Republic of the
Supreme Court
|
HEIRS OF
Petitioner, - versus - HON.
J. CEDRICK O. RUIZ, Presiding Judge, Branch 39, Regional Trial Court, Iloilo
City; GERRY D. SUMACULUB, as Clerk of Court of the Regional Trial Court;
BOMBO RADYO HOLDINGS, INC., and ROGELIO M. FLORETE, SR.,
Respondents. |
G.R.
No. 172508 Present: CARPIO, J.,
Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ. Promulgated: January 12, 2011 |
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PERALTA,
J.:
Before
this Court is a petition for review on certiorari,[1]
under Rule 45 of the Rules of Court, seeking to set aside the October 5, 2005
Decision[2]
and April 21, 2006 Resolution[3]
of the Court of Appeals (CA) in CA-G.R. SP No. 86435. Said CA Decision
dismissed the petition for certiorari seeking the nullification of the
September 8, 2004 Resolution and September 15, 2004 Writ of Execution,
respectively issued by the Presiding Judge and Clerk of Court of Branch 39 of
the Regional Trial Court (RTC) of Iloilo City in Corporate Case No. 00-26557.
The
facts of the case are as follows:
On
February 25, 1999, Santiago Divinagracia (Divinagracia), in his capacity as a
stockholder, filed a derivative suit on behalf of People’s Broadcasting Service
Incorporated (PBS) assailing a management contract entered into by PBS and
Bombo Radyo Holdings Incorporated (Bombo Radyo) and Rogelio Florete, Sr.
(Florete). Said suit was docketed as SEC
Case No. IEO-99-00084. In response to
the derivative suit, Bombo Radyo and Florete filed a counterclaim against
Divinagracia claiming that the suit filed by him was unfounded and intended
only to harass and molest them.
Pursuant
to Section 5.2[4] of
Republic Act No. 8799, the derivative suit was transferred to Branch 39 of the
RTC of Iloilo City sitting as a special commercial court. The derivative suit
was then re-docketed as Corporate Case No. 00-26557 and governed by the Interim
Rules of Procedure Governing Intra-Corporate Controversies. During the pendency
of the case, however, Divinagracia died and was, thus, substituted by his
heirs.
On
WHEREFORE, in view of
the foregoing disquisitions, the instant petition ought to be, as it is hereby
DISMISSED for lack of merit.
The Counterclaim of
respondents Bombo Radyo Holdings, Inc. (BRHI) and Rogelio Florete Sr. is given
due course and granted and the Heirs of Santiago Divinagracia, namely:
NAME RESIDENCE
1.
Ma. Elena R. Divinagracia
2.
3.
Ruth Marie R. Divinagracia Unit 4-C,
4.
Liane Grace R. Divinagracia 23 Delgado St.,
5.
Ricardo R. Divinagracia 16 Fajardo
6.
Ma. Fe Emily R. Divinagracia 23 Delgado St., Iloilo City
are hereby ordered, jointly and
severally, to pay each of the respondents Bombo Radyo Holdings, Inc. and
Rogelio Florete Sr. the following, to wit:
1.
The
sum of Five Hundred Thousand Pesos (P500,000.00)
as moral damages;
2.
The
sum of Two Hundred Thousand Pesos as and for exemplary damages;
3.
The
sum of One Hundred Thousand Pesos as and for attorney’s fees; and
4.
The
costs of suit.
SO ORDERED.[6]
On
On
Aggrieved
by the issuance of the Writ of Execution, the Heirs of Divinagracia filed a
petition for certiorari[11]
with the CA. They argued that the issuance of the writ of execution by the RTC
was improper, considering that they had already appealed the decision to the
CA. Also, the Heirs of Divinagracia
contended that the RTC erred in granting the writ of execution for a
counterclaim consisting of moral damages, exemplary damages and attorneys fees
despite the fact that said damages under the counterclaim consisted of an
ordinary action and was not an intra-corporate controversy.[12]
On
WHEREFORE, in view of the
foregoing premises, judgment is hereby rendered by us DISMISSING the petition
filed in this case and AFFIRMING the assailed resolution issued by the
respondent judge on
SO ORDERED.[13]
The
CA ruled that Section 4 of Rule 1 of the Interim Rules of Procedure for
Intra-Corporate Controversies was very explicit in providing that “all
decisions rendered in intra-corporate controversies shall be immediately
executory.” Thus, the CA held that the
RTC did not err when it granted Bombo Radyo and Florete’s motion for immediate
execution on the grant of moral damages, exemplary damages and attorney’s fees.
