Eudela vs. Court of Appeals

A writ of execution pending appeal may issue only upon motion of the prevailing party, based on good reasons stated in a special order; the mere filing of a bond does not constitute such good reason. The circumstances that render the judgment likely ineffectual — such as the judgment debtor’s insolvency, departure from the country, or dissipation of assets — may, however, independently satisfy the requirement of good reasons.

Private respondents filed two complaints for injunction, specific performance, and damages against petitioners in the Regional Trial Court of Quezon City. The cases were consolidated and, after trial, the trial court found petitioners solidarily liable for defrauding the private respondents, ordering them to pay P450,000.00 plus 15% interest and P30,000.00 attorney’s fees. The decision was later amended to specify the individual amounts recoverable by each complainant. Petitioners appealed. Meanwhile, private respondents moved for execution pending appeal. The trial court granted the motion, citing the precarious financial condition of the defendants and the risk that the judgment would become unenforceable. The Court of Appeals sustained the order. Petitioners then sought review before the Supreme Court.

• Nature of the Action: Private respondents Niza Soriano Vergel de Dios, Richard Ng, and Natividad Mallari‑Ng filed two complaints against petitioners Eudela, Tuazon, Pangilinan, Guevarra, and Pioneer Savings and Loan Bank for injunction, specific performance, and damages. The cases were consolidated in the Regional Trial Court of Quezon City, Branch 94.
• The RTC Decision: After trial, the RTC found that petitioners had defrauded the private respondents. In a Decision dated December 16, 1987, petitioners were held solidarily liable to pay P450,000.00 with 15% interest and P30,000.00 as attorney’s fees.
• Amendment and Appeal: On motions for reconsideration by both parties, the RTC amended its decision on February 1, 1988, merely to specify the respective amounts due to each complainant. On that same date, petitioners filed a notice of appeal from the original decision.
• Motion for Execution Pending Appeal: Private respondents received the amended decision on February 13, 1988. Six days later, on February 19, 1988, they filed a motion for execution pending appeal, citing the financial condition of the defendants.
• The Trial Court’s Order: The RTC, then presided over by Judge Filemon H. Mendoza, granted the motion in a special order that listed the following reasons:
  1. The case had been pending since May 26, 1984, and there was uncertainty whether the individual defendants could satisfy the awards, rendering the judgment potentially a mere paper judgment.
  2. Pioneer Savings and Loan Bank (a defendant) was under receivership and insolvent, with many creditors.
  3. Renato Tuazon and his family had emigrated and were selling real properties, with the possibility of staying abroad permanently.
  4. The court required the private respondents to post a bond of P100,000.00 to answer for damages should the decision be reversed.
  5. Supervening Circumstances of Individual Defendants: The records additionally showed that Leo Guevarra and Arturo Eudela had no registered real properties in their names, and Eudela was reportedly at large facing malversation charges filed by the Bureau of Internal Revenue. Francisco Pangilinan, president of the insolvent bank, had not denied allegations that his real properties were heavily mortgaged and that he had sold two cars.
  6. Petitioners’ Motion for Counterbond: Petitioners moved to file a counterbond to prevent enforcement of the writ. The motion was granted, but the counterbond had not been filed as of the Supreme Court’s decision.

• Lack of Good Reasons: Petitioners argued that the trial court’s order granting execution pending appeal was not supported by the “good reasons” required under Section 2, Rule 39 of the Rules of Court. They maintained that the mere filing of a bond was insufficient to justify immediate execution.
• Constitutional Infirmity of the CA Resolution: Petitioners contended that the Court of Appeals’ resolution denying their motion for reconsideration failed to state clearly and distinctly the facts and law on which it was based, in violation of Section 14, Article VIII of the 1987 Constitution.
• Jurisdiction: Petitioners asserted that the trial court had lost jurisdiction to act on the motion for execution pending appeal because a notice of appeal had already been filed.
• Prematurity: Although not frontally refuted, petitioners generally argued that their petition for certiorari before the Court of Appeals was proper, citing extensive jurisprudence on extraordinary remedies.

