorough scrutiny of the records of the case, the Court opined that no supervening events transpired. The alleged supervening events narrated by the defendants which took place between 1987 to 1988, if true, should have been brought to the attention of the appellate court and/or to the highest tribunal 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 the decision of the Supreme Court final and executory. (p. 156, Rollo) Undeterred, petitioners once again sought the intercession of the Court of Appeals which acknowledged that, indeed, partial payments had been made by petitioners to PHILCOTTON. Accordingly, in its decision dated July 19, 1999, the appellate court modified the trial courts ruling by taking cognizance of the partial payments, in the amount of P3,597,999.97, made by petitioners to PHILCOTTON. However, the appellate court still found no merit in petitioners claim that there had been a condonation effected by PHILCOTTON. Aggrieved, petitioners now come to this Court arguing that there was a condonation executed by PHILCOTTON in their favor and that the same qualifies as a valid supervening event. Petitioners argument holds no water. As correctly pointed out by the Court of Appeals, the issue of condonation has already been settled by this Court in its Resolution dated July 27, 1992.

Therein, we stated that the issue of condonation was a matter of fact which should have been brought to the attention of the Court of Appeals, as this Court is not a trier of facts. Said resolution having attained finality, the same may no longer be questioned. The general rule is that once a judgment becomes 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 injustice in a particular case. As this Court has stated, "[a]ll litigation must at last come to an end, however unjust the result of error may appear. Otherwise, litigation would become even more intolerable than the wrong or injustice it is designed to correct. Considering the litigousness of our people and the volume of litigation being processed in our legal system, the importance of the public policy cannot be overturned (Reinsurance Company vs. CA, 198 SCRA 19 [1991]). Petitioners, however, asseverate that the instant case falls under one of the exceptions to the rule on immutability of judgments, claiming that the fact of condonation constitutes a supervening event which, in the higher interest of justice, 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. In Baclayon vs. CA (182 SCRA 762 [1990]), we stated: [A]ttempts to frustrate or put off enforcement of an executory judgment on the basis of facts or events occurring before the judgment became final cannot meet with success. Facts or events bearing on the substance of the obligation subject of the action should ordinarily be alleged during the issueformulation stage or otherwise by proper amendment, and proved at the trial; if discovered after the case has been submitted but before the decision is rendered, proved after obtaining a reopening of the case; and if discovered after judgment has been rendered but before it becomes final, substantiated at 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 the judgment becomes executory, the only other remedy left to attempt a material alteration thereof is that provided for in Rule 38 of the Rules of Court (governing petitions for relief from judgments), or an action to set aside the judgment on account of extrinsic, collateral fraud.1wphi1 There is no other permissible mode of preventing or delaying execution on equitable grounds predicated on facts occurring before finality of judgment. The alleged condonation purportedly having taken place before the judgment became final, petitioners may not now claim the same as a

supervening event that will justify modifying our previous judgment in this case. WHEREFORE, the petition is DENIED for lack of merit. SO ORDERED. Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.

G.R. No. 102965 January 21, 1999 JAMES REBURIANO and URBANO REBURIANO, petitioners, vs. HONORABLE COURT OF APPEALS AND PEPSI COLA BOTTLING COMPANY OF THE PHILIPPINES INC., respondents. MENDOZA, J.: In Civil Case No. Q-35598, entitled "Pepsi Cola Bottling Company of the Philippines Inc. v. Urbano (Ben) Reburiano and James Reburiano," the Regional Trial Court, Branch 103 rendered on June 1, 1987 a decision, the dispositive portion of which reads: ACCORDINGY, judgment is hereby rendered in favor of plaintiff Pepsi Cola Bottling Co. of the Philippines Inc. 1. Ordering the defendants Urbano (Ben) Reburiano and James Reburiano to pay jointly and severally the plaintiff the sum of P55,000.00 less whatever empties (cases and bottles) may be returned by said defendants valued at the rate 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 of the decision, which stated the value of the cases with empty bottles as P55.00 per case and obtained a favorable decision. On June 26, 1990, judgment was rendered as follows: WHEREFORE, the decision appealed from is SET ASIDE and another one is rendered, ordering the defendant appellees to pay jointly and severally the plaintiff-appellant the sum of P55,000.00 with interest at the legal rate from January 1982. With costs against defendants-appellees. After the case had been remanded to it and the judgment had become final and 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 term of existence to July 8, 1983. The amended articles of incorporation was approved 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 execution alleging 3. That when the trial of this case was conducted, when the decision was rendered by this Honorable Court, when the said decision was appealed to the Court of Appeals, and when the Court of Appeals rendered its decision, the private respondent was no longer in existence and had no more juridical personality and so, as such, it no longer had the capacity to sue and be sued; 4. That after the [private respondent], as a corporation, lost its existence and juridical personality, Atty. Romualdo M. Jubay had no more client in this case and so his appearance in this case was no longer possible and tenable; 5. That in view of the foregoing premises, therefore, the decision rendered by this Honorable Court and by the Honorable Court of Appeals are patent nullity, for lack of jurisdiction and lack of capacity to sue and be sued on the part 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 decision 1 inequitable or impossible. Private respondent opposed petitioners' motion. It argued that the jurisdiction of the court as well as the respective parties capacity to sue had already been established during the initial stages of the case; and that when the complaint was filed in 1982, private respondent was still an existing corporation so that the mere fact that it was dissolved at the time the case was yet to be resolved did not warrant the dismissal of the case or oust the trial court of its jurisdiction. Private respondent further claimed that its dissolution was effected in order to transfer its assets to a new firm of almost 2 the same name and was thus only for convenience.

On February 28, 1991, the trial court issued an order denying petitioners' motion to quash. Petitioners then filed a notice of appeal, but private respondent moved to dismiss the appeal on the ground that the trial court's order of February 28, 1991 denying petitioners' motion to quash writ of 4 execution was not appealable. The trial court, however, denied private respondent's motion and allowed petitioners to pursue their appeal. In its resolution of September 3, 1991, the appellate court dismissed petitioners' appeal. Petitioners moved for a reconsideration, but their motion was denied by the appellate court in its resolution, dated November 26, 1991. Hence, this petition for review on certiorari. Petitioners pray that the resolutions, dated September 3, 1991 and November 26, 1991, of the Court of Appeals be set aside and that a new decision be rendered declaring the order of the trial court denying the motion to quash to be appealable and 6 ordering the Court of Appeals to give due course to the appeal. On the other hand, private respondent argues that petitioners knew that it had ceased to exist during the course of the trial of the case but did not act upon this information until the judgment was about to be enforced against them; hence, the filing of a Motion to Quash and the present petition are mere dilatory tactics resorted to by petitioners. Private respondent likewise 7 cites the ruling of this Court in Gelano v. Court of Appeals that the counsel of a dissolved corporation is deemed a trustee of the same for purposes of continuing such action or actions as may be pending at the time of the dissolution to counter petitioners' contention that private respondent lost its capacity to sue and be sued long before the trial court rendered judgment and hence execution of such judgment could not be complied with as the 8 judgment creditor has ceased to exist. 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, no appeal lies from such an order, otherwise litigation will become interminable. There are exceptions, but this case does not fall within any of such exceptions. In Limpin, Jr. v. Intermediate Appellate Court, this Court held:
9 5

would be interminable, and there would be negation of the overmastering need to end litigations. There may, to be sure, be instances when an error may be committed in the course of execution proceedings prejudicial to the rights of a party. These instances, rare though they may be, do call for correction by a superior court, as where 1. the writ of execution varies the judgment; 2. there has been a change in the situation of the parties making execution inequitable or unjust; 3. execution is sought to be enforced against property exempt 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 and there remains room for interpretation thereof; or, 6. it appears that the writ of execution has been improvidently issued, or that it is defective in substance, or is issued against the wrong party, or that the judgment debt has been paid or otherwise satisfied, or the writ was issued without authority; In these exceptional circumstances, considerations or justice and equity dictate that there be some mode available to the party aggrieved of elevating the question to a higher court. That mode of elevation may be either by appeal (writ of error or certiorari) or by a special civil action of certiorari, prohibition, or mandamus. In these case, petitioners anchored their Motion to Quash on the claim that there was a change in the situation of the parties. However, a perusal of the cases which have recognized such a ground as an exception to the general rule shows that the change contemplated by such exception is one which occurred subsequent to the judgment of the trial court. Here, the change in the status of private respondent took place in 1983, when it was dissolved,

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

10

during the pendecy of its case in the trial court. The change occurred prior to the rendition of judgment by the trial court. It is true that private respondent did not inform the trial court of the approval of the amended articles of incorporation which shortened its term of existence. However, it is incredible that petitioners did not know about the dissolution of private respondent considering the time it took the trial court to decide the case and the fact that the petitioner Urbano Reburiano was a 10 former employee of private respondent. As private respondent says, since petitioner Reburiano was a former sales manager of the company, it could be reasonably presumed that petitioners knew of the changes occurring in respondent company. Clearly, the present case does not fall under the exception relied upon by petitioners and, the Court of Appeals correctly denied due course to the appeal. As has been noted, there are in fact cases which hold that while parties are given a remedy from a denial of a motion to quash or recall writ of execution, it is equally settled that the writ will not be recalled by reason of any defense which could have been made at the time 11 of the trial of the case. Second. The Court of Appeals also held that in any event petitioners cannot raise the question of capacity of a dissolved corporation to maintain or defend actions previously filed by or against it because the matter had not been raised by petitioners before the trial court nor in their appeal from the decision of the said court. The appellate court stated: It appears that said motion to quash writ of execution is anchored on the ground that plaintiff-appelee Pepsi Bottling Company of the Philippines had been dissolved as a corporation in 1983, after the filing of this case before the lower court, hence, it had lost its capacity to sue. However, this was never raised as an issue before the lower court and the Court of Appeals when the same was elevated on appeal. The decision of this Court, through its Fourth 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 capacity to sue, and has since become final and executory on July 16, 1990, and has been remanded to the court a quo for execution. It is readily apparent that the same can no longer be made the basis for this appeal regarding the denial of the motion to quash writ of execution. It should have been made in the earlier appeal as the same was 12 already obtaining at that time.

We agree with this ruling. Rules of fair play, justice, and due process dictate that parties cannot raise for the first time on appeal from a denial of a Motion to Quash a Writ of Execution issues which they could have raised but never did during the trial and even on appeal from the decision of the trial 13 court. Third. In any event, if the question of private respondent's capacity to sue can be raised for the first time in this case, we think petitioners are in error in contending that "a dissolved and non-existing corporation could no longer be represented by a lawyer and concomitantly a lawyer could not appear as 14 counsel for a non-existing judicial person." Sec. 122 of the Corporation Code provides in part: 122. Corporate Liquidation. Every Corporation whose charter expires by its own limitation or is annulled by forfeiture or otherwise, or whose corporate existence for other 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 so dissolved, for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose of and convey its property and to distribute its assets, but not for the purpose of continuing the business for which it was established. At any time during said three (3) years, said corporation is authorized the empowered to convey all of its property to trustees for the benefit of stockholders, members, creditors, and other persons in interest. From and after any such conveyance by the corporation of its property in trust for the benefit of its stockholders, members, creditors and others in interests, all interests which the corporation had in the property in terminates, the legal interest vests in the trustees, and the beneficial interest in the stockholders, members, creditors or other persons in interest. Petitioners argue that while private respondent Pepsi Cola Bottling Company of the Philippines, Inc. undertook a voluntary dissolution on July 3, 1983 and the process of liquidation for three (3) years thereafter, there is no showing that a trustee or receiver was ever appointed. They contend that 122 of the Corporation Code does not authorize a corporation, after the three-year

