ERIBERTO G. VALENCIA, PETITIONER, VS. HON. COURT OF APPEALS, HON. CARLOS C. OFILADA, PRESIDING JUDGE, REGIONAL TRIAL COURT, BULACAN, BRANCH XL, THIRD JUDICIAL REGION, DEPUTY SHE…

Valencia versus Court of Appeals

The Case

This is a petition for review brought by Eriberto Valencia against the Court of Appeals and the presiding judge of the Regional Trial Court of Bulacan, Branch Forty, arising from a civil case for rescission of a lease contract over a fishpond. After the trial court rendered judgment awarding damages to the defendants, it granted their motion for execution pending appeal on the sole ground that they had posted a bond. Valencia asks the Supreme Court to annul that writ. The case matters because it settles two questions every litigator must know: when an appeal is deemed perfected, and what counts as a good reason for execution pending appeal.

Procedural History

Valencia filed a complaint for rescission of a lease contract with a prayer for preliminary mandatory injunction before the Regional Trial Court of Bulacan, Branch Forty, against the private respondents, who answered with a counterclaim for damages. The trial court rendered judgment declaring the prayer for rescission moot and awarding moral and exemplary damages and attorney's fees to the defendants. Valencia filed a notice of appeal, which the trial court gave due course. The private respondents then moved for execution pending appeal and posted a bond. Over Valencia's opposition, the trial court granted the motion and later issued the writ. Valencia's motion for reconsideration was denied. He then filed a petition for certiorari, prohibition and mandamus with the Court of Appeals, which dismissed it, and denied his motion for reconsideration. Valencia elevated the matter to the Supreme Court, which issued a temporary restraining order and ultimately decided the petition.

Facts

In July 1984, Valencia sued in the Regional Trial Court of Bulacan for rescission of a lease over a twenty-four hectare fishpond in Paombong, Bulacan, and asked for a writ of preliminary mandatory injunction against the private respondents. The private respondents answered and counterclaimed for damages. During the pendency of the case, the lease contract expired and the defendants peacefully surrendered the fishpond to Valencia.

In its decision of November 1988, the trial court held that the prayer for rescission had become moot and academic, leaving only the claim for damages. It awarded one hundred thousand pesos as moral damages and fifty thousand pesos as exemplary damages to each defendant, thirty thousand pesos as attorney's fees, and the costs of suit. Valencia received his copy of the decision in January 1989 and filed a notice of appeal, which the trial court gave due course the same day.

The next day, the private respondents moved for execution pending appeal, offering to post a bond. Over Valencia's opposition, the trial court granted the motion, the defendants having posted a bond of three hundred thirty thousand pesos, and allowed Valencia a period to file a counter bond to stay the writ. His motion for reconsideration was denied on the ground that an offer of a bond is a good ground for execution pending appeal. A writ of execution pending appeal was then issued. Valencia went to the Court of Appeals on certiorari, prohibition and mandamus, but that court dismissed the petition and denied reconsideration.

Issues

• Whether or not the trial court lost jurisdiction to act on the motion for execution pending appeal because Valencia's appeal had already been perfected by his filing of a notice of appeal.
• Whether or not the mere filing of a bond by the prevailing party is a good reason for ordering execution pending appeal.
• Whether or not awards of moral and exemplary damages may be the subject of execution pending appeal.
• Whether or not certiorari lies against an order granting execution pending appeal, despite the availability of an appeal and of a supersedeas bond.

Applicable Provisions

Section 2 of Rule 39 of the Rules of Court, as discussed in the decision, governs discretionary execution pending appeal:

Under Section 2 of Rule 39 of the Rules of Court a writ of execution may be issued to enforce a judgment before the expiration of the period to appeal upon showing good reasons.

This is the provision whose requisites the Court applies in testing the trial court's order.

Section 1 of Rule 65 of the Rules of Court, as quoted in the decision, defines when certiorari may be invoked:

Although Section 1, Rule 65 of the Rules of Court provides that the special civil action of certiorari may only be invoked when there is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of law, this rule is not without exception.

This provision bears on whether Valencia properly resorted to certiorari instead of an appeal.

Ruling

On the first issue, the Court held that the appeal was not perfected by the filing of the notice of appeal. Under the present procedure, an appeal is perfected upon the expiration of the last day to appeal by any party. The defendants had until January 18, 1989 to appeal, and their motion for execution was filed on January 17, 1989, before that period expired. That the trial court gave due course to Valencia's notice of appeal was inconsequential, because a notice of appeal does not require the approval of the trial court.

On the second issue, the Court ruled for Valencia. It laid down the requisites for discretionary execution pending appeal: a motion by the prevailing party with notice to the adverse party, a good reason for issuing the writ, and the statement of that good reason in a special order. The trial court relied solely on the filing of a bond, and the Court held that the mere filing of a bond is not a good reason. It quoted its earlier ruling:

It is not intended obviously that execution pending appeal shall issue as a matter of course. Good reasons, special, important, pressing reasons must exist to justify it; otherwise, instead of an instrument of solicitude and justice, it may well become a tool of oppression and inequity.

Absent a good reason, the special order of execution must be struck down for grave abuse of discretion. The Court added that Section 2 of Rule 39, being an exception to the general rule, must be restrictively construed.

On the third issue, the Court held that awards for moral and exemplary damages cannot be the subject of execution pending appeal, because their execution depends on the outcome of the main case and their amounts remain uncertain and indefinite pending appeal.

On the fourth issue, the Court held that certiorari lies against an order granting execution pending appeal where the order is not founded upon good reasons. The availability of an appeal does not bar certiorari where appeal is not an adequate remedy. Nor may the losing party be faulted for not filing a supersedeas bond, since such a bond does not entitle him to suspension of execution as a matter of right.

Doctrine

An appeal is perfected upon the expiration of the last day to appeal by any party, not upon the filing of the notice of appeal, and the trial court's act of giving due course to a notice of appeal does not affect that rule. Execution pending appeal under Section 2 of Rule 39 requires a motion by the prevailing party with notice, a good reason, and a statement of that reason in a special order. The mere filing of a bond is not a good reason. Awards of moral and exemplary damages cannot be executed pending appeal. Certiorari lies against an order granting execution pending appeal that is not founded on good reasons.

Disposition

The petition was granted; the resolutions of the Court of Appeals were reversed and set aside, the writ of execution was annulled, and the temporary restraining order was made permanent.

Remember This

The single line to memorize: the mere filing of a bond is not a good reason for execution pending appeal. Examiners use this case to test the requisites of discretionary execution and the rule on when an appeal is perfected.