• Existence of Good Reasons: Private respondents argued that the insolvency of Pioneer Savings and Loan Bank, the emigration and property sales of Renato Tuazon, the apparent lack of assets of the other individual petitioners, and the length of time the case had been pending collectively constituted the “good reasons” required by law.
• Bond as Adequate Protection: The posting of a P100,000.00 bond, they contended, furnished ample protection to the petitioners against any damage resulting from immediate execution.
• Non-Divestment of Jurisdiction: Respondents maintained that the trial court retained jurisdiction to entertain the motion for execution pending appeal despite the filing of a notice of appeal, because the records had not yet been elevated to the appellate court.
• Prematurity of Petitioners’ Resort to Certiorari: Respondents argued that the petition for certiorari in the Court of Appeals was premature, having been filed on May 11, 1988, before the writ of execution was actually issued on May 30, 1988, and before the RTC order could be fully implemented.

• Good Reasons for Execution Pending Appeal: Whether the trial court’s special order enumerated sufficient “good reasons” as required by Section 2, Rule 39 of the Rules of Court to justify execution pending appeal.
• Bond as Sole Justification: Whether the mere filing of a bond by the prevailing party constitutes, by itself, a “good reason” for execution pending appeal.
• Jurisdiction Over the Motion: Whether the trial court retained jurisdiction to act on the motion for execution pending appeal after the petitioners had filed a notice of appeal.
• Constitutional Sufficiency of the CA Resolution: Whether the Court of Appeals’ resolution denying the motion for reconsideration satisfied the constitutional mandate that decisions must state clearly and distinctly the facts and law on which they are based.
• Prematurity of the Petition in the CA: Whether the petition for certiorari filed in the Court of Appeals was premature because it was brought before the actual issuance of the writ of execution.

• Good Reasons for Execution Pending Appeal: The trial court’s special order listed specific supervening circumstances: the defendant bank was under receivership and insolvent; Renato Tuazon had emigrated with his family and was selling real properties; Leo Guevarra and Arturo Eudela had no registered real properties in their names, and Eudela was at large facing malversation charges; and Francisco Pangilinan’s properties were heavily mortgaged while he had sold two cars. Together with the fact that the complaints had been pending since 1984 and the judgment remained unsatisfied, these circumstances constituted “good reasons” as required by Section 2, Rule 39. The trial court therefore did not commit grave abuse of discretion, but rather acted judiciously in granting the motion.
• Bond as Sole Justification: The mere filing of a bond is not sufficient to justify execution pending appeal. The rule in Roxas v. Court of Appeals explicitly holds that to treat the posting of a bond alone as a good reason would make immediate execution routinary, the rule rather than the exception, which the law does not contemplate. However, where independent good reasons exist, the bond provides added protection to the adverse party.
• Jurisdiction Over the Motion: The filing of a notice of appeal does not automatically divest the trial court of jurisdiction. Under the applicable rules and prevailing jurisprudence, the trial court may still entertain a motion for execution pending appeal filed within the reglementary period, provided the records have not yet been elevated to the appellate court. The motion in this case was timely filed within 15 days from notice of the amended decision.
• Constitutional Sufficiency of the CA Resolution: The resolution of the Court of Appeals denying the motion for reconsideration stated that there was “no cogent reason to justify the reversal of our decision of April 10, 1987.” This was held to be a sufficient statement of the legal basis for the denial under Section 14, Article VIII of the Constitution, as the resolution effectively sustained and reaffirmed the factual findings and legal conclusions already set forth in the decision. There is no requirement to reproduce those findings and conclusions verbatim in the order denying reconsideration.
• Prematurity of the Petition in the CA: The petitioners did not squarely refute the appellate court’s finding that the petition was premature because it was filed before the issuance of the challenged order granting the writ of execution. Instead, they merely cited general jurisprudence on extraordinary remedies. Accordingly, the petition was properly dismissed.