11

liquidation period, to continue actions instituted by it within said period of three years. Petitioners cite the case of National Abaca and Other Fibers 15 Corporation v. Pore wherein this court stated: It is generally held, that where a statue continues the existence of a corporation for a certain period after its dissolution for the purpose of prosecuting and defending suits, etc., the corporation becomes defunct upon the expiration of such period, at least in the absence of a provision to the contrary, so that no action can afterwards be brought by or against it, and must be dismissed. Actions pending by or against the corporate when the 16 period allowed by the statue expires, ordinarily abate. This ruling, however, has been modified by subsequent cases. In Board of 17 Liquidators v. Kalaw, this Court stated: . . . The legal interest became vested in the trustee the Board of Liquidators. The beneficial interest remained with the sole stockholder the government. At no time had the government withdrawn the property, or the authority to continue the present suit, from the Board of Liquidators. If for this reason alone, we cannot stay the hand of the Board of Liquidators from prosecuting this case to its final conclusion. The provision of Section 78 (now Section 122) of the Corporation Law the third method of winding up 18 corporate affairs finds application. Indeed, in Gelano vs. Court of Appeals, a case having substantially similar facts as the instant case, this Court held: However, a corporation that has a pending action and which cannot be terminated within the three-year period after its dissolution is authorized under Sec. 78 [now 122] of the Corporation Law to convey all its property to trustees to enable it to prosecute and defend suits by or against the corporation beyond the three-year period. Although private respondent did not appoint any trustee, yet the counsel who prosecuted and defended the interest of the corporation in the instant case and who in fact appeared in behalf of the may be considered a trustee of the corporation at least with respect to the matter in litigation only. Said counsel had been handling the case
19

when the same was pending before the trial court until it was appealed before the Court of Appeals and finally to this Court. We therefore hold that there was substantial compliance with Sec. 78 [now 122] of the Corporation Law 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 of dissolution. . . . [T]he trustee may commence a suit which can proceed to final judgment even beyond the three-year period. No reason can be conceived why a suit already commenced by the corporation itself during its existence, not by a mere trustee who, by fiction, merely continues the legal personality of the dissolved corporation should not be accorded similar treatment allowed to proceed to final 20 judgment and execution thereof. In the Gelano case, the counsel of the dissolved corporation was considered 21 a trustee. In the later case of Clemente v. Court of Appeals, we held that the board of directors may be permitted to complete the corporate liquidation by continuing as "trustees" by legal implication. For, indeed, as early as 22 1939, in the case of Sumera v. Valencia, this Court held: It is to be noted that the time during which the corporation, through its own officers, may conduct the liquidation of its assets and sue and be sued as a corporation is limited to three years from the time the period of dissolution commences: but ther is no time limit within which the trustees 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 to complete the work of liquidation within the three-year period or to reduce disputed claims to judgment. The authorities are to the effect that suits by or against a corporation abate when it ceased to be an entity capable of suing or being sued (7 R.C.L., Corps., par. 750); but trustees to whom the corporate assets have been conveyed pursuant to the authority of Sec. 78 [now Sec. 122] may sue and be sued as such in all matters connected with the 23 liquidation. . . .

12

Furthermore, the Corporation Law provides: 145. Amendment or repeal. No right or remedy in favor of or against any corporation, its stockholders, members, directors, trustees, or officers, nor any liability incurred by any such corporation, stockholders, members, directors, trustees, or officers, shall be removed or impaired either by the subsequent dissolution of said corporation or by any subsequent amendment or repeal of this Code or of any part thereof. This provision safeguards the rights of a corporation which is dissolved pending litigation. There is, therefore, no reason why the suit filed by private respondent should not be allowed to proceed to execution. It is conceded by petitioners that the judgment 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 to execute the same is that there is no existing corporation to which they are indebted. Such argument is fallacious. As previously mentioned, the law specifically allows a trustee to manage the affairs of the corporation in liquidation. Consequently, any supervening fact, such as the dissolution of the corporation, repeal of a law, or any other fact of similar nature would not serve 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.

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 OF COURT IN THE PHILIPPINES 648 (1964). 12 Petition, Annex A; Rollo, pp. 8-9. 13 See De 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.

1 Petition. Annex D; Rollo, pp. 14-15. 19 103 SCRA 90 (1981). 2 Id., Annex E; Rollo, pp. 17-18. 20 Id., at 98-99 (emphasis added). 3 Id., Annex F; Rollo, p. 22. 21 242 SCRA 717 (1995). 4 Id., Annex H; Rollo, p. 24-25. 22 67 Phil. 721, 726 (1939). 5 Per Justice Venanciano D. Aldecoa, Jr. and concurred in by Justices Luis L. Victor and Filemon H. Mendoza. 23 Id., at 726.

13

G.R. No. 127851

October 18, 2000

up to the time the full amount is fully paid, as and by way of actual damages; 4. The sum of P1,000,000.00 as and for attorney's fee; plus the costs of the suit. The counterclaim interposed by the defendant is hereby dismissed for lack of evidence to sustain it. SO ORDERED."
3

CORONA INTERNATIONAL, INC., petitioner, vs. THE COURT OF APPEALS and THE PHILIPPINE COCONUT AUTHORITY, respondents. DECISION YNARES-SANTIAGO, J.: May funds of the Philippine Coconut Authority, a public corporation, be garnished on account of an execution pending appeal? This is the pivotal issue raised in the instant petition for review which assails the January 22, 1997 Decision of respondent Court of Appeals in CA-G.R. 1 SP No. 42829 holding that such funds are public funds exempt from garnishment. The facts are simple: On September 10, 1996, the Regional Trial Court of Quezon City, Branch 2 99, rendered a Decision in 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 hereby rendered 1. Ordering the defendant to pay plaintiff the total sum of P9,082,068.00 representing the balance of the contract price for Phase III of the project, the 10% retention for Phases I, II and III of the project, and the contract price for Phase IV of the project; 2. Ordering the defendant to indemnify plaintiff the sum equal to two (2%) per centum of P9,082,068.00 monthly from date of the filing of the complaint up to March 30, 1995, as actual and for damages; 3. Ordering the defendant to indemnify plaintiff the sum equal to 1 and % per cent of P9,082.068.00 monthly from March 30, 1995

On September 25, 1996, petitioner filed a Motion for Execution of Judgment Pending Appeal to which private respondent filed an Opposition. After hearing, the trial court granted the motion for execution pending appeal "if only to prevent the irreparable collapse of" petitioner's business operations. It also considered the appeal taken by private respondent as "patently unmeritorious and would only result in the delay of the final disposition of the case." It, however, required petitioner to post a Twenty Million (P20,000,000.00) bond to protect private respondent in the event its decision is reversed on appeal. With the filing by petitioner of the required bond, a writ of execution was issued, on the strength of which funds of private respondent with the Land Bank of the Philippines, in the amount of Seventeen Million Five Hundred Twenty Nine Thousand Three Hundred Sixty Three Pesos and Seventy Six Centavos (P17,529,363.76), was garnished. The bank, however, refused to release the said amount, prompting petitioner to file a Motion to Require Release of Bank Deposit. Meanwhile, on December 5, 1996, private respondent filed a Motion to Quash Writ of Execution Pending Appeal and Notice of Garnishment alleging that it had not yet received a copy of the Order granting petitioner's Motion for Execution of Judgment Pending Appeal which allowed the garnishment of its funds with the Land Bank of the Philippines. It further contended that the bond filed by petitioner did not bear the court's approval. Finally, it expressed its readiness to file a supersedeas bond to stay execution of the court's judgment. Petitioner filed its Opposition on December 10, 1996. On December 11, 1996, the trial court issued an Order denying private respondent's Motion to Quash and ordered the Land Bank of the Philippines
4

14

to release and turn over to the court sheriff the garnished fund of private respondent immediately upon its receipt of said Order. Private respondent then filed a petition for certiorari with respondent Court of Appeals. On January 22, 1997, the Court of Appeals rendered the assailed Decision, nullifying and setting aside the Order of the trial court granting the execution pending appeal. It also issued a writ of preliminary injunction enjoining the court sheriff from enforcing both the Writ of Execution and Notice of Garnishment against private respondent. Hence, the instant petition for review anchored upon the following grounds "I THE RESPONDENT COURT OF APPEALS ERRED, AS A MATTER OF LAW, IN HOLDING THAT THE TRIAL COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION IN ISSUING THE ORDER (ANNEX "F") ALLOWING EXECUTION PENDING APPEAL, AND ORDER (ANNEX "I") ORDERING THE GARNISHEE TO RELEASE AND TURN OVER THE FUNDS OF RESPONDENT PCA TO DEPUTY SHERIFF JOSE G. MARTINEZ. II THE COURT OF APPEALS ERRED, AS A MATTER OF LAW, IN ENTERTAINING ISSUES NOT RAISED IN THE LOWER COURT TO SUPPORT ITS DECISION REVERSING THE CHALLENGED ORDERS. III THE COURT OF APPEALS ERRED, AS A MATTER OF LAW, IN HOLDING THAT THE PHILIPPINE COCONUT AUTHORITY IS AN AGENCY OF THE NATIONAL GOVERNMENT AND IN HOLDING THAT ITS FUNDS ARE EXEMPT FROM LEVY ON EXECUTION AND/OR GARNISHMENT. IV

THE COURT OF APPEALS ERRED, AS A MATTER OF LAW, IN 5 ISSUING A WRIT OF PRELIMINARY INJUNCTION." It is apparent from the challenged Decision that the rationale for setting aside the execution pending appeal was its finding that the funds of private respondent, being public in nature, cannot be garnished. As argued by petitioner, however, the issue of whether or not the funds garnished were public in nature was not raised in the trial court and was merely entertained for the first time in the certiorari proceedings before the Court of Appeals. We agree with petitioner on this ground and so rule that not having been raised below, such an issue could no longer be considered 6 in the Petition for Certiorari before the Court of Appeals. This leaves us with the question of whether or not there is basis to sustain execution pending appeal ordered by the trial court. Section 2, Rule 39 of the 1997 Rules of Civil Procedure lays down the rule for execution pending appeal, categorized as discretionary execution, to wit "SEC. 2. Discretionary execution. (a) Execution of a judgment or final order pending appeal. - On motion of the prevailing party with notice to the adverse party filed in the trial court while it has jurisdiction over the case and is in possession of either the original record or the record on appeal, as the case may be, at the time of the filing of such motion, said court may, in its discretion, order execution of a judgment or final order even before the expiration of the period to appeal. After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in the appellate court. Discretionary execution may only issue upon good reasons to be stated in a special order after due hearing." It is evident from the foregoing that a primary consideration for allowing execution pending appeal would be the existence of good reasons. In turn, "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

15

will outweigh the injury or damages should the losing party secure a reversal 7 of the judgment. We note that the reason of the trial court in granting execution pending appeal was to prevent the irreparable collapse of petitioner's business operation 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? Will this outweigh the injury or damage caused private respondent should the latter 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's business operation, as feared by the trial court, is illusory. As manifested by private respondent, petitioner has an application for the expansion of its 8 operations with the National Telecommunications Commission. Evidently, such an application would not have been filed had petitioner truly been in the brink of financial bankruptcy.1wphi1 Moreover, the latest financial report submitted by petitioner to the Securities and Exchange Commission, on the 9 records, would readily show that its assets exceed its liabilities. We also note that the property bond offered by petitioner and accepted by the trial court has already been conveyed to Natas-ya Enterprises, Inc. via a Deed of Exchange dated January 30, 1996 and registered on July 25, 1997. Said Natas-ya Enterprises is now the registered owner of the subject property under Transfer Certificate of Title No. N-179573 of the Register of Deeds of Quezon City. The same property is further the subject of a case pending before the Quezon City Regional Trial Court. Clearly, then, this property bond can no longer serve its purpose as security for damages that may be obtained by private respondent on account of execution pending appeal. In upholding the disallowance of the execution pending appeal ordered by the trial court, albeit on different grounds, we are guided by the rule that execution pending appeal must be strictly construed being an exception to 10 the general rule. So, too, execution pending appeal is not to be availed of 11 and applied routinely, but only in extraordinary circumstances. Here, with the 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 pending appeal would cause private respondent which is a public corporation tasked to implement the national policy of the State to promote the rapid integrated development and growth of the coconut and palm oil industry and to ensure that the coconut farmers become direct participants of such development 12 and growth. Among the funds held by private respondent which would be subject to execution pending appeal would be coconut levy funds vital both to the coconut industry and to coconut farmers, which being vested with public interest, we are duty bound to protect. Weighed against these considerations, execution pending appeal further proves unwise. WHEREFORE, for the reasons aforementioned, the Petition for Review is hereby DENIED. SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur. Footnotes
1

See Petition, Annex "A"; Rollo, pp. 46-56. Id., Annex "C"; Rollo, pp. 61-77. Id., at p. 77. Id., Annex "I"; Rollo, pp. 100-102. Petition, p. 12; Rollo, p. 14.

