SECOND DIVISION
HARISH RAMNANI, CHANDRU G.R. No. 165855
P. PESSUMAL, MAUREEN RAMNANI,
and JOSE MANACOP,
Petitioners, Present:
QUISUMBING, J.,
CARPIO,
- versus - CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
QBE INSURANCE PHILIPPINES, INC.,
Respondent.
Promulgated:
October 31, 2007
x --------------------------------------------------------------------------------------x
D E C I S I O N
Tinga, J.:
Lavine Loungewear Mfg. Inc. (Lavine) is a corporation engaged in the manufacture and export of loungewear. It procured six (6) fire insurance contracts from different insurers in order to insure its buildings and supplies. The insurers were Philippine Fire and Marine Insurance Corporation (PhilFire), Rizal Surety and Insurance Company (Rizal Surety), Tabacalera Insurance Company (Tabacalera), First Lepanto-Taisho Insurance Corporation (First Lepanto), Equitable Insurance Corporation (Equitable Insurance), and Reliance Insurance Corporation (Reliance Insurance).
On P112,245,324.34. A
controversy arose as to how the claims were to be paid out. It appears that all
of the insurance policies, with the exception of the First Lepanto policy, had
earlier been endorsed to Equitable PCI Bank on account of loans procured by
Lavine through its authorized representative, petitioner Harish Ramnani
(Harish). The insurance companies were thus willing to release the payments on
the claims to Equitable Bank, a result which Harish encouraged. However, on
When the insurance companies insisted on paying Equitable Bank directly, Lavine filed a Complaint dated 22 January 2001[1] against them and the bank before the Regional Trial Court (RTC) of Pasig City, seeking that the companies be restrained from paying the proceeds of the insurance policies directly to Equitable Bank and that they be directed to pay such proceeds directly to Lavine instead.
The case was docketed as Civil Case
No. 68287 and raffled to Branch 71 presided by Judge Celso D. Laviña. Harish
and the other present petitioners, namely: Jose F. Manacop, Chandru P.
Pessumal, Maureen M. Ramnani and Salvador Cortez, moved to intervene in the
case. They alleged they were Lavine's incumbent directors, that Harish remained
the authorized representative of Lavine, and that Harish had not been validly
elected president of Lavine and bore no authority to institute the complaint.
In addition, they alleged that Lavine’s obligations to Equitable Bank had
totaled around P71 million and that Equitable Insurance and Reliable
Insurance had already paid the bank more than said amount out of the insurance
proceeds. Thus, petitioners prayed that the remaining insurance proceeds be
delivered to them by the insurance companies.
After trial, the RTC rendered a Decision
in favor of the intervenors on
WHEREFORE, judgment is hereby rendered:
1. DISMISSING
the Complaint dated
2. ORDERING
the defendant Bank to refund to plaintiff through the Intervenors the amount of
P63,819,936.05 representing the overpayment as actual or compensatory
damages, with legal rate of interest at six (6%) per cent per annum from the
date of this decision until full payment.
3. ORDERING:
a. Defendant Philippine Fire and Marine
Insurance Corporation to pay plaintiff through Intervenors the total amount of P15,111,670.48,
representing unpaid insurance proceeds as actual or compensatory damages, with
twenty-nine (29%) per cent interest per annum from
b. Defendant Rizal Surety and Insurance
Company to pay plaintiff through Intervenors the amount of P17,100,000.00[,]
representing unpaid insurance proceeds as actual or compensatory damages, with
twenty-nine (29%) per cent interest per annum from October 1, 1998 until full
payment.
c. Defendant First Lepanto-Taisho
Insurance Corporation to pay plaintiff through Intervenors the total amount of P18,250,000.00[,]
representing unpaid insurance proceeds as actual or compensatory damages, with
twenty-nine (29%) per cent interest per annum from October 1, 1998 until full
payment.
d. Defendant Tabacalera Insurance Company
to pay plaintiff through Intervenors the amount of P25,690,000.00[,]
representing unpaid insurance proceeds as actual or compensatory damages, with
twenty-nine (29%) per cent interest per annum from October 1, 1998 until full
payment.
4. ORDERING all defendants to pay, jointly
and severally, plaintiff through Intervenors the amount equivalent to ten (10%)
per cent of the actual damages due and demandable as and by way of attorney's
fees.
5. CANCELLING the loan mortgage
annotations and RETURNING to plaintiff through Intervenors TCT No. 23906, CCT
Nos. PT-17871, PT-17872 and PT-17873.
6. Costs of suit.
Counterclaims filed by plaintiff against
intervenors and cross-claims filed by all defendants against intervenors and
counterclaims are hereby DISMISSED for lack of merit.