Furthermore, the CA also ruled that since the Heirs of Divinagracia had already
filed a notice of appeal, such act barred them from availing of the remedy of certiorari.
The
Heirs of Divinagracia filed a Motion for Reconsideration,[14]
which was, however, denied by the CA in a Resolution[15]
dated
Hence, herein petition, with the Heirs of
Divinagracia raising the following issues for this Court’s consideration, to
wit:
I.
THE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE TRIAL COURT’S ORDER
ALLOWING IMMEDIATE EXECUTION SINCE SAID ORDER CLASHES WITH THE SUPPLETORY
APPLICATION OF THE RULES OF COURT PROVIDED FOR IN SECTION 2, RULE 1 OF THE
INTERIM RULES, AND DISREGARDS RELEVANT JURISPRUDENCE REGARDING THE EXECUTION OF
COUNTERCLAIMS UNDER THE RULES OF COURT.
II.
THE COURT OF APPEALS GRAVELY ERRED IN FAILING TO RULE THAT THE TRIAL
COURT COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT DISREGARDED PERTINENT AND
WELL-ENTRENCHED JURISPRUDENCE STATING THAT A SEPARATE PETITION FOR CERTIORARI
MAY PROSPER WHERE THE APPEAL DOES NOT APPEAR TO BE A PLAIN, SPEEDY AND ADEQUATE
REMEDY UNDER LAW.
III.
THE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO RULE THAT THE PRESENT
PETITION FOR CERTIORARI WAS PROPER AND JUSTIFIED BECAUSE IT WAS MEANT TO
PREVENT: (A) IRREPARABLE DAMAGE AND INJURY TO PETITIONER HEIRS FROM THE TRIAL
COURT JUDGE’S CAPRICIOUS, ARBITRARY, AND WHIMSICAL EXERCISE OF HIS JUDGMENT;
(B) THE DANGER OF CLEAR FAILURE OF JUSTICE; AND (C) BECAUSE THEIR APPEAL IS
INADEQUATE TO RELIEVE THEM FROM THE INJURIOUS EFFECTS OF THE TRIAL COURT’S
JUDGMENT.
IV.
THE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO RULE THAT IT WAS GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION FOR THE TRIAL
COURT TO INSIST UPON THE EXECUTION OF A MANIFESTLY UNUST AWARD OF MORAL AND
EXEMPLARY DAMAGES AND ATTORNEY’S FEES.
V.
THE HONORABLE COURT OF APPEALS FAILED TO APPRECIATE THAT THE TRIAL
The
petition is meritorious.
At
the crux of the controversy is the determination of whether or not moral
damages, exemplary damages, and attorney’s fees, awarded as a result of a
counterclaim in an intra-corporate case, are immediately executory despite the
pendency of the appeal in the main case.
The
issue is not novel as the same has been resolved in another petition filed
before this Court by the Heirs of Divinagracia in G.R No. 172023.
G.R. No. 172023
The controversy therein originated
from Corporate Case No. 02-27050, which involved a Petition for Mandamus and
Nullification of Delinquency Call and Issuance of Unsubscribed Shares filed by
Divinagracia who claimed he was a stockholder of CBS Development Corporation,
Inc. (CBSDC). Said action was also filed before the same RTC of the present
petition.
In G.R. No. 172023, Divinagracia, as a
stockholder of CBSDC, opposed a proposal to authorize Florete, in his capacity
as President of CBSDC, to mortgage all, or substantially all, of CBSDC’s real
properties to secure a loan obtained by Newsounds Broadcasting Network, Inc.,
Consolidated Broadcasting System, and People’s Broadcasting Services, Inc.