See Buag v. Court of Appeals, G.R. No. 107364, 303 SCRA 591 [1999].
7

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

Docketed as National Telecommunications Commission Case No. 92-211.

9

Petition for Certiorari, Annex "G"; Records, CA-G.R. SP No. 42829, pp. 44-48.

16

10

Planters Products, Inc. v. Court of Appeals, G.R. No. 106052, 22 October 1999.
11

Molina v. Presiding Judge of RTC, Quezon City, G.R. No. 112564, 277 SCRA 342 [1997].
12

Presidential Decree No. 1468, Sections 2 & 3.

17

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 be executed 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 Certiorari under Rule 45 of the 2 Rules of Court seeking the reversal of the August 14, 1998 Decision of the 3 Court of Appeals (CA) in CA-GR SP No. 47405, the dispositive portion of which reads: WHEREFORE, based on the foregoing, the instant Petition is hereby GRANTED. The challenged ORDER of respondent Court, dated October 2, 1997, is hereby ANNULLED and SET ASIDE insofar as it orders partial execution pending appeal. No pronouncement as to costs. The Order annulled by the CA was a modification by the trial court of the 6 latter's Decision dated February 25, 1997 in Civil Case No. 8737, Bonifacio Sanz Maceda Jr. and Teresita Maceda-Docena v. Development Bank of the Philippines 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] of a Complaint for Specific Performance with Damages against [private 8 respondent] and one of its managers, Oscar De Vera. In their Complaint, [petitioners] alleged that they were the owners of the old Gran Hotel in Tacloban City; that pursuant to their plan to build a new Gran Hotel, they
7 4 5 1

applied for an Eleven Million Pesos (P11,000,000.00) loan with [private respondent], submitting to the latter a project study of the new hotel, the Philippine Tourism Authority's approval of the project, as well as the plans and specifications of the new Gran Hotel; that on July 28, 1976, petitioner approved 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 several parcels of land as well as on assets they would acquire out of the proceeds of said loan, to sign a Promissory Note in the amount of Seven Million Three Hundred Thousand Pesos (P7,300,000.00); that the contract for the new Gran Hotel was awarded to Moreman Builders Co., which demolished the old Gran Hotel and proceeded to build the new Gran Hotel; that payment to said contractor was to be taken from the approved Seven Million Three Hundred Thousand Pesos (P7,300,000.00) loan, on a progressive manner, based on actual construction or work accomplishment; that they were required to advance, as they did advance, to the contractor their required equity; that as of June 24, 1977, they have advanced to the contractor the sum of One Million Two Hundred Sixty Two Thousand Nine Hundred Ninety Eight Pesos and Thirty Eight Centavos (P1,262,988.38); that [private respondent] had also released a total of One Million Nine Hundred Eleven Thousand Three Hundred Sixty Pesos (P1,911,360.00), out of their loan, to the contractor; that [private respondent], through its officer in charge of the project, defendant Oscar De Vera, conspired with the contractor to enable the latter to secure undue fund releases from their loan; that this was done by the bloating of the value and percentage of construction work; that the contractor was able to acquire sixty percent (60%) of the cost of the projected hotel even as its actual accomplishment was only fifteen percent (15%); that [petitioners] were compelled to file a Complaint for Rescission of Contract and Damages against the contractor; that they also filed a complaint 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 items they had supplied; that [private respondent] engaged in a series of dilatory effects in the release of their loan funds until the period of their loan availment lapsed; that [private respondent] has threatened to foreclose on the mortgages they had executed for their loan; and that [private respondent's] acts prevented them from completing the new Gran Hotel and from realizing profits therefrom. [Petitioners] thus prayed (1) that [private respondent] 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/or loss of income, (b) actual damages representing additional costs or price increase in construction labor and materials, (c) moral damages, (d)

18

exemplary damages, (e) attorney's fees, litigation expenses and costs of suit.1wphi1.nt In their Answer to the Complaint, [private respondent] and Oscar De Vera averred that releases on the loan of [petitioners] to the contractor were made through [Petitioner] Bonifacio Maceda, Jr., that on account of the civil case filed by [petitioners] against the contractor, [private respondent] was enjoined from making any further releases on [petitioners'] loan; that while the trial court decided in favor of [petitioners], still [private respondent] could not make any releases on their loan considering the appeal filed by the contractor; that while said case was pending, at least two suppliers filed cases against [petitioners] for non-payment of salaries/wages and costs of suppliers; that said pending case also caused the construction of the hotel project to stop and the period of the loan availment to lapse; that during the negotiation for revival of the loan, [private respondent] requested [petitioners] to submit new cost estimates and quotations inasmuch as the original cost estimates prepared in 1976 were no longer sufficient to complete the project because of the intervening price increases in labor and materials; that [petitioners] insisted that the project be completed on the original cost estimates, with the project reduced to fifty (50) instead of the original planned seventy five (75) rooms; that during several conferences held between them, [private respondent] informed [petitioners] of the terms and conditions for the resumption of their loan; that on July 18, 1979, it authorized further releases on [petitioners'] loan; that said releases amounted to a total of Five Million Three Hundred Forty Seven Thousand Five Hundred Ten Pesos and Ninety Centavos (P5,347,510.90); that no further releases were thereafter made in view of [petitioners'] failure to comply with the equity build up requirement; that [petitioners] applied for an additional 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 Five Million Three Hundred Forty Seven Thousand Five Hundred Ten Pesos and Ninety Centavos (P5,347,510.90), which was the amount of the total releases made on their original loan amount; that notwithstanding said reduction of amount of the loan, [petitioners] failed to make payments according to schedule; and that having agreed to all the terms of their transactions, [petitioners] are estopped from questioning the conditions of the loan as well as the releases thereof. After praying for dismissal of the Complaint, [private respondent] and defendant Oscar De Vera counterclaimed for P200,000.00 by way of attorney's fees and litigation expenses, 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 renders judgment, to wit: 1. The preliminary injunction issued on December 12, 1984 is hereby made permanent; 2. Defendant Development Bank of the Philippines is ordered, to wit: a) To immediately release in favor of plaintiff Bonifacio Maceda, Jr. the unreleased loan balance of P1,952,489.10. In addition, as to the portion thereof amounting to P1.003M, DBP is further directed to pay interest thereon at the rate of 12% per annum beginning and 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 Five Hundred Thousand Pesos as moral damages; d) To pay plaintiff Bonifacio Maceda, Jr. the sum of One Hundred Thousand Pesos as exemplary damages; e) To pay plaintiff Bonifacio Maceda, Jr. the sum of P17,547,510.90 representing the additional cost to complete and finish the New Gran Hotel; f) To pay plaintiff Bonifacio Maceda, Jr. the sum of P100,000.00 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 a Motion for Reconsideration, seeking to increase the amount awarded to them by [the trial] [c]ourt. They also filed a Motion for Execution Pending

19

Appeal. [Private respondent] filed its corresponding Opposition to the two Motions. 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 loan balance of P1,952.489.10 as well as payment of 12% interest p.a. on the amount of P1.003M, from January, 1978; and (b) the payment of P17,547,510.90 representing the additional cost to finish the hotel together with 6% interest thereon p.a. from 1987. On November 5, 1997, [private respondent] filed its Notice of Appeal from the February 25, 1997 Decision, as amended by the October 2, 1997 Order of [the trial] [c]ourt. On the same date, it also filed a Motion for Reconsideration of the October 2, 1997 Order insofar as it grants execution pending appeal. Thereafter, or on March 26, 1998, it filed a Supplemental Motion for the approval of a supersedeas as bond in the amount of P35M and 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 and Supplemental Motion. The Development Bank of the Philippines (DBP) appealed the trial court Decision to the CA. Thereafter, it also filed with the appellate court a Petition for Certiorari challenging the lower court's October 2, 1997 Order granting execution of the said Decision pending appeal. Ruling of the Court of Appeals Ruling in favor of respondent bank, the CA concluded that there existed no sufficient ground or compelling reason to allow the execution of the judgment pending appeal. It held: There is nothing in the circumstances surrounding the case at bench which is of an urgent nature. As may be gleaned from the records and as admitted by private respondents, themselves, the project has reached 85% completion. With private respondents' undenied "seven-figure assets and capability to put in the required equity participation", We see no urgent financial need on the part of private respondent. Then, too, with the financial standing of private

respondents and their assets, including the hotel itself which they claim to have an appraised value of P16,632,129.40, private respondents can very well obtain loans for the project from other financial entities. On the other hand, considering that the amounts subject of the execution pending appeal form only a small percentage of the amount it would take to complete the project, We see no compelling reason to prematurely order its release since it would have no substantial effect anyway on the project. Moreover, measured against the injury or damage which such execution would pose on petitioner should it secure a reversal of the judgment, the reasons relied upon by respondent Court markedly pales in comparison. After all where execution made pending appeal is overturned, complete restitution is required. xxx xxx xxx

All things considered, respondent Court should have approved the Thirty Five Million (P35,000,000.00) supersedeas bond posted by petitioner. Said amount can adequately assure performance of whatever judgment may be awarded in favor of private respondents. Neither is there any danger that the awards in favor of private respondents will not be answered or that justice will be frustrated as petitioner is a government owned and controlled financial institution with an authorized capital stock of Five Billion Pesos (P5,000,000,000.00). With the stable and sound condition of petitioner, immediate execution is not justified as there is no danger 9 of the judgment becoming illusory. Hence, this Petition.
10

Issue The solitary issue in this case is whether or not the Court of Appeals erred when it reversed the October 2, 1997 Order of the trial court granting execution of the latter's Decision pending appeal. More simply stated, are there good reasons to justify execution of the trial court judgment pending appeal? This Court's Ruling The Petition is not meritorious.

20

Sole Issue: Execution of Judgment Pending Appeal The execution of a judgment during the pendency of an appeal is 11 governed by Section 2, Rule 39 of the 1997 Rules of Court, which reads: Sec. 2. Discretionary execution. (a) Execution of a judgment or final order pending appeal On motion of the prevailing party with notice to the adverse party filed in the trial court while it has jurisdiction over the case and is in possession of either the original record or the record on appeal, as the case may be, at the time of the filing of such motion, said court may, in its discretion, order execution of a judgment or final order even before the expiration of the period to appeal. After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in the appellate court. Discretionary execution may only issue upon good reasons to be stated in a special order after due hearing. xxx xxx xxx

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 16 inequity." Moreover, "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 17 judgment." In its Order dated October 2, 1997, the trial court ordered execution pending appeal of the following awards: (a) To immediately release in favor of the plaintiff Bonifacio Maceda, Jr. the unreleased loan balance of P1,952,489.10. In addition, as to the portion thereof amounting to P1.03M, DBP is further directed to pay interest thereof at the rate of 12% per annum beginning and counted from January 1978; xxx xxx xxx

(e) To pay plaintiff Bonifacio Maceda Jr. the sum of P17,547,510.90 representing the additional cost to complete and finish the New Gran Hotel, plus six percent interest (6%) thereon effective as of the year 1987 until 18 finality. In other words, the trial court, pending the appeal, ordered the immediate release by the bank of (1) the unreleased amount of the loan agreement and (2) the sum needed to complete the construction of the hotel, subject to the filing of a bond of equivalent amount. The "good reason" invoked by the trial court was the urgency resulting from almost twenty years of delay and the yearly increase in costs that made the completion of the hotel construction more difficult. We are not convinced.

