STRONGHOLD INSURANCE COMPANY, INC., PETITIONER, VS. HONORABLE NEMESIO S. FELIX, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 56, REGIONAL TRIAL COURT, MAKATI CITY, RICHARD C. JA…

Stronghold Insurance versus Felix

The Case

This is a petition for review brought by Stronghold Insurance Company, Incorporated against Judge Nemesio Felix, in his capacity as presiding judge of the Regional Trial Court of Makati City, Branch 56, against the branch clerk of court, Richard Jamora, and against Emerita Garon. Stronghold Insurance asks the Supreme Court to set aside the decision of the Court of Appeals which had dismissed its petition and lifted the temporary restraining order it had earlier issued. The dispute is about a trial court order allowing the immediate execution of a judgment pending appeal, and about a writ of execution that commanded the garnishment of a sum far larger than the amount for which Stronghold Insurance had been held liable. The case matters because it gathers into one decision the strict requisites of discretionary execution and the rule that the amount to be executed must be fixed by the court, not left to the sheriff.

Procedural History

Emerita Garon filed an action for a sum of money against Project Movers Realty and Development Corporation and Stronghold Insurance before the Regional Trial Court of Makati City, Branch 56. The trial court granted Garon's motion for summary judgment and rendered judgment in her favor, holding Stronghold Insurance jointly and solidarily liable. Stronghold Insurance moved for reconsideration, which the trial court denied. Garon then moved for execution pending appeal, and the trial court granted the motion, requiring Garon to post a bond of 20 million pesos. The branch clerk of court issued the writ of execution pending appeal. Stronghold Insurance filed a notice of appeal and, at the same time, filed a petition for certiorari before the Court of Appeals, which issued a temporary restraining order. The Court of Appeals later dismissed the petition and lifted its restraining order, sustaining the trial court on the ground of the illness of Garon's husband. Stronghold Insurance then came to the Supreme Court by petition for review, and the Supreme Court issued its own temporary restraining order. The Supreme Court later noted that the Court of Appeals, in a separate decision on the main case, had absolved Stronghold Insurance from liability, and that this decision was itself pending review before the Supreme Court.

Facts

Emerita Garon sued Project Movers Realty and Development Corporation and Stronghold Insurance to collect on two promissory notes, one denominated in pesos and one in dollars, and on a surety agreement. The trial court found that the defendants had admitted the genuineness and due execution of the promissory notes and the surety agreement, and it rendered summary judgment. Project Movers was ordered to pay the principal amounts with interest and penalties, and Stronghold Insurance was held jointly and solidarily liable to Garon in the amount of 12,755,139 pesos and 85 centavos, with attorney's fees of 200,000 pesos plus costs of suit.

Garon then moved for execution pending appeal. She relied on three grounds: that any appeal would be patently dilatory, that her husband was in ill health and the family urgently needed the funds, and that she was willing to post a bond. The trial court granted the motion, ordering a bond of 20 million pesos, and the clerk of court issued a writ of execution pending appeal. Notices of garnishment were served even before the Court of Appeals could act on Stronghold Insurance's petition.

The writ of execution and the notices of garnishment were for 56 million pesos, although the judgment held Stronghold Insurance liable only for 12,755,139 pesos and 85 centavos plus attorney's fees. The Court of Appeals held that Stronghold Insurance had failed to show that more than its adjudged liability had actually been garnished. The Supreme Court disagreed, because the writ itself left the sheriff free to garnish more than the judgment amount.

Issues

• Whether or not there are good reasons to justify execution pending appeal.
• Whether or not the posting of a bond, by itself, is sufficient to justify execution pending appeal.
• Whether or not execution pending appeal may be enforced against Stronghold Insurance in an amount exceeding its liability under the trial court's judgment.

Applicable Provisions

Section 2, paragraph (a) of Rule 39 of the 1997 Rules of Civil Procedure governs discretionary execution and provides:

Section 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.

This provision supplies the three requisites the Court applies: a motion by the prevailing party with notice, good reasons, and a special order stating those reasons.

Article 68 of the Family Code, cited by the Court of Appeals, provides:

Article 68. The husband and wife are obliged to live together, observe mutual love, respect and fidelity, and render mutual help and support.

This provision was invoked to connect Garon's husband's illness to her need for the funds, but the Court found the connection insufficient as a good reason.

Article 195 of the Family Code, also cited by the Court of Appeals, provides:

Article 195. Subject to the provisions of the succeeding articles, the following are obliged to support each other to the whole extent set forth in the preceding article: (1) The spouses; (2) Legitimate ascendants and descendants; (3) Parents and their legitimate children and the legitimate and illegitimate children of the latter; (4) Parents and their illegitimate children and the legitimate and illegitimate children of the latter; and (5) Legitimate brothers and sisters, whether of the full or half-blood.

This provision establishes the mutual obligation of support between spouses, which the Court of Appeals used to justify execution, but which the Supreme Court did not accept as a good reason in this case.

Ruling

On the first issue, the Court held that the petition has merit and that Garon failed to present good reasons to justify execution pending appeal. Execution pending appeal is an extraordinary remedy, more the exception than the rule, and it is strictly construed against the movant. The requisites are a motion by the prevailing party with notice to the adverse party, good reasons for execution pending appeal, and the statement of those good reasons in a special order. Good reasons must be special, important, and pressing, 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.

The trial court had ruled that any appeal would be a ploy to delay the proceedings. The Court rejected this, holding that the authority to determine whether an appeal is dilatory lies with the appellate court, and that the trial court prematurely judged the merits of the main case on appeal. The Court also noted that the Court of Appeals had absolved Stronghold Insurance from liability, which showed that the appeal was not dilatory on its part.

On the second issue, the Court held that the posting of a bond, standing alone and absent the good reasons required by Section 2 of Rule 39, is not enough to allow execution pending appeal. The bond is only an additional factor for the protection of the defendant's creditor. The Court distinguished the cases relied upon by the trial court, because in those cases it was the movant who was ill, whereas here it was not Garon but her husband who was ill.

On the third issue, the Court held that execution pending appeal against Stronghold Insurance may not exceed its liability under the trial court's order. The writ of execution was for 56 million pesos, while the judgment held Stronghold Insurance liable only for 12,755,139 pesos and 85 centavos plus attorney's fees. The Court held that leaving to the sheriff the determination of the exact amount due would vest that officer with judicial powers, and that the orderly administration of justice requires that the amount on execution be determined judicially and the duties of the sheriff confined to purely ministerial ones.

Doctrine

Execution pending appeal is an extraordinary remedy, more the exception than the rule, and is strictly construed against the movant. It may issue only upon a motion by the prevailing party with notice to the adverse party, upon good reasons, and upon a special order stating those good reasons. Good reasons must be special, important, and pressing, 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. The posting of a bond, standing alone, is not a good reason. The authority to determine whether an appeal is dilatory lies with the appellate court, not the trial court. Finally, the amount to be executed must be determined judicially, and the sheriff's duties are purely ministerial.

Disposition

The Supreme Court granted the petition, set aside the decision of the Court of Appeals, set aside the trial court's order granting execution pending appeal and the writ of execution pending appeal, and made permanent the temporary restraining order it had issued.

Remember This

Memorize the three requisites of discretionary execution and the rule that a bond alone is never a good reason. Examiners use this case to test the strict construction of execution pending appeal and the principle that the sheriff cannot be given discretion to fix the amount to be executed.