MIGUEL R. SOCCO, PETITIONER, VS. CONCHITA VDA. DE LEARY AND THE COURT OF APPEALS, RESPONDENTS.

Socco versus Vda. de Leary

The Case

This is a petition for review brought before the Supreme Court by Miguel R. Socco against Conchita Vda. de Leary and the Court of Appeals. Socco had won a final judgment in the Court of First Instance of Manila ordering the defendants to pay damages and to deliver a large block of shares in the Gold Star Mining Company, or in the alternative to pay their par value. The dispute that reached this Court concerns the execution of that judgment: whether the trial court could reject the particular stock certificates tendered in satisfaction and instead order payment of their par value, and whether the Court of Appeals could correct that order through certiorari. The case matters because it fixes the rule that a court may not, through an order of execution, substantially vary the terms of a judgment that has already become final and executory.

Procedural History

The Court of First Instance of Manila rendered judgment in favor of Socco, ordering Conchita Vda. de Leary and Carlos A. Barretto jointly and severally to pay damages and to deliver shares of the Gold Star Mining Company or pay their par value. The defendants appealed to the Court of Appeals, which modified the judgment by ordering the delivery of additional shares or their par value upon the release of the remaining escrow shares. Leary sought review of that modified judgment in the Supreme Court, but the petition was dismissed for lack of merit, and the judgment became final.

After remand, the trial court issued an order of execution. When Leary tendered stock certificates in satisfaction, Socco questioned one certificate covering ninety-six thousand shares, and the trial court rejected it, ordering instead that a writ of execution issue against the supersedeas bond for the par value of those shares. Leary moved to substitute other certificates, but the motion was denied, and her motion to quash the writ was likewise denied. She then filed a petition for certiorari in the Court of Appeals, which set aside the order of execution and made permanent the writ of preliminary injunction. Socco brought that decision to the Supreme Court by petition for review.

Facts

Socco obtained a judgment against Leary and Barretto requiring them to pay him ten thousand pesos in damages and to deliver two hundred twenty-five thousand shares of the Gold Star Mining Company or pay their par value. On appeal, the Court of Appeals modified the judgment to require the delivery of an additional one hundred fifty thousand shares or their par value upon the release of the remaining escrow shares. That judgment became final after the Supreme Court dismissed Leary's petition for review.

When the case was remanded, the trial court ordered the defendants to deliver three hundred seventy-five thousand shares or pay their par value within three days. Leary delivered shares and paid the damages and costs, then asked that the judgment be recorded as fully satisfied. Socco questioned one certificate covering ninety-six thousand shares. After receiving evidence, the trial court rejected that certificate because the shares were registered in the names of third persons and there was no showing that the stockholders had indorsed or transferred them, and it ordered execution against the supersedeas bond for the par value of nine thousand six hundred pesos.

Leary received a copy of that order at three in the afternoon and, about an hour later, filed a motion to substitute other certificates covering the same ninety-six thousand shares, attaching them to her motion. The next day the writ of execution issued, and two days later the motion for substitution was denied for lack of merit. Her motion to quash the writ was likewise denied, so she went to the Court of Appeals on certiorari.

Issues

• Whether or not a prior motion for reconsideration in the trial court was necessary before Leary could resort to certiorari.
• Whether or not the trial court acted with authority in denying the substitution of the rejected shares and ordering payment of their par value.
• Whether or not the Court of Appeals had authority to take cognizance of the petition for certiorari, considering that the judgment was already final and the order of execution was not appealable.
• Whether or not the motion for substitution, which stated no time and place of hearing and was served without three days notice, was fatally defective.

Applicable Provisions

Section 4 of Rule 26 of the Rules of Court, as it then stood, governs the notice required for motions, and the Court cites it to justify hearing the motion on shorter notice. It provides:

Section 4. Notice. — No motion shall be heard by any court or judge unless the motion has been served upon the adverse party at least three days before the hearing thereof, and the notice of the motion shall state the time and place of the hearing.

This provision bears on the last issue, because the Court holds that its three-day requirement may be relaxed when the urgency of the case demands it.

Ruling

On the first issue, the Court held that while a motion for reconsideration should generally precede recourse to certiorari, it may be dispensed with where execution had been ordered and the need for relief was extremely urgent. The urgency here justified going directly to the Court of Appeals.

On the second issue, the Court held that the trial court exceeded its authority. By rejecting the particular shares and ordering payment of their par value, the trial court in effect rejected not the shares but the choice to deliver shares or pay their par value, a choice the judgment itself had granted to the defendants. This varied the terms of an executory judgment, which the court no longer had power to do, and nullified the freedom of choice conferred by the judgment.

On the third issue, the Court acknowledged the general rule that no appeal lies from an order of execution of a final judgment, but recognized an exception: where the order of execution would substantially vary the terms of the judgment, the order is appealable. Because the acceptance, rejection, or substitution of the shares involved questions of fact, and by reason of the nature of the case and the amount involved, the appeal lay with the Court of Appeals. The certiorari sought there was therefore in aid of its appellate jurisdiction.

On the fourth issue, the Court held that, considering the urgency, the motion could be heard on shorter notice, and that the time and place of hearing were substantially indicated in the notice asking for immediate consideration by the Court of First Instance of Manila.

Doctrine

A court may not, through an order of execution, substantially vary the terms of a judgment that has already become final and executory; to do so is to nullify the very rights the judgment granted, including a defendant's freedom of choice to deliver shares or pay their par value. While no appeal ordinarily lies from an order of execution of a final judgment, an exception obtains where the order of execution would substantially vary the terms of the judgment, in which case the order is appealable. Certiorari may be availed of without a prior motion for reconsideration where execution has been ordered and the need for relief is extremely urgent, and the three-day notice requirement under Section 4 of Rule 26 may be relaxed in urgent cases.

Disposition

The Supreme Court affirmed the decision of the Court of Appeals, with costs against the petitioner Socco.

Remember This

The single line worth memorizing is that an order of execution which substantially varies the terms of a final judgment is appealable, and the court issuing it acts without authority. Examiners use this case to test the exception to the rule against appealing orders of execution, and the urgency exception to the requirement of a prior motion for reconsideration before certiorari.