This rule is strictly construed against the movant, for "courts look with disfavor upon any attempt to execute a judgment which has 12 not acquired a final character." In the same vein, the Court has held that such execution "is usually not favored because it affects the rights of the parties which are yet to be ascertained on 13 appeal." There are three requisites for the grant of an execution of a judgment pending appeal: "a) there must be a motion by the prevailing party with notice to the adverse party; b) there must be a good reason for execution pending appeal; and c) the good reason 14 must be stated in a special order." Underscoring the importance of the requisite "good reasons," the Court ruled in Ong v. Court of 15 Appeals:

21

Good Reasons not Established To repeat, an execution pending appeal is an extraordinary remedy, being more of the exception rather than the rule. It is allowed only upon showing of "good reasons" by the movant. In the present case, we find no justification for the execution, pending appeal, of the awards of P1,952,489.10 under disposition (a) and more than P17 million under disposition (e). There is no guarantee that petitioner can indeed complete the project, even if the sum referred to in disposition (e) is immediately released. It must be underscored that this was the amount needed to finish the project way back in 1987 and was based on 1987 prices. Equally unjustified is the release, pending appeal, of the remaining portion of the loan in the amount of P1,952,489.10. As the trial court itself has held in 1987, the award of more than P17 million under disposition (e) was the amount needed to finish the project. Consequently, there was no urgent need for the unreleased portion of the loan. The said amount was relatively minuscule compared with that needed for the remainder of the hotel project and would have little effect on its completion. More important, the "compelling reason" given by the trial court for allowing execution pending appeal is far outweighed by the injury or damage that private respondent would suffer if it secures a reversal of the trial court's judgment. If the trial court is reversed on appeal, petitioners would be hard-pressed to make a complete restitution to private respondent, to which they already owe more than P5 million the amount of their original loan plus accrued interests. In any event, we agree with the Court of Appeals that there is no likelihood that DBP, a government-owned and -controlled corporation, would fail to answer its obligation if the trial court Decision is affirmed. As 19 held in Valencia v. Court of Appeals: If the judgment is executed and, on appeal, the same is reversed, although there are provisions for restitution, oftentimes damages may arise which cannot be fully compensated. Accordingly, execution should be granted only when these considerations are clearly outweighed by superior circumstances demanding urgency and the provision contained in Rule 39, Section 2, requires a

statement of these circumstances as a security for their existence. Reasons Cited by Petitioners In their Memorandum, petitioners passionately argue that DBP, as the lending bank, has the obligation to deliver the full amount of the loan. They allege that the bank "unilaterally reduced the amount of the approved loan 20 and unilaterally terminated the transaction." They also point out that the project has been delayed for 22 years, and that the award of more than P17 million, with interest, for the completion of the hotel "is less in value and purchasing power than the original estimate of P10.5 M had the hotel been finished on its deadline in 1972." These, however, involve issues that should be resolved in the appeal, not in these proceedings. The respondent bank itself contends that it could not release the remaining amount of the loan, because of the stipulation in the loan agreement that such release is contingent on the amount of work accomplished. Thus, an order of this Court releasing the balance of the loan, notwithstanding the bank's argument to the contrary, would certainly be construed as a definitive judgment on the present issue. Petitioners' argument that the project has been delayed for twenty-two years is not persuasive either. The release of the amount at this time is tantamount to a pronouncement that respondent bank was responsible for the delay. Moreover, petitioners are in effect taking the position that the undertaking of the bank was meant to finance the complete construction of the hotel. The Court 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 must be 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 the Court of Appeals committed reversible errors in overturning the trial court's Order. As movants, they have the burden of showing why the lower court's Decision should be executed without awaiting the result of the appeal. Absent such justification, execution pending appeal cannot be granted.1wphi1.nt WHEREFORE, the Petition is hereby DENIED. Costs against petitioner.

22

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

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.
12

Footnotes Valencia v. Court of Appeals, 184 SCRA 561, 568, April 25, 1990 per Regalado, J.
1

Rollo, pp. 3-31. Rollo, pp. 113-121.

13

San Manuel Wood Products, Inc. v. Tupas, 249 SCRA 466, 475, October 25, 1995, per Puno, J.
14

12th Division composed of J. Consuelo Ynares-Santiago, chairman and ponente (now a member of this Court); JJ. Romeo J. Callejo Sr. and Mariano M. Umali, members, concurring.
4

Provident 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. Ibid. Ibid. RTC Order dated October 2, 1997, p. 14; rollo, p. 107. 184 SCRA 561, 568, April 25, 1990, per Regalado, J. Petitioners' Memorandum, p. 20; rollo, p. 195.

Rollo, pp. 94-107. Branch 134, National Capital Judicial Region. Penned by Judge Ignacio M. Capulong; rollo, pp. 37-107.

16

17

18

In the assailed Decision, Petitioners Bonifacio Sanz Maceda Jr. and Teresita Maceda-Docena are referred to as private respondents.
8

19

20

In the assailed Decision, Private Respondent DBP is referred to as petitioner.

9

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

10

The case was deemed submitted for resolution on May 12, 1999, upon receipt by this Court of respondent's Memorandum.
11

Before the 1997 amendments to the Rules of Court, the provision was:

23

G.R. No. 135630

September 26, 2000

INTRAMUROS TENNIS CLUB, INC. (ITC), PHILIPPINE TENNIS ASSOCIATION (PHILTA) and ITC TENNIS PLAYERS, petitioners, vs. PHILIPPINE TOURISM AUTHORITY (PTA), CLUB INTRAMUROS, and COURT OF APPEALS, Second Division, respondents. DECISION GONZAGA-REYES, J.: This petition for certiorari assails two resolutions of the Second Division of the Court of Appeals which granted private respondents motion for execution pending appeal and ordered the Regional Trial Court of Manila, Branch 50 to issue the corresponding writ of execution. The antecedent facts are as follows: Private respondent Philippine Tourism Authority ("PTA") owns the Victoria Tennis Courts located in Intramuros, Manila by virtue of Presidential Decree No. 1763. In a Memorandum of Agreement ("MOA") executed on June 11, 1987, the PTA transferred the management, operation, administration and development of the Victoria Tennis Courts to petitioner Philippine Tennis 1 Association ("PHILTA") for a period of ten (10) years commencing on June 2 15, 1987. Petitioner Intramuros Tennis Club, Inc. ("ITC") is an affiliate of PHILTA and has for its members tennis players and enthusiasts who regularly use the facilities of the Victoria Tennis Courts. On June 26, 1995, and during the effectivity of the MOA, PTA wrote a letter to PHILTA enumerating alleged violations by PHILTA of the terms and conditions of the MOA and demanding the surrender of the possession of 3 the Victoria tennis courts on or before July 25, 1995. On April 11, 1996, PTA wrote a second letter to PHILTA requesting the latter to vacate the premises of said tennis courts to give way to PTAs golf course expansion 4 program with private respondent Club Intramuros. On May 7, 1996, petitioners instituted a case for "preliminary injunction, damages, and prayer for temporary restraining order" with the Regional Trial Court of Manila, which was docketed as Civil Case No. 96-78248. The petition alleged that PTAs demand to vacate was a unilateral pretermination of the MOA, under the terms of which PHILTA was allowed the management of the tennis courts until June 15, 1997. It also alleged that by

complying with PTAs demand to vacate, petitioner ITC stands to sustain liability because it had prior commitments to use the Victoria Tennis Courts for two activities, namely, the International Wheelchair Tennis Clinic on May 14-16, 1996 and the Philippine National Games on May 20-25, 1996. The other grounds cited by petitioners were: the Victoria Tennis Courts are the oldest in the country, and form part of Philippine history and cultural heritage; the Victoria Tennis Courts are one of the few remaining public tennis courts in Metro Manila open to the less affluent; petitioners are maintaining the tennis courts at high cost, and unless the demolition is restrained, they will be unable to recoup their investments; the demolition will result in the displacement of the workers in the tennis courts; and, as players and aficionados of tennis, petitioners stand to lose the camaraderie that playing in Victoria Tennis Courts helped foster among them. The temporary restraining order was granted on May 22, 1996, and petitioners were allowed to retain possession of the Victoria Tennis Courts. Thereafter, or on June 17, 1996, the RTC also granted the writ of preliminary injunction prayed for by petitioners, based upon a finding that PTA in pursuing the golf course expansion program was in effect unilaterally preterminating the MOA. In the same order, it declared that "petitioner ITC is an 5 affiliate of PHILTA that has a right to be protected." On June 16, 1997, private respondents filed a motion to dismiss, stating that in view of the expiration of the MOA petitioners cause of action was rendered moot and academic. However, petitioners maintained that their petition was also an action for damages; hence, there are other issues for resolution despite the termination of the MOA. The RTC granted the motion to dismiss, finding that based on the allegations of the petition in relation to the reliefs demanded, petitioners only purpose was to stop PTA from pursuing the golf course expansion program on account of the tennis activities that will utilize Victoria Tennis Courts as venue. It also found that the evidence submitted by the parties at the trial revolved around the issue of whether the preliminary injunction should be declared permanent or lifted. This issue has resolved itself when the MOA expired. The RTC noted that by the terms of the MOA the contract between PTA and PHILTA was actually one of lease --- and under the law on leases, upon the expiration of the period of lease the lessor is entitled to be restored to the possession of the property. Moreover, the RTC declared, the petition before it cannot be considered an action for damages because based on standing case law the amount of

24

damages must be stated in the complaint for purposes of determining 6 jurisdiction and the appropriate amount of docket fees. The court did not take cognizance of petitioners claim for damages considering that the amount thereof was nowhere mentioned in the petition, whether in the prayer or in the body of said pleading. Hence, the RTC ruled to lift the writ of preliminary injunction and to declare private respondent PTA entitled to the possession of Victoria Tennis Courts. It further declared that petitioners action has become moot and academic by reason of the expiration of the MOA upon which petitioners rights were based. Petitioners appealed to respondent court. While the case was pending therewith, private respondents filed a motion for execution of judgment pending appeal invoking that under Section 4, Rule 39 of the 1997 Revised Rules of Court judgments in actions for injunction are not stayed by appeals taken therefrom. Thus: Sec. 4. Judgments not stayed by appeal. --- Judgments in actions for injunction, receivership, accounting and support, and such other judgments as are now or may hereafter be declared to be immediately executory, shall be enforceable after their rendition and shall not be stayed by an appeal taken therefrom, unless otherwise ordered by the trial court. On appeal therefrom, the appellee court in its discretion may make an order suspending, modifying, restoring or granting the injunction, receivership, accounting, or award of support. (Underscoring supplied) The motion alleged that there was an urgent necessity on the part of private respondents to immediately take possession of the Victoria Tennis Courts "by reason of its being heavily deteriorated and unsanitized because of [petitioners] failure to maintain its good condition." It appended a letter by a group of tennis players, addressed to Tourism Secretary Mina T. Gabor, complaining about the state of the facilities and general uncleanliness of the tennis courts and appealing that "the depredations committed by PHILTA 7 and its concessionaires" be corrected. The motion also alleged that the appeal taken by petitioners was frivolous and intended merely to delay the immediate execution of the judgment of the RTC. In their comment to the above motion, petitioners stated that private respondents reliance on Section 4, Rule 39 of the Revised Rules of Court was erroneous because that provision contemplates an instance where an action for injunction was granted, not a situation as the one herein where the judgment was for the lifting of an injunction earlier issued. Rather, petitioners

maintain that the applicable provision is Section 2, Rule 39 of the Revised Rules of Court, which accords the appellate court discretionary power to order execution of a judgment or final order pending appeal, "upon good reasons to be stated in a special order after due hearing." Petitioners further contended that the deterioration and unsanitary conditions of Victoria Tennis Courts alleged by private respondents were unsubstantiated and do not constitute "good reasons" for the wielding by respondent court of its power of discretionary execution. They maintained that their appeal is not merely dilatory, but poses several justiciable issues including the claim for damages which was aborted by the RTCs premature dismissal of the petition. Thus, respondent court should, in the exercise of its discretion whether or not to allow execution pending appeal, lean towards the preservation of petitioners right to appeal. In a resolution dated July 9, 1998, the Second Division of respondent court took into consideration the ground advanced by private respondents, i.e., that the Victoria Tennis Courts are ill-maintained by PHILTA. It granted the motion for execution pending appeal, declaring that since the lease agreement under the MOA had already expired and private respondents had made it clear that there will be no renewal of the said agreement, PTA as lessor is entitled to exercise all its rights of ownership and possession over the Victoria Tennis Courts. It also observed that the petitioners appeal from the order of the RTC was merely dilatory, and that the outcome of the appeal will not in any way alter the fact of private respondents entitlement to the 9 possession and administration of the Victoria Tennis Courts. Thus, the dispositive portion of respondent courts resolution provides: WHEREFORE, for the special reasons set forth above, the motion for execution pending appeal is hereby GRANTED upon payment and approval of this court of a bond in the amount of P800,000.00. SO ORDERED.
10 8