SO ORDERED.[3]
On P40 million. On
On
On
On
QBE filed a petition for
certiorari with the Court of Appeals challenging the RTC orders directed against
it, imputing grave abuse of discretion to Judge Laviña for ordering the
execution pending appeal of the decision
in Civil Case No. 68287 against QBE even though the latter was not a party to
the case, and for unduly considering QBE and Rizal Surety as effectively one
entity. The petition was granted by the Court of Appeals in a Decision[12]
dated
Hence, the present petition, which posits that the Court of Appeals erred in not holding that QBE and Rizal Surety are one and the same entity and in reversing the RTC order directing execution pending appeal of the decision against QBE. Petitioners pray for the reinstatement of the RTC orders to pave the way for the implementation of the writ of execution pending appeal against QBE, as well as for the garnishment of the latter’s bank deposits pursuant to the writ of execution.
Apart from contesting the arguments of petitioners, in its Comment,[14] QBE chides petitioners for neglecting to mention that on 29 May 2003, or more than a year before the filing of the present petition, the Court of Appeals promulgated a Decision[15] in CA-G.R. SP. No. 70292 which set aside the 2 April 2002 Decision in Civil Case No. 68287, the subsequent RTC Order dated 17 May 2002 allowing execution pending appeal, and the Writ of Execution Pending Appeal dated 20 May 2002. QBE pointed out that with the setting aside of the decision and the nullification of the orders allowing execution pending appeal, the subsequent RTC orders subject of the present petition had become functus officio. On that point, petitioners replied that they had timely appealed from the Court of Appeals decision to this Court, with the appeal docketed as G.R. No. 162814, and that until a final decision is rendered therein the decision and orders of the RTC remain.
On 25 August 2005, the
Court promulgated its Decision[16] in G.R. No. 162814, affirming the Court of
Appeals in CA-G.R. SP. No. 70292 “insofar as it declared null and void the
Special Order dated May 17, 2002 [granting execution pending appeal] and the
Writ of Execution dated May 20, 2002” of the RTC. On
We agree with QBE that the
The
The general rule is that only judgments
which have become final and executory may be executed. However, discretionary
execution of appealed judgments may be allowed under Section 2 (a) of Rule 39
of the Revised Rules of Civil Procedure upon concurrence of the following
requisites: (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 must be stated in a special order. The
yardstick remains the presence or the absence of good reasons consisting of
exceptional circumstances of such urgency as to outweigh the injury or damage
that the losing party may suffer, should the appealed judgment be reversed
later. Since the execution of a judgment pending appeal is an exception to the
general rule, the existence of good reasons is essential.
In the case at bar, petitioners insist
that execution pending appeal is justified because respondent insurance
companies admitted their liabilities under the insurance contracts and thus
have no reason to withhold payment.
We are not persuaded. The fact that the
insurance companies admit their liabilities is not a compelling or superior
circumstance that would warrant execution pending appeal. On the contrary,
admission of their liabilities and willingness to deliver the proceeds to the
proper party militate against execution pending appeal since there is little or
no danger that the judgment will become illusory.
There is likewise no merit in petitioners'
contention that the appeals are merely dilatory because, while the insurance
companies admitted their liabilities, the matter of how much is owing from each
of them and who is entitled to the same remain unsettled. It should be noted
that respondent insurance companies are questioning the amounts awarded by the
trial court for being over and above the amount ascertained by the Office of
the Insurance Commission. There are also three parties claiming the insurance
proceeds, namely: petitioners, Equitable Bank, and Lavine as represented by the
group of Chandru.
Besides, that the appeal is merely
dilatory is not a good reason for granting execution pending appeal. As held in
BF Corporation v. Edsa Shangri-la Hotel:
. . . it is not for the trial judge to
determine the merit of a decision he rendered as this is the role of the
appellate court. Hence, it is not within competence of the trial court, in
resolving a motion for execution pending appeal, to rule that the appeal is
patently dilatory and rely on the same as basis for finding good reasons to
grant the motion. Only an appellate court can appreciate the dilatory intent of
an appeal as an additional good reason in upholding an order for execution
pending appeal. . .
Lastly, petitioners assert that Lavine's
financial distress is sufficient reason to order execution pending appeal.
Citing Borja v. Court of Appeals,
they claim that execution pending appeal may be granted if the prevailing party
is already of advanced age and in danger of extinction.
Borja is not applicable to the case at bar
because its factual milieu is different. In Borja,
the prevailing party was a natural person who, at 76 years of age, "may no
longer enjoy the fruit of the judgment before he finally passes away."