However, majority of the stockholders approved the grant of authority to
Florete and the Board. As a result, Divinagracia, as a dissenting stockholder
wrote a letter exercising his appraisal right under Section 81 of the
Corporation Code. CBSDC’s Board of Directors approved Divinagracia’s exercise
of his appraisal right.
Thereafter, Divinagracia surrendered
his stock certificates. The Board,
however, deferred action on Divinagracia’s request, an act to which
Divinagracia protested to. Later, the corporate secretary informed Divinagracia
that his shares were declared delinquent and that they were to be sold in
public auction.
Consequently, on
On
CBSDC and Diamel filed their answer to
Divinagracia’s petition at the same time interposing their compulsory
counterclaim. Divinagracia, however, died and was substituted by his heirs.
The RTC ruled in favor of CBSDC and
Diamel, and granted their compulsory counterclaim. Consequently, the Heirs of
Divinagracia were ordered by the RTC to pay exemplary damages and attorney’s
fees to CBSDC and Diamel. The Heirs of Divinagracia filed a Notice of Appeal.
Thereafter,
CBSDC and Diamel filed a Motion for Immediate Execution which was granted by
the RTC. This prompted the Heirs of Divinagracia to
file a petition for certiorari before the CA, which was docketed as
CA-G.R. CEB SP No. 00040. In said
petition, the Heirs of Divinagracia questioned the immediate execution of the
grant of exemplary damages and attorney’s fees, despite their having already
filed a Notice of Appeal.
In a Decision dated
On
From
the filing of the intra-corporate dispute on 6 February 2002 until the
promulgation of the challenged Court of Appeals’ decision and resolution on 6
December 2005 and 22 February 2006, respectively, the governing rule,
specifically Section 4, Rule 1 of the Interim Rules, provided that:
All
decisions and orders issued under these Rules shall immediately be executory.
No appeal or petition taken therefrom shall stay the enforcement or
implementation of the decision or order, unless restrained by an appellate
court. Interlocutory orders shall not be subject to appeal.
On 19
September 2006, while the present case remained pending before this Court, the
Court en banc issued a Resolution in A.M. No. 01-2-04-SC titled "Re:
Amendment of Section 4, Rule 1 of the Interim Rules of Procedure Governing
Intra-Corporate Controversies by Clarifying that Decisions Issued Pursuant to
Said Rule are Immediately Executory Except the Awards for Moral Damages,
Exemplary Damages and Attorney’s Fees, if any." The Court
resolved to amend specifically Section 4, Rule 1 of the Interim Rules, to wit:
Acting
on the Resolution dated
x x x
SEC. 4.
Executory nature of decisions and orders.— All decisions and orders issued
under these Rules shall immediately be executory EXCEPT THE AWARDS FOR MORAL
DAMAGES, EXEMPLARY DAMAGES AND ATTORNEY’S FEES, IF ANY. No appeal or petition
taken therefrom shall stay the enforcement or implementation of the decision or
order, unless restrained by an appellate court. Interlocutory orders shall not
be subject to appeal.
The
amended provision expressly exempts awards for moral damages, exemplary
damages, and attorney’s fees from the rule that decisions and orders in cases
covered by the Interim Rules are immediately executory. As can be
gleaned from the title of A.M. No. 01-2-04-SC, the amendment of Section 4, Rule
1 of the Interim Rules was crafted precisely to clarify the previous rule that
decisions on intra-corporate disputes are immediately executory, by
specifically providing for an exception. Thus, the prevailing rule now
categorically provides that awards for moral damages, exemplary damages, and
attorney’s fees in intra-corporate controversies are not
immediately executory.
Indisputably,
the amendment of Section 4, Rule 1 of the Interim Rules is procedural in
character. Well-settled is the rule that procedural laws are construed to be applicable
to actions pending and undetermined at the time of their passage, and are
deemed retroactive in that sense and to that extent. Procedural laws do not
fall under the general rule against retroactive operation of statutes. Further,
the retroactive application of procedural laws does not violate any personal
rights because no vested right has yet attached or arisen from them. Clearly,
the amended Section 4, Rule 1 of the Interim Rules must be applied
retroactively to the present case. Therefore, the trial court’s award of
exemplary damages and attorney’s fees in favor of private respondents is not
immediately executory.[18]
Based
on the foregoing disquisitions, the conclusion is certain in that the award of
moral damages, exemplary damages and attorney’s fees, awarded as an incident to
an intra-corporate case, are exempt from the rule on immediate execution.