In their motion for reconsideration, petitioners argued that under Section 2, Rule 39 of the Revised Rules of Court respondent court should have conducted hearings to ascertain whether there were "good reasons" to issue the writ of execution pending appeal. Respondent court denied their motion 11 for lack of merit, and declared that contrary to petitioners asseverations, the determination of "good reasons" for allowing execution pending appeal does not strictly require a formal or trial-type hearing; instead, the parties may be heard by way of pleadings. In the case of petitioners, their arguments against private respondents motion for execution pending appeal

25

were heard when they filed their comment thereto. Moreover, under Rule 8 of the Revised Internal Rules of the Court of Appeals --Section 1. Oral Argument. --- The necessity or propriety of oral argument shall be determined by the Justice assigned to study and report on the case and the oral argument shall be confined to those matters which he may specify. However, in lieu of oral arguments, said Justice may allow the parties to file their respective memoranda within fifteen (15) days from notice. Petitioners also contended that the trial court had no jurisdiction to rule on PTAs possessory rights over the tennis courts, because the appropriate action to determine those rights is unlawful detainer which is under the jurisdiction of MTCs. Respondent court dismissed the argument stating that it was inconsistent of petitioners to now question the RTCs jurisdiction, considering that it was they who instituted the injunction case before the RTC; thus, it appears that they were raising this argument merely because they failed to secure the affirmative reliefs that they sought from that court. Thus, the September 23, 1998 resolution of respondent court reads: WHEREFORE, the motion for reconsideration is denied for lack of merit. The Regional Trial Court of Manila, Branch 50 is hereby ordered to issue a Writ of Execution pursuant to this courts resolution dated July 9, 1998 granting 12 the execution pending appeal. From the above resolutions of respondent court, petitioners filed the instant special civil action for certiorari. The petition, filed on November 17, 1998, alleged that the Court of Appeals committed grave abuse of discretion in the following: a. In granting private respondents Motion for Execution Pending Appeal pursuant to an erroneous or incorrect provision of the Rules of Court; b. In entertaining a "special reason" interposed by private respondents, which was not even inceptually offered in evidence; c. In considering - with unfounded bias, petitioners pending appeal with said respondent court - as "merely intended to delay";

d. In reasoning that the revised Internal Rules of the Court of Appeals can supersede the Rules of Court; e. In assuming that possessory reliefs automatically vest upon private respondents due to the dismissal of the injunction case; and f. In directing the RTC Manila, Branch 50, to issue a Writ of 13 Execution pursuant to the July 9, 1998 Resolution. Anent the first ground, petitioners allege that respondent court wrongly 14 quoted the provisions of Section 2, Rule 39 of the Revised Rules of Court, and that the pertinent provisions are the second and third paragraphs which declare that after the trial court has lost jurisdiction, it is the appellate court in the exercise of its discretion and upon good reasons that may issue the motion for execution pending appeal. They maintained that the "special reason" interposed by private respondents, i.e., that the Victoria Tennis Courts were ill-maintained, was a bare allegation that was not properly substantiated, because the letter of the tennis players to Secretary Gabor 15 was not formally submitted in evidence in the trial court. Moreover, they declared, there was no "judgment" or "final order" to speak of in the instant case because the RTC order dated August 5, 1997 was still the subject of an appeal that is pending with respondent court. They also assailed the conclusion of respondent court that the appeal was dilatory considering that petitioners had "several causes of action which transcend the lease relationship" in the MOA. The fourth assignment of error, meanwhile, asserts that petitioners were entitled to a hearing under Section 2, Rule 39 of the Revised Rules of Court and respondent court erroneously dispensed thereof in favor of the provisions of the Internal Rules of the Court of Appeals that memoranda may be required of the parties in lieu of a hearing. Finally, petitioners argued that respondent court acted hastily and prematurely in ordering the trial court to issue a writ of execution for private respondents to gain possession over the tennis courts, when the dispositive portion of the RTC order lifting the preliminary injunction made no mention of giving possession to private respondents. As declared by petitioners, the dispositive portion of the RTC order dated August 5, 1997 merely reads: WHEREFORE, premises considered, the motion to dismiss filed by PTA is 16 hereby granted. The bond posted by plaintiff is hereby declared released. In response to petitioners arguments, private respondents declared that no grave abuse of discretion may be imputed to respondent court for allowing execution pending appeal to prosper. The matter of "good reasons" as basis of an execution pending appeal is a question that lies within the sound

26

discretion of respondent court, and its finding in the herein case as to the existence of such "good reasons" should be given respect and credence in 17 the absence of evident bad faith. Moreover, execution pending appeal is only a provisional remedy that respondent court allowed private respondents to avail of and should not be interpreted as an adjudication on the merits of 18 the main case still pending before respondent court. Shortly after the filing of the instant petition, or on October 21, 1998, private respondents filed a motion for issuance of a writ of execution with the RTC of Manila, Branch 50, pursuant to the resolutions of respondent court dated July 9, 1998 and September 23, 1998. This motion, however, was not granted by the RTC which, in an order penned by then presiding judge Urbano C. Victorio, Sr., suspended or held in abeyance the issuance of the writ of execution because the records of Civil Case No. 96-78248 are still with respondent court and also "in deference to the Supreme Court" where 19 the instant petition is pending. In a second order which denied private respondents motion for reconsideration, Judge Victorio additionally noted that since the principal cause of action in Civil Case No. 96-78248 was for the issuance of a writ of preliminary injunction and the same has been cancelled or revoked by the RTC on August 5, 1997, there was nothing more for the RTC to execute. Undaunted by these developments, private respondents filed with the RTC a Second Motion for Issuance of Writ of Execution With Leave of Court on November 11, 1999. Private respondents reasoned that the mere pendency of a special civil action for certiorari, commenced in relation to a case pending execution before a lower court, cannot prevent the said lower court from effecting execution in the absence of a writ of injunction from a higher court restraining it from doing so, and in the absence of a final determination from the Supreme Court that the Court of Appeals gravely abused its 20 discretion in ordering the RTC to issue the writ of execution. This motion was granted on February 4, 2000 by Judge Concepcion S. Alarcon-Vergara, who assumed office as presiding judge of RTC Manila, Branch 50 after the 21 retirement of Judge Victorio. Thus, a writ of execution was issued on February 17, 2000 ordering the Sheriff of RTC Manila, Branch 50 to cause petitioners to vacate the premises of Victoria Tennis Courts and to place 22 private respondents in possession of the same. Petitioners attempted to secure before this Court a restraining order against the implementation of the above writ of execution, arguing that such implementation would render the instant petition moot and academic. The Court, however, denied their motion in a resolution dated March 15, 2000.

In their memorandum dated May 27, 2000, private respondents informed the Court that on March 1, 2000 they had gained actual control and possession 23 of the Victoria Tennis Courts. Thus, they submit that the instant petition is now moot and academic. Preliminarily, we find that the petition was not rendered moot or illusory by the fact that execution was effected and possession of the tennis courts restored to private respondents. The resolution of the instant petition requires a determination of whether respondent Court of Appeals gravely abused its discretionary power to order execution pending appeal as prescribed in Section 2, Rule 39 of the 1997 Revised Rules of Court, and where such grave abuse of discretion is established the execution pending appeal pursuant to the resolutions of respondent court may be voided. Thus, the Court finds that the petition presents a live and justiciable controversy. Section 2, Rule 39 of the Revised Rules of Court reads --Discretionary execution. --(a) Execution of a judgment or final order pending appeal. --- On motion of the prevailing party with notice to the adverse party filed in the trial court while it has jurisdiction over the case and is in possession of either the original record or the record on appeal, as the case may be, at the time of the filing of such motion, said court may, in its discretion, order execution of a judgment or final order even before the expiration of the period to appeal. After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in the appellate court. Discretionary execution may only issue upon good reasons to be stated in a special order after due hearing. Based on the foregoing provisions, respondent court may order execution pending appeal subject to the following conditions: (1) there must be a judgment or final order; (2) the trial court must have lost jurisdiction over the case; (3) there must be "good reasons" to allow execution; and (4) such good reasons must be stated in a special order after due hearing. Undoubtedly, the RTC order dated August 5, 1997 which granted private respondents motion to dismiss and lifted the writ of preliminary injunction is a "final order" within the contemplation of Section 2, Rule 39 of the Revised Rules of Court. Petitioners maintain that the said RTC order could not be the

27

proper subject of execution because it was still appealed to respondent court, but this merely confuses the concept of a "final" judgment or order from one which has "become final" (or to use the more established term, "final and executory") --- a distinction that is definite and settled. A "final" judgment or order is one that finally disposes of a case, leaving nothing more for the court to do in respect thereto --- such as an adjudication on the merits which, on the basis of the evidence presented at the trial, declares categorically what the rights and obligations of the parties are and which party is in the right, or a judgment or order that dismisses an action on 24 the ground of res judicata or prescription, for instance. It is to be distinguished from an order that is "interlocutory", or one that does not finally dispose of the case, such as an order denying a motion to dismiss under Rule 16 of the Rules of Court, or granting a motion for extension of time to file a pleading. As such, only final judgments or orders (as opposed to interlocutory orders) are appealable. Now, a "final" judgment or order in the sense just described becomes "final and executory" upon expiration of the period to appeal therefrom where no appeal has been duly perfected or, an appeal therefrom having been taken, the judgment of the appellant court in turn becomes final. It is called a "final and executory" judgment because 25 execution at such point issues as a matter of right. By its provisional nature, the remedy of execution pending appeal requires only a "final" judgment or order (as distinguished from an "interlocutory" order) and not a "final and executory" judgment or order. In the instant case, the RTC order dated August 5, 1997 which granted private respondents motion to dismiss, lifted the writ of preliminary injunction and held private respondents entitled to possess the Victoria Tennis Courts is a final order within the contemplation of Section 2, Rule 39 of the Revised Rules of Court, inasmuch as it makes an adjudication on the merits of the case and dismisses petitioners action. Petitioners, in fact, impliedly recognize d the finality of this RTC order when they filed an ordinary appeal (and not a petition for certiorari) therefrom with respondent court. Addressing petitioners argument that the dispositive portion of the RTC order dated August 5, 1997 only provides that private respondents motion to dismiss is granted and does not order private respondents to regain possession of the Victoria Tennis Courts, suffice it to say that although as a rule, execution must conform to the dispositive portion of a decision, the other parts of the decision may be resorted to in order to determine the ratio 26 decidendi of the court. In fact, a closer look at the RTC order shows that the dispositive portion consists of two paragraphs, thus ---

Accordingly, the writ of preliminary injunction is hereby lifted and defendant is entitled to possess the Victoria Tennis Court. WHEREFORE, premises considered, the motion to dismiss filed by PTA is hereby granted. The bond posted by plaintiff is hereby declared released. 27 (Underscoring supplied) Thus, petitioners representation that the RTC order did not intend to award possession to private respondents of the disputed property as a result of the lifting of the preliminary injunction is blatantly without basis. It is also not contested that at the time the motion for execution pending appeal was filed, the RTC had already lost jurisdiction over the case as petitioners appeal had already been perfected and the records of the case transmitted to respondent court. On the matter of hearing, we uphold respondents position that respondent court did not gravely abuse its discretion in granting the motion for execution pending appeal without a full-blown or trial-type hearing. We have interminably declared that due process basically entails the opportunity to be heard, and we hold that the same principle underlies the provision on hearing in Section 2 of the abovecited Rule 39. The records of the instant 28 case clearly disclose that petitioners have filed their comment to private respondents motion for execution pending appeal, and their arguments as embodied in said comment did in fact form part of the discussion of respondent court in its assailed resolution of July 9, 1998. 1wphi1 Thus, the only issue remaining is whether respondent court gravely abused its discretion in finding good reasons to grant private respondents motion for execution pending appeal. Execution of a judgment pending appeal is an exception to the general rule 29 that only a final judgment may be executed. Thus, the existence of "good reasons" is essential for it is what confers discretionary power on a court to 30 issue a writ of execution pending appeal. These reasons must be stated in a special order --- for unless they are divulged, it would be difficult to determine whether judicial discretion has been properly exercised in the 31 case. Good reasons consist of compelling circumstances justifying immediate execution lest judgment becomes illusory, or the prevailing party after the lapse of time be unable to enjoy it, considering the tactics of the adverse