• Requisites of Execution Pending Appeal (Rule 39, Sec. 2) — A writ of execution pending appeal may issue only upon compliance with the following: (a) a motion by the prevailing party with notice to the adverse party; (b) the existence of good reasons; and (c) the statement of those good reasons in a special order. The existence of “good reasons” is indispensable; absent such reasons, the order is issued with grave abuse of discretion. “Good reasons” must be special, important, and pressing — such as the insolvency or precarious financial condition of the judgment debtor that renders the judgment likely ineffectual if not immediately executed.
• Bond Is Not a “Good Reason” — The posting of a bond by the prevailing party, standing alone, does not constitute a “good reason” for execution pending appeal. To hold otherwise would make immediate execution the rule rather than the exception, contrary to the design of Rule 39.
• Trial Court’s Retained Jurisdiction After Notice of Appeal — The mere filing of a notice of appeal does not divest the trial court of jurisdiction over the case. The court retains residual jurisdiction to act on a motion for execution pending appeal, as long as the motion is filed within the applicable reglementary period and the records have not yet been forwarded to the appellate court.
• Constitutional Mandate and Denial of Reconsideration — A resolution denying a motion for reconsideration satisfies the requirement of Section 14, Article VIII of the Constitution when it states that no cogent reason exists to reverse the decision, as it is deemed to adopt the decision’s factual findings and legal conclusions.

• “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. But to consider the mere posting of a bond a ‘good reason’ would precisely make immediate execution of a judgment pending appeal routinary, the rule rather than the exception.”
• “The general rule under Sec. 1 of Rule 39 of the Rules of Court is that a judgment can be executed only after it has become final and executory … By way of exception, however, execution pending appeal is allowed under Sec. 2 of the same Rule …”
• “The said resolution found ‘no cogent reason to justify the reversal of our decision of April 10, 1987.’ This was a sufficient statement of the legal basis required by Article VIII, Sec. 14, of the Constitution. In so saying, the respondent court was in effect sustaining and re-affirming the challenged decision, with the factual findings and legal conclusions contained therein.”

• Roxas v. Court of Appeals, 157 SCRA 390 — Followed as controlling authority that the mere posting of a bond is not a “good reason” for execution pending appeal.
• Cuento v. Pareres, 40 Phil. 346 — Cited for the rule that the date of an amended judgment is considered the date of the decision for purposes of computing the period to perfect appeal.
• Engineering Construction, Inc. v. National Power Corp., et al., 163 SCRA 9 — Cited in reiterating the requisites for execution pending appeal under Rule 39, Section 2.
• Valencia v. Court of Appeals, 184 SCRA 561 — Cited similarly for the requisites of execution pending appeal.
• Universal Far East Corp. v. Court of Appeals, 131 SCRA 642 — Cited for the principle that the trial court retains jurisdiction to act on a motion for execution pending appeal despite the filing of a notice of appeal, as long as the records have not been elevated.

• Rule 39, Section 1, Rules of Court — Establishes the general rule that execution shall issue only upon a final and executory judgment; applied as the baseline rule from which execution pending appeal is an exception.
• Rule 39, Section 2, Rules of Court — Governs execution pending appeal; requires a motion, good reasons, and a special order stating those reasons. The provision was applied to test the validity of the trial court’s order.
• Article VIII, Section 14, 1987 Constitution — Mandates that decisions of courts must state clearly and distinctly the facts and law on which they are based. Applied to sustain the Court of Appeals’ resolution denying reconsideration.
• Interim Rules, paragraphs 18 and 19(b) — Cited to support the rules that no appeal bond or record on appeal is required, and that the mere filing of a notice of appeal does not divest the trial court of jurisdiction.

Griño-Aquino, Medialdea, and Bellosillo, JJ., concurred.