This
Court is not unmindful of the fact that the Heirs of Divinagracia also argued
in herein petition that the grant of moral damages, exemplary damages and
attorney’s fees was without basis. This
Court is, however, not inclined to grant such relief in view of the fact that
records show that the Heirs of Divinagracia had already filed a Notice of
Appeal to Civil Case No. 26557 which questioned the dismissal of the derivative
suit filed by Divinagracia. The determination of the propriety of the grant of
damages must, therefore, be determined in the main case and not in herein
petition which assails the propriety of the grant of the writ of execution by
the RTC as held by this Court in Radio
Communications of the Philippines, Inc. v. Lantin,[19]
to wit:
x x x The execution of any award for moral and
exemplary damages is dependent on the outcome of the main case. Unlike
actual damages for which the petitioners may clearly be held liable if they
breach a specific contract and the amounts of which are fixed and certain,
liabilities with respect to moral and exemplary damages, as well as the exact
amounts, remain uncertain and indefinite pending resolution by the Intermediate
Appellate Court and eventually the Supreme Court. The existence of the factual bases of these types of damages and their
causal relation to the petitioners' act will have to be determined in the light
of the assignment of errors on appeal. It is possible that the petitioners,
after all, while liable for actual damages may not be liable for moral and
exemplary damages. Or as in some cases elevated to the Supreme Court, the
awards may be reduced.[20]
WHEREFORE,
premises considered, the petition is GRANTED. The October 5, 2005 Decision and April 21,
2006 Resolution of the Court of Appeals in CA-G.R. SP No. 86435 are hereby REVERSED and SET ASIDE.
SO
ORDERED.
DIOSDADO
M. PERALTA
Associate
Justice
WE CONCUR:
ANTONIO
T. CARPIO
Associate
Justice
Chairperson
ANTONIO EDUARDO B. NACHURA ROBERTO A. ABAD
Associate Justice Associate Justice
JOSE CATRAL
Associate
Justice
ATTESTATION
I attest that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Second Division, Chairperson
CERTIFICATION
Pursuant to Section 13, Article
VIII of the Constitution and the Division Chairperson’s Attestation, I certify
that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s
Division.
RENATO
C. CORONA
Chief
Justice
[1] Rollo, pp. 3-45.
[2] Penned by Associate Justice Isaias P. Dicdican, with
Associate Justices Ramon M. Bato, Jr. and Enrico A. Lanzanas, concurring; id.
at 46-53.
[3]
[4] The Securities Regulation Code.
5.2.
The Commission’s jurisdiction over all cases enumerated under section 5 of
Presidential Decree No. 902-A is hereby transferred to the Courts of general
jurisdiction or the appropriate Regional Trial Court: Provided, That the
Supreme Court in the exercise of its authority may designate the Regional Trial
Court branches that shall exercise jurisdiction over the cases. The Commission
shall retain jurisdiction over pending cases involving intra-corporate disputes
submitted for final resolution which should be resolved within one (1) year
from the enactment of this Code. The Commission shall retain jurisdiction over
pending suspension of payment/rehabilitation cases filed as of
[5] Penned
by Presiding Judge J. Cedrick O. Ruiz; rollo, pp. 57-76.
[6] Rollo, pp. 75-76.
[7]
[8]
[9]
[10]
[11] CA rollo, pp. 2-13.
[12]
[13] Rollo, p. 52.
[14]
[15]
[16]
[17] Penned by Senior Associate Justice Antonio T. Carpio,
with Associate Justices Roberto A. Abad, Martin S. Villarama, Jr., Jose
Portugal Perez and Jose Catral Mendoza, concurring.
[18] Emphasis in the original.
[19] Nos. L-59311 & 59320,
[20]