28

party who may have apparently no case but to delay. There must be superior circumstances demanding urgency which will outweigh the injury or 33 damages should the losing party secure a reversal of the judgment. Were it otherwise, execution pending appeal may well become a tool of oppression 34 and inequity instead of an instrument of solicitude and justice. In light of these considerations, the Court has been very discriminating in the allowance of such exceptional execution. Thus, mere allegations that the 35 appeal is dilatory, or that the bond for the early execution has been duly 36 37 paid, or that the corporation seeking execution is in financial distress --were held insufficient grounds to merit execution pending appeal. On the other hand, where the goods subject of the judgment stand to perish or 38 deteriorate during the pendency of the appeal, or the award of actual 39 damages is for an amount which is fixed and certain, the Court found that "good reasons" existed for execution pending appeal to prosper. At the same time, it must also be remembered that the determination of the existence of "good reasons" is also a discretionary power, and the reviewing court will not interfere with the exercise of this discretion absent a showing of 40 grave abuse thereof. In the present case, we find that respondent court was well within its discretion in issuing its questioned resolutions, which clearly set out the reasons for granting private respondents motion for execution pending appeal. The observation on the deteriorating and unsanitary conditions of the Victoria Tennis Courts came from tennis players who regularly use the said courts, and there is no indication that the letter was contrived or fabricated simply to procure for private respondents the restoration of possession of the Victoria Tennis Courts. We find no merit to petitioners contention that the letter is inadmissible because it was not among those formally offered in evidence during trial at the RTC --- the letter was dated November 10, 1997 and it could not have formed part of the evidence in trial at the time the parties formally rested their cases on June 41 11, 1996. Verily, it could only have been submitted in evidence before respondent court, while the case was on appeal therewith. More importantly, PHILTA no longer had any legal right to the possession and management of the Victoria Tennis Courts because the lease agreement between PTA and PHILTA had already expired on June 15, 1997. Obviously, PTA as the lessor and owner of the tennis courts had every right to regain possession thereof --- and it also had every reason to be alarmed at the complaint filed by the tennis players with the Department of Tourism because it would be held accountable as owner and administrator of the tennis courts for the ill conditions of the said tennis courts. As also observed by respondent court, "after all, upon the expiration of the lease

32

agreement, the plaintiffs-appellants (petitioners herein) were no longer 42 obliged to properly maintain the property." Clearly, the restoration of PTA into the possession and management of Victoria Tennis Courts is in order, being a necessary consequence of the lifting of the preliminary injunction and the termination of the MOA or lease agreement, and does not prejudice in any way the resolution of the other issues in petitioners pending appeal with respondent court such as their claim for damages from PTA which petitioners admit to be independent of the terms of the MOA. Thus, we find that respondent court did not gravely abuse its discretion in finding "good reasons" for allowing private respondents motion for execution pending appeal. Moreover, judgments in actions for injunction are not stayed by the 43 pendency of an appeal taken therefrom. This rule has been held to extend to judgments decreeing the dissolution of a writ of preliminary injunction, 44 which are immediately executory. However, we modify respondent courts findings to the extent that it held petitioners appeal pending therewith to be clearly dilatory, and cited this as one of the reasons for allowing execution pending appeal. This assumption 45 prematurely judges the merits of the main case on appeal, and except in cases where the appeal is patently or unquestionably intended to delay it must not be made the basis of execution pending appeal if only to protect and preserve a duly exercised right to appeal. WHEREFORE, the instant petition is DISMISSED. The validity of the writ of execution issued and implemented pursuant to the resolutions of the Court of Appeals dated July 9, 1998 and September 23, 1998 is SUSTAINED. No costs. SO ORDERED. Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

Footnotes
1

Paragraph 5(b) of the MOA provides:

29

"Within a period of five (5) years after the implementation of the above-mentioned development, PHILTA shall continue to manage, operate, administer and develop the Victoria Tennis Courts and its premises. PHILTA is hereby given the option to resume its management thereof for another period of five (5) years upon mutual agreement of the parties." (Rollo, 42.)
2

execution to issue even before the expiration of the time to appeal, upon good reasons to be stated in a special order." The citation of Section 2, Rule 39 is not a quotation but a paraphrasing of some pertinent provisions from different paragraphs of said section.
15

RTC Order dated June 17, 1996; Rollo, 115. RTC Order dated August 5, 1997; Rollo, 146. Ibid. RTC Order dated June 17, 1996; Rollo, 115.

Ibid., 20-21. RTC Order; Rollo, 149. Comment to Petition; Rollo, 216. Ibid., 217. Ibid., 248-250. Citing Santiago vs. Vasquez, 217 SCRA 633.

16

17

18

Citing Manchester Development Corporation vs. Court of Appeals, 149 SCRA 562.
7

19

20

Annex "B" to Motion for Execution of Judgment Pending Appeal; Rollo, 173-174.
8

21

The resolution was penned by Associate Justice Eubulo G. Verzola, and concurred in by Associate Justices Emeterio C. Cui (Chairman) and Artemio G. Tuquero.
9

Petitioners Urgent Motion for Issuance of Appropriate Injunctive Reliefs; Rollo, 241.
22

Rollo, 274-276. Memorandum of Private Respondents; Rollo, 313.

CA Resolution dated July 9, 1998; Rollo, 187. Ibid., 188. Per Resolution dated September 23, 1998. Rollo, 200. Petition; Rollo, 19-25.

23

10

24

Puertollano vs. Intermediate Appellate Court, 156 SCRA 188; Investments, Inc. vs. Court of Appeals, 147 SCRA 334.
25

11

Investments, Inc. vs. Court of Appeals, supra. Olac vs. Court of Appeals, 213 SCRA 321. RTC Order dated August 5, 1997; Rollo, 149. Rollo, 175-184.

12

26

13

27

14

In its resolution dated July 9, 1998, the Court of Appeals declared: Section 2, Rule 39 provides, "on motion of the prevailing party with notice to the adverse party the court may, in its discretion, order

28

29

Diesel Construction Company, Inc. vs. Jollibee Foods Corporation, G.R. No. 136805, January 28, 2000.

30

30

PLDT vs. Genovea, 201 Phil. 862.

45

International School Manila vs. Court of Appeals, 309 SCRA 474; Ong vs. Court of Appeals, supra; PLDT vs. Genovea, supra.

31

Radio Communications of the Philippines, Inc. vs. Lantin, 134 SCRA 395; Asturias vs. Victoriano, 98 Phil. 581.
32

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

33

Maceda vs. Development Bank of the Philippines, G.R. No. 135128, August 26, 1999; Ong vs. Court of Appeals, 203 SCRA 38.
34

Id.

35

International School Manila vs. Court of Appeals, 309 SCRA 474; Ong vs. Court of Appeals, supra; PLDT vs. Genovea, supra.
36

International School Manila vs. Court of Appeals, supra.

37

Diesel Construction Company, Inc. vs. Jollibee Foods Corporation, supra.

38

Yasuda vs. Court of Appeals, supra; Bell Carpets International Trading Corporation vs. Court of Appeals, 185 SCRA 35; Federation of United Namarco Distributors, Inc. vs. National Marketing Corporation, 4 SCRA 867.
39

Radio Communications of the Philippines, Inc. vs. Lantin, supra. Id.

40

41

Exhibits "I" and "J" of Petition (Formal Offers of Evidence), Rollo, 89-95; RTC Order dated June 11, 1996, Rollo, 96-97.
42

CA Resolution dated July 9, 1998; Rollo, 187. Sec. 4, Rule 39, Revised Rules of Court.

43

44

Crisostomo vs. Securities and Exchange Commission, 179 SCRA 146; See also Defensor-Santiago vs. Vasquez, 217 SCRA 633.

31

G.R. No. 123935

December 14, 2001

property in his name and was able to secure Transfer Certificate of Title No. 167387. In his answer to the complaint, Palabasan asserted that he bought the property from Salome on June 30, 1966, after he had paid the obligation of Salome with Country Bankers Insurance and Surety Company; that he had been issued Transfer Certificate of Title No. 167387 in his name after he had the deed of sale registered; that the spouses Barrera were in possession of the property as lessees of Salome; and that a contract of lease was executed by and between the spouses Barrera and Palabasan in 1970. Consequently, he claimed that the spouses Barrera had no legal right to claim reconveyance of the property in question.1wphi1.nt On February 23, 1993, after trial, the lower court rendered a decision declaring Palabasan to have validly acquired title to the property in question. The trial court, ruling that the case is one of double sale of an immovable, 9 applied the second paragraph of Article 1544 of the Civil Code. In time, the spouses Barrera appealed 11 Appeals.
10 8

LEONCIO and ENRIQUETA, both surnamed BARRERA, petitioners, vs. COURT OF APPEALS and ROSENDO C. PALABASAN, respondents. PARDO, J.: The Case In this petition for certiorari, petitioners seek to annul the decision of the 2 3 Court of Appeals affirming the decision of the Regional Trial Court, Makati, 4 Branch 66, as well as its resolution denying reconsideration thereof. The Facts Azalia Salome (Salome) owned a house and lot located at No. 2641 Bonifacio St., Bangkal, Makati City, covered by Transfer Certificate of Title No. 61772. Salome mortgaged the property to Country Bankers Insurance and Surety Company to secure a P10,000.00 loan. On July 1, 1966, Salome sold the property to Rosendo C. Palabasan. Transfer Certificate of Title No. 61772 was cancelled and a new one, 6 Transfer Certificate of Title No. 167387, was issued in the name of Rosendo C. Palabasan and Bella S. Palabasan. On April 19, 1989, Leoncio and Enriqueta Barrera (spouses Barrera) filed 7 with the Regional Trial Court, Makati City, Branch 138, a complaint against Palabasan for reconveyance with damages. They alleged that they had been in possession of the property since 1962 by virtue of a Deed of Sale with Assumption of Mortgage which was not notarized; that Salome executed a notarized Deed of Sale with Assumption of Mortgage in their favor on March 31, 1966; that, pursuant to this notarized deed, they settled Salome's obligations with the Country Bankers Insurance and Surety Company; that they tried to redeem the property but were not able to do so because Palabasan had done so and the title to the property was released to Palabasan; that in 1970, they signed a blank document which was supposed to become Palabasan's authority to sell the land for them; that in 1975, they were surprised to learn that the blank document which they had signed turned out to be a contract of lease wherein they were the lessees and Palabasan was the lessor of the property; and that Palabasan registered the
5 1

the decision to the Court of

On October 25, 1995, the Court of Appeals promulgated a decision affirming in toto the decision of the trial court. The appellate court, however, found Article 1544 of the Civil Code inapplicable to the case as there was no sale between the spouses Barrera and Salome because Salome's testimony 12 given in a previous case to this effect was stricken off the record since she died prior to cross-examination; the testimony of Cenon Mateo, the commonlaw husband of Salome showed that he was not aware of the transaction entered into on March 31, 1966; and counsel for spouses Barrera admitted that the sale transaction in 1962 did not materialize as the property was mortgaged to Country Bankers Insurance and Surety Company. On December 4, 1995, the spouses Barrera filed a motion for 13 reconsideration of the decision; however, on February 21, 1996, the Court 14 of Appeals denied the same. Hence, this petition.
15