Lavine, on the other hand, is a juridical entity whose existence cannot be
likened to a natural person. Its precarious financial condition is not by
itself a compelling circumstance warranting immediate execution and does not
outweigh the long standing general policy of enforcing only final and executory
judgments.[20]
The present petition was filed because the writ of execution pending appeal was sought to be enforced against QBE. The writ, in turn, was issued only because the RTC ordered the execution of its decision pending appeal. It may be so that the issue of whether petitioners were entitled to execution pending appeal was not directly raised in the petition, yet it cannot be denied that the RTC rulings, assailed by QBE and set aside by the Court of Appeals, were issued as a sole consequence of petitioner’s motion for execution pending appeal. Since it has been ruled with finality that petitioners had no right to an execution pending appeal and that the RTC issuances directly infusing life to that right have been irretrievably nullified, it follows that the RTC rulings challenged in the present petition have been rendered functus officio.
Given the situation at hand, any extraneous
pronouncement by the Court on the merits of the case would be dicta. Hence, there is no genuine need
to delve into the other issues raised in the petition. However, it should be pointed
out that in two administrative cases, the Court has respectively found Sheriff
Rabella and Judge Laviña administratively liable on account of their actions
which led to the implementation of the writ of execution against QBE. Said
actions, in particular, concerned the sheriff’s manifestation and motion and of
the judge’s corresponding
In QBE Insurance (Phils.), Inc. v. Sheriff Rabello, Jr.,[21] the Court observed of the sheriff:
In the instant case, respondent asserted
that the manifestation he filed before the trial court stating that Rizal
Surety and Insurance Co. had recently changed its corporate name to QBE
Insurance (Phils.) was based on what he saw in the office of Rizal Surety and
information relayed to him by its employees. Respondent ought to be aware that
execution could only be issued against a party and not against one who was not
accorded his day in court and it was his bounden duty to see to it that the
writ of execution would be implemented only upon properties unquestionably
belonging to the judgment debtor. Property belonging to third persons cannot
thus be levied upon.
It behooved respondent to confirm and
establish the veracity of the information he received by making his own
verification with the SEC. Instead of doing so, he unthinkingly accepted the
representations of the employees of Rizal Surety and hastily filed the Urgent Ex-Parte Manifestation and Motion
dated
In the recently promulgated case of QBE Insurance v. Judge Laviña,[23] the Court stated:
There is
no question that the writ of execution was issued against the judgment debtors
(Rizal Surety, among other insurance companies) in Civil Case No. Q-68287,
before the RTC of
Hence,
QBE Insurance remains a third person to the judgment in Civil Case No. 68287
and cannot be bound by it. Nor can the writ of execution issued pursuant to
said judgment be enforced against QBE Insurance since it was not afforded its
day in court.
We agree
with the Investigating Justice that Judge Laviña is guilty of gross ignorance
of the law when he issued the
x x x Sections
36 and 37 of Rule 39 of the 1997 Rules of Civil Procedure already provide for
the proper procedure if the judgment is unsatisfied against the judgment obligor,
or if another person or other juridical entity has property of such judgment
obligor. Whichever rule is applied, there is a requirement that the judgment
obligor, or the person who has property of such judgment obligor, to appear
before the court and be examined concerning the same. The failure of respondent
to observe the procedure in Sections 36 and 37 of Rule 39 contributed to the
finding of Gross Ignorance of the Law or Knowingly Rendering an Unjust
Interlocutory Order.
We reiterate that the cause
for the dismissal of this petition is mootness, as the RTC rulings sought to be
reinstated were rendered functus officio
by the
WHEREFORE, the petition is DENIED. Costs against petitioners.
SO ORDERED.
DANTE O. TINGA
Associate
Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
ANTONIO T. CARPIO CONCHITA CARPIO MORALES
Associate Justice Associate
Justice
PRESBITERO J. VELASCO,
JR.
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson,
Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief
Justice
[5]
[12]
[13]The records bear some confusion on this point. While the Court of Appeals likewise annulled an RTC Order dated 19 May 2003, described in the Decision as one which “upheld the 24 March 2003 Notice of Garnishment of Branch Sheriff Cresencio Rabello, Jr.” See rollo, p. 56. Petitioners do not advert to any such ruling, and no copy of it appears in the rollo. Further, the 15 May 2003 RTC Order already denied QBE’s Urgent Motion to lift the 24 March 2003 Notice of Garnishment, and any subsequent RTC ruling reaffirming said Notice of Garnishment against QBE’s claims would be superfluous. In any event, these matters ultimately bear no impact on our present decision.
[15]
[16]Entitled
Manacop v. Equitable PCIBank, G.R.
Nos. 162814-17,
[17]Rollo, pp. 618-624.
[21]A.M.
No. P-04-1884,