CORONA INTERNATIONAL, INC., PETITIONER, VS. THE COURT OF APPEALS AND THE PHILIPPINE COCONUT AUTHORITY, RESPONDENTS. E C I S I O N 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.
SP No. 42829^[1] 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 99,
rendered a Decision^[2] 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 ½% per
   cent of P9,082.068.00 monthly from March 30, 1995 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]

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^[4] denying private respondent’s Motion to
Quash and ordered the Land Bank of the Philippines 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 ISSUING A WRIT OF
PRELIMINARY INJUNCTION.”^[5]

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 in the
Petition for Certiorari before the Court of Appeals.^[6]

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 will outweigh the injury or
damages should the losing party secure a reversal of the judgment.^[7]

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
operations with the National Telecommunications Commission.^[8] Evidently, such an application would not
have been filed had petitioner truly been in the brink of financial bankruptcy.
Moreover, the latest financial report submitted by petitioner to the Securities
and Exchange Commission, on the records, would readily show that its assets
exceed its liabilities.^[9]

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 the
general rule.^[10] So, too, execution
pending appeal is not to be availed of and applied routinely, but only in
extraordinary circumstances.^[11] 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 and
growth.^[12] 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.

^[2] Id., Annex “C”;
Rollo, pp. 61-77.

^[3] Id., at p. 77.

^[4] Id., Annex “I”;
Rollo, pp. 100-102.

^[5] Petition, p. 12; Rollo, p.
14.

^[6] See Buñag 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.

^[8] 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.

^[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.