The Issues

32

The issues raised are: whether respondent Palabasan is the owner of the property in question; and whether there was double sale of an immovable property covered by Article 1544 of the Civil Code. The Court's Ruling The petition is without merit. An action for reconveyance of a property is the sole remedy of a landowner whose property has been wrongfully or erroneously registered in another's name after one year from the date of the decree so long as the property has 16 not passed to an innocent purchaser for value. The action does not seek to reopen the registration proceedings and set aside the decree of registration but only purports to show that the person who secured the registration of the 17 property in controversy is not the real owner thereof. Fraud may be a ground for reconveyance. For an action for reconveyance based on fraud to prosper, the party seeking reconveyance must prove by clear and 18 convincing evidence his title to the property and the fact of fraud. It must be stressed that mere allegations of fraud are not enough. Intentional acts to deceive and deprive another of his right, or in some manner, injure 19 him, must be specifically alleged and proved. The burden of proof rests on petitioners; this, the petitioners failed to do. Petitioners offered no proof that there was misrepresentation or concealment in the registration of the deed that led to the issuance of Transfer Certificate of Title No. 167387. With the presumption of regularity in the performance of official functions, the claim of petitioners that the issuance of Transfer Certificate of Title No. 167387 was tainted with fraud must fail. As to proof of title to the property, respondent Palabasan offered the 20 following: Transfer Certificate of Title No. 167387, Tax Declaration No. 21 22 03251, the Deed of Absolute Sale dated June 30, 1966, executed by 23 Salome in favor of respondent Palabasan, the Contract of Lease, with respondent Palabasan as the lessor and petitioner Leoncio Barrera as the lessee, and the decision for the court of First Instance, Pasig, Branch XIX in 24 Civil Case No. 38608, finding respondent Palabasan to be the lawful owner of the property covered by Transfer Certificate of Title No. 167387. On the other hand, petitioner spouses Barrera only have the Deed of 25 Absolute Sale with Assumption of Real Estate Mortgage evidencing a transaction which occurred in 1962, a Deed of Sale with Assumption of

Mortgage dated March 31, 1966 and the testimonies of Cenon Mateo 28 and petitioner Leoncio Barrera. The spouses Barrera attempted to offer in evidence the transcript of stenographic notes taken of the testimony of 29 Salome in Civil Case No. 14009. Respondent objected to the offer which 30 opposition the trial court sustained. We find respondent Palabasan to be the owner of the property. The decision of the then Court of First Instance, Pasig, Branch XIX in Civil 31 Case No. 38608, promulgated on September 4, 1981 and reinstated on 32 August 10, 1990, finding respondent Palabasan to be the lawful owner of the property covered by Transfer Certificate of Title No. 167387 may not be 33 invoked in this case since said decision had become stale. Article 1144 (3) of the Civil Code provides that an action upon a judgment must be brought within ten years from the time the right of action accrues. On the other hand, Section 6, Rule 39, Revised Rules of Court, states: "A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations." The rule is that the court could issue a writ of execution by motion within five 34 (5) years from finality of the decision. A writ of execution issued after the 35 expiration of that period is null and void. There is a need for the interested party to file an independent action for revival of judgment. The judgment may be enforced after the lapse of this period and before the same is barred by 36 the statute of limitations, by instituting an ordinary civil actions. "The reason is that after the lapse of the five-year period, the judgment is reduced to a mere right of action, which judgment must be enforced, as all other ordinary actions, by the institution of a complaint in the regular form. Such action must be filed within ten (10) years from the date the judgment became 37 final." The decision having become stale, "any action to enforce or revive it has 38 prescribed."

26

27

33

This notwithstanding, the greater weight of evidence lies in favor of respondent Palabasan's claim of ownership over the land. Surely, Transfer Certificate of Title No. 167387 and Tax Declaration No. 03251 which respondent Palabasan offered in evidence is more convincing than petitioners' evidence. The certificate of title issued is an absolute and indefeasible evidence of ownership of the property in favor of the person whose name appears 39 therein. It is binding and conclusive upon the whole world. Anent the question of whether this case is one of double sale, suffice it to say that there is no sufficient proof on the sale between Salome and petitioners. There is no double sale that would warrant the application of Article 1544 of the Civil Code. As mentioned at the outset, the evidence petitioners adduced to prove the sale was the notarized deed executed on March 31, 1966. However, a perusal of the deed would show that the sale is conditioned on the payment by the petitioners of Salome's obligation with the Country Bankers Insurance and Surety Company under the contract of mortgage. Petitioners submitted no evidence to show that they complied with the condition given. Hence, there was no consummation of the contract which would transfer ownership of the property to the petitioners. All that they 40 presented was the self-serving testimony of petitioner Leoncio Barrera to the effect that the obligations were paid by them. Notable is Cenon Mateo's testimony that he has no knowledge of any transaction entered into by 41 Salome on March 31, 1966. Likewise, there is no sufficient evidence to show that the earlier transaction in 1962 ever materialized. The testimony of Salome in Civil Case No. 14009 confirming the existence of this transaction is inadmissible for lack of crossexamination. Likewise, the Deed of Absolute Sale with Assumption of Real 42 Estate Mortgage not having been notarized, its genuineness and due execution will have to be proven. In this case, the petitioners only presented the testimony of petitioner Leoncio Barrera and Cenon Mateo, which are, again, self-serving assertions if not corroborated by any other evidence. Notable is the counsel of petitioners own admission that "the said transaction however did not in any way materialize for the reason that the property, subject of the transaction was mortgaged to Country Bankers and Surety 43 Company."

The only sale that materialized in this case was the sale by Salome to respondent Palabasan that was evidenced by a deed of absolute sale that enabled respondent Palabasan to redeem the property from Country Bankers Insurance and Surety Company and consequently to secure Transfer Certificate of Title No. 167387 in his favor over the same property.1wphi1.nt The Fallo WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals in CA-G.R. CV No. 40909 and its resolution denying reconsideration. No Costs. SO ORDERED. Davide, Jr., Kapunan, Ynares-Santiago, JJ., concur. Puno, J., on official leave.

Footnotes
1

Under Rule 65 of the Revised Rules of Court.

In CA-G.R. CV No. 40909 promulgated on October 25, 1995, Petition, Annex "A", Rollo, pp. 39-52, Eugenio S. Labitoria, J., ponente, Cancio S. Garcia and Portia Alio Hormachuelos, JJ., concurring.
3

In Civil Case No. 89-3713, promulgated on February 23, 1993, Petition, Annex "E", Rollo, pp. 6471, Judge Eriberto U. Rosario, Jr., presiding.
4

Dated February 21, 1996. Petition, Annex "B", Rollo, p. 53. Hereafter, Palabasan.

34

Exhibit "I", Folder of Exhibits, p. 17.

17

Ibid., supra, Note 16, citing Rodriguez v. Toreno, 79 SCRA 356, 361-362 (1977).
18

Docketed as Civil Case No. 89-3713. Petition, Annex "C", Rollo, pp. 54-59.
8

Ibid., suora Note 16, citing Heirs of Mariano, Juan, Tarcela and Josefa Brusas v. Court of Appeals, 372 Phil. 47 (1999).
19

Petition, Annex "E", pp. 64-71.

Article 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there by no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof; to the person who presents the oldest title, provided there is good faith.
10

Heirs of Mariano, Juan, Tarcela and Josefa Brusas v. Court of Appeals, supra, Note 18, at p. 58.
20

Exhibit "1", Folder of Exhibits, p. 17. Exhibit "3", Folder of Exhibits, p. 27. Exhibit "2", Folder of Exhibits, pp. 28-29. Exhibit "6", Folder of Exhibits, pp. 22-23.

21

22

23

24

Notice of Appeal, Original Record, Civil Case No. 89-3713, p. 133.

11

Exhibits "4" and "5", Folder of Exhibits, pp. 24-25. Civil Casse 38608 was an action for unlawful detainer with prayer for damages and preliminary attachment filed by Palabasan against Leoncio Barrera.
25

Exhibit "A", Folder of Exhibits, pp. 3-4. Exhibit "B", Folder of Exhibits, pp. 5-6. T.S.N., Civil Case No. 89-3713, April 2, 1992. T.S.N., Civil Case No 89-3713, February 6 and 11, 1992.

Docketed as CA-G.R. CV No. 40909.

26

12

Civil Case No. 14009. This was a case for ejectment filed by Palabasan on August 2, 1975 against the spouses Barrera in the Municipal Court of Makati City. This was dismissed for lack of jurisdiction as issues of ownership were raised therein.
13

27

28

Petition, Annex "F", Rollo, pp. 72-77. Petition, Annex "B", Rollo, p. 54.

29

14

This was an ejectment case filed in the Municipal Court of Makati by Rosendo Palabasan against Leoncio Barrera. The case was, however, dismissed for lack of jurisdiction as issues of ownership were raised therein.
30

15

Petition, Rollo, pp. 14-37. On July 16, 1997, we gave due course to the petition (Rollo, p. 97).
16

T.S.N., Civil Case No. 89-3713, February 11, 1992, pp. 31-38.

Abejaron v. Nabasa, G.R. No. 84831, June 20, 2001, citing Director of Lands v. Register of Deeds or Rizal, 92 Phil. 826 (1953).

31

Exhibit "4", Folder of Exhibits, pp. 25-26, Judge Santiago Raada, Jr., presiding.

35

32

Exhibit "5", Folder of Exhibits, p. 24, Judge Jose T. Hernandez, presiding.

33

Terry v. people, 314 SCRA 669, 674 (1999).

34

Ibid. Supra Note 33, citing Rule 39, Section 6, 1964 Revised Rules of Court; Villaruel v. Court of Appeals, 172 SCRA 305, 313 (1989); Republic v. Court of Appeals, 137 SCRA 220, 227 (1985).
35

Ibid., supra, Note 33, 2 Moran, Comments on the Rules of Court, 1979 ed., p. 270, citing Arambulo v. CFI Laguna, 53 Phil. 302 (1929).
36

Ibid., supra, Note 33, citing Republic v. Court of Appeals, 137 SCRA 220, 227 (1985); Prudence Realty and Development Corporation v. Appeals, 231 SCRA 379 (1994); Camacho v. Court of Appeals, 351 Phil. 108 (1998); Salientes v. Intermediate Appellate Court, 316 Phil. 197 (1995); Gonzales v. Court of Appeals, 212 SCRA 595 (1992).
37

Ibid., supra, Note 33, citing 2 Moran, Comments on the Rules of Court, 1979 ed., pp. 266-267, citing Caia v. Court of Appeals, 239 SCRA 252 (1994); Continental Bank v. Tiongco, 94 SCRA 715, 718 91979); Luzon Surety Co. v. IAC, 151 SCRA 652 91987); PNB v. Deloso, 143 Phil. 224 (1970).
38

Republic v. Atlas Farms, Inc., G.R. No. 141975, November 20, 2000, citing Article 1144, Civil Code; Lizardo, Sr. v. Mantano, 332 SCRA 163 (2000); Estonina v. Southern Marketing Corporation, 167 SCRA 605 (1988).
39

Heirs of Vecilao v. Court of Appeals, 351 Phil. 815, 823 (1998). T.S.N., Civil Case No. 89-3713, February 6, 1992, p. 12. T.S.N. Civil Case No. 89-3713, April 2, 1992, pp. 13 and 19-20 Exhibit "A", Folder of Exhibits, pp. 3-4. T.S.N., Civil Case No. 89-3713, February 6, 1992, p. 4.

40

41

42

43

36

G.R. No. 130401 December 4, 1998 LEONARDO ARCENAS, represented by his attorney-in-fact CARMELITA ARCENAS VILLANUEVA, petitioner, vs. THE COURT OF APPEALS, Hon. ARMIE E. ELMA, Presiding Judge of Branch 153, Regional Trial Court of Pasig City, and JOSE DELA RIVA, respondent.

The Court of Appeals affirmed with modification the aforesaid decision reducing the moral damages to P10,000.00 and the exemplary damages to P2,000.00. The said decision became final and executory on November 2, 1987 after this Court dismissed the petition for review filed by the petitioner. Thereafter, private respondent filed a motion for issuance of a writ of execution with the trial court (the case was subsequently transferred to the Regional Trial Court, Branch 140), which motion was granted on January 25, 2 1988. However, despite the writ of execution, private respondent failed to enforce the judgment. On October 13, 1993, or five (5) years from the time of the entry of 3 judgment, private respondent filed a complaint for revival of judgment and sum of money with damages before the Regional Trial Court of Pasig, praying: 1. Reviving the judgment in Civil Case No. 35349 and thereafter to issue the corresponding writ of execution against defendants for the enforcement thereof; and 2. Ordering defendants to jointly and severally to pay plaintiff: i. The sum of P171,022.00 in their capacities as principals of the surety company under said bond; ii. The sum of at least P100,000.00 for and as moral, exemplary, temperate and nominal damages, and iii. The sum equivalent to 35%, or in case of appeal 45% of any and all sums awarded to or recovered by

MARTINEZ, J.: The decision of the Court of Appeals in CA-G.R. SP No. 43407, dismissing the petition for annulment of judgement filed by petitioner, is impugned in this petition for review on certiorari. The case takes its roots from Civil Case No. 35349 of the Court of First Instance of Rizal (now Regional Trial Court) which was an action for annulment of the foreclosure sale of a barge. After trial, the trial court rendered judgment on March 21, 1985, the dispositive portion which reads: WHEREFORE, judgment is hereby rendered dismissing plaintiff's complaint and sentencing plaintiff Emilio Espino to return the barge "Sta. Lucia Triumph I", as described in the body of this Decision, to the possession of defendant Jose dela Riva, and to pay the said defendant P46,000.00 a month as unrealized profit counted from February 3, 1980, until actual possession of the barge is surrendered to Dela Riva. Both plaintiffs Espino and Leonardo Arcenas are also sentenced to pay jointly defendant Dela Riva moral damages in the amount of P20,000.00 and exemplary damages of P10,000.00. Both plaintiffs are further ordered to pay jointly defendants Dela Riva and Antonio Sy, Sr., attorney's fees of P15,000.00 each, and the costs of the suit. SO ORDERED.
1

37

plaintiff plus P500.00 for every court appearance as and by way of attorney's fees. Such other reliefs just and equitable under the premises are likewise prayed for. The complaint alleged that petitioner (defendant therein) could be served with summons at BF Homes, Pamplona Las Pinas, Metro Manila. On November 29, 1993, Deputy Sheriff Gezzer P. Bote filed a return of service of summons, reading as follows: SHERIFF'S RETURN This is to certify that I tried to serve Summons with Complaint upon the following defendants: xxx xxx xxx 2. Leonardo Arcenas on November 8, 1993, I tried to serve Summons with Complaint upon defendant Leonardo Arcenas at No. 206 E. Vital St., BF Homes, Pamplona Las Pias, M.M., but I was informed by the neighbor that said defendant is already out of the country, however Atty. Rico, counsel for the plaintiff, informed the undersigned that defendant is still here and conducting his business. On November 26, 1993, I went to the place of the defendant and therein I met his mother Carmen Arcenas, but when I tried to serve the Summons with Complaint, she refused to receive it for the reason that said defendant is already in the States since June 1993. Respectfully returned to the Honorable Court with the information that said Summons were unserved.

On December 15, 1993, private respondent filed a motion to order the sheriff to effect service of summons by substituted service upon petitioner. The 4 motion was granted by the trial court in its order of December 16, 1993. In compliance with the court's order, the deputy sheriff on February 4, 1994, 5 served a copy of the Alias summons together with the complaint upon petitioner through his mother, Mrs. Carmen Arcenas, who refused to receive 6 and acknowledge the same. Petitioner failed to file his answer and, upon motion by private respondent, 7 was declared in default. Thereafter, private respondent was allowed to adduce his evidence ex-parte. On March 21, 1994, the trial court rendered a 8 decisions against petitioner, the dispositive portion of which reads: WHEREFORE, all the foregoing premises considered, judgment is hereby rendered: 1.) Reviving the decision in Civil Case No. 35349 and for the corresponding writ of execution to be issued. 2.) Ordering defendant Leonardo Arcenas to pay plaintiff. 3.) a.) P171,022.00 in his capacity as one of the principals under the surety bond. b) P10,000.00 as moral and exemplary damages; c) 15% of the amount recoverable as and by way of attorney's fees. SO ORDERED. On March 8, 1995, a writ of execution was issued and petitioner's properties were levied. On February 17, 1997, petitioner through his attorney-in-fact Carmelita A. 9 Villanueva, filed with the respondent Court of Appeals a petition to annul the judgment of the RTC. Petitioner asserts that the trial court never acquired jurisdiction over his person because there has been no valid service of summons. He posits that the service of summons is improper and invalid since he was already living in the United States when the summons was served and that it was served at the wrong address. Petitioner also

38

contended that the decision of the trial court is void because it substantially amended the original decision of the RTC in Civil Case No. 35349 absolving him of any liability with regard to the return of the barge. On June 3, 1997 the respondent Court of Appeals rendered a decision dismissing the petition and declaring that the petitioner was validly served with summons. The respondent court noted: xxx xxx xxx Considering the diametrically opposed asseverations of the petitioner and private respondent, this Court took a close look at the record and noticed the following: Intriguing circumstances. In her affidavit, Carmelita A. Villanueva, sister and attorney-in-fact of petitioner Leonardo Arcenas, averred that her brother left the Philippines "on or about April 19, 1991" and that "since then, my brother has not returned." (Annex "N" of the Petition). On the other hand, the Sheriffs Return of November 29, 1993 showed that petitioner's mother, Carmen Arcenas, refused to receive the summons being served because the petitioner was allegedly "already in the States since June 1993." Such conflicting dates baffled this Court, taking note further of the Sheriffs Return of April 15, 1994 portraying a statement of BF Homes Security Guard Rolly Penaflorida that defendant Leonardo Arcenas, petitioner herein, "occasionally visit the place." Worse as already stated, no evidence was presented, as to when the petitioner actually left the Philippines if he really did leave. Where in the United States do the petitioner and wife stay, assuming they are actually abroad? Was the alleged departure designed to escape liability in the Philippines? Presumption of regularity. The afore-mentioned Sheriff's Returns, as aptly stated by the private respondent, are clothed with the mantle of presumption of regularity under Section 3(m), Rule 131 of the New Rules on Evidence (Capulong vs. Court of Appeals, 185 SCRA 215) and said presumption was not punctured. Thus, as between the unsubstantiated and self-serving pretensions of the petitioner and the return of the respondent sheriff,

whose motive was not impeached by evidence, this Court is more inclined to give credence to the latter. . . . . . . . . .
10

Petitioner now impugns the aforequoted decision, assigning the following errors: 1. The original decision of the Regional Trial Court as modified by the Court of Appeals and affirmed by the Supreme Court is already final and executory, hence, it could no longer be amended or altered. 2. The decision of the RTC modified and altered the original decision. 3. Petitioner has already satisfied the judgment rendered in Civil Case No. 63751. 4. Petitioner's right to due process of law was violated. The question that we shall first address and which is the focal point in the case is whether or not the trial court acquired jurisdiction over the person of the petitioner. Service of summons upon the defendant is essential in order for the court to acquire of jurisdiction over his person. The summons must be served to the defendant in person "by handing a copy thereof to the defendant in person, 11 or, if he refuses to receive it, by tendering it to him." If personal service cannot be effected within a reasonable time, service may be effected by leaving copies of the summons at the defendant's dwelling house or residence with some person of suitable age and discretion then residing therein, or by leaving the copies at defendants' office or regular place of 12 business with some competent person in charge thereof. If the defendant is temporarily out of the country, summons may, by leave of court, be effected outside of the Philippines by substituted service or by 13 publication. However, if the defendant does not reside and is not found in the Philippines, summons may be effected, by leave of court, by personal

39

service or by publication; or other sufficient manner as determined by the court, provided that the action affects the personal status of the plaintiff residing in the Philippines; or when the action relates to, or the subject of which involves property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent; or when the relief demanded on such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; or when the non-resident 14 defendant's property has been attached within the Philippines. Petitioner is no longer residing and found in the Philippines. He left for the United States in June of 1993 as evidenced by the Sheriff's Return. Hence, summons may be served on him either personally or by publication. However, since the complaint filed against him is one in personam (a personal action) and does not involve the personal status of the private respondent, nor any property in the Philippines in which petitioner has or claim or an interest, or which the private respondent has attached, summons should be served on him personally. The deputy sheriff can not serve the summons by substituted service. In Panteleon vs. Asuncion
15

that the original judgment which was the subject of the action for revival was substantially modified. In Civil Case No. 35349, the judgment of the trial court ordered only petitioner's co-defendant Emilio Espino to return the barge "MV Sta. Lucia I" to private respondent Jose de la Riva and to pay P48,000.00 a month as unrealized profit from February 3, 1980 or until June 18, 1980. The said judgment absolved petitioner from any liability insofar as the barge is concerned but found him jointly liable to private respondent and Antonio Sy, Sr., for moral and exemplary damages. On the other hand, the revived judgment now subject of this case, substantially modified the original judgment by directing petitioner to pay private respondent the sum of P171,022.00 representing double the value of the barge; P10,000.00 as moral and exemplary damages; and 15% of the amount recoverable by way of attorney's fees. These new monetary awards can not be allowed since they were not adjudged in the original judgment which had long become final and executory. For, it is a fundamental rule that when a final judgment becomes executory, it thereby becomes immutable and unalterable. The judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest Court of the land. The only recognized exceptions are the correction of clerical errors or the making of so-called nunc pro tunc entries which cause no prejudice to any party, and, of course, 16 where the judgment is void. Any amendment or alteration which substantially affects a final and executory judgment is null and void for lack 17 of jurisdiction, including the entire proceedings held for that purpose. The purpose of the action for revival for a judgment is not to modify the original judgment subject of the action but is merely to give a creditor a new 18 right of enforcement from the date of revival. The rule seeks to protect judgment creditors from wily and unscrupulous debtors who, in order to evade attachment or execution, cunningly conceal their assets and wait until 19 the statute of limitation sets in. WHEREFORE, the petition is hereby GRANTED. The Decision of the Court of Appeals dated June 3, 1997 in CA-G.R. SP. No. 43407 is hereby REVERSED and SET ASIDE. SO ORDERED.

we ruled:

. . . , it is a well-settled principle of Constitutional Law that, in an action strictly in personam, like the one at bar, personal service of summons, within the forum, is essential to the acquisition of jurisdiction over the person of the defendant, who does not voluntarily submit himself to the authority of the court. . . . Due process of law requires personal service to support a personal judgment, and, when the proceeding is strictly in personam brought to determine the personal rights and obligations of the parties, personal service within the state or a voluntary appearance in the case is essential to the acquisition of jurisdiction so as to constitute compliance with the constitutional requirement of due process. ***. Having failed to serve the summons on the person of the petitioner, the Regional Trial Court did not validly acquire jurisdiction over him. Consequently, the proceedings held is null and void. Even assuming that the trial court had acquired jurisdiction over the person of the petitioner, still, the judgment rendered by it is a nullity for the reason

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Melo, Puno and Mendoza, JJ., concur. Footnotes 1 Penned by Justice Ramon Mabutas, Jr. and concurred in by Justices Portia-Alio-Hermachuelos and Bernardo LL. Salas, pp. 29-39, Rollo. 2 Annex "D", p. 52, Rollo. 3 Annex "F", pp. 54-60, Id. 4 P. 106, Rollo. 5 P. 63, Ibid. 6 P. 63, Ibid. 7 P. 108, Ibid. 8 Annex "H", pp. 65-70, Ibid. 9 Annex "I", pp. 71-88, Rollo. 10 Annex "A", pp. 9-10; CA Decision, pp. 37-38, Rollo. 11 Sec. 6, Rule 14, 1997 Rules of Civil Procedure. 12 Sec. 7, Rule 14, Ibid. 13 Sec. 16, Rule 14, Ibid. 14 The Dial Corporations vs. Soriano, 161 SCRA 740; Sec. 15, Rule 14, Ibid. 15 105 Phil. 765, cited in Magdalena Estate, Inc. vs. Nieto, 125 SCRA 761.

16 Manning International Corporations vs. NLRC, 195 SCRA, 155, 161 [1991], cited in Nual vs. Court of Appeals, 221 SCRA 26, 32 [1993]. 17 Francisco vs. Bautista, 192 SCRA 388, 392 [1990], cited in Nual vs. Court of Appeals, ibid. 18 Compania General de Tabacos vs. Maritnez, 29 Phil. 515, 519, cited in Philippine National Bank vs. Bondoc, 14 SCRA 771. 19 Philippine National Bank vs. Bondoc, supra.

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