Lee vs. Trocino

Execution pending appeal may be stayed only upon approval by the proper court of a sufficient supersedeas bond filed by the party against whom it is directed; until such approval, all execution acts are presumed regular, and an injunction contained in a decision subsequently vacated by an amended decision ceases to have any force or effect.

Magdaleno M. Peña rendered legal services to Urban Bank, Inc. in connection with the eviction of occupants from a property Urban Bank purchased from Isabela Sugar Company. After more than thirteen months, Peña filed Civil Case No. 754 before the Regional Trial Court of Bago City, Branch 62, for recovery of agent's compensation, expenses, damages, and attorney's fees against Urban Bank and its board members and officers, including petitioner Eric L. Lee. The Supreme Court, in a prior disbarment case filed by Urban Bank against Peña (Urban Bank, Inc. vs. Peña, A.C. No. 4863, September 7, 2001), found the existence of an attorney-client relationship between Peña and Urban Bank, thereby giving Peña ground to collect fees for his services.

On March 1, 1996, Magdaleno M. Peña filed before the Regional Trial Court of Bago City, Branch 62, a complaint docketed as Civil Case No. 754 for recovery of agent's compensation, expenses, damages, and attorney's fees against Urban Bank, Inc. and its board of directors and officers, including petitioner Eric L. Lee. The action arose from legal services Peña rendered in connection with the eviction of occupants from a property Urban Bank had purchased from Isabela Sugar Company. On May 28, 1999, the trial court rendered judgment in favor of Peña, ordering the defendants to pay jointly and severally P24,000,000 as compensation, P3,000,000 as reimbursement of expenses, P1,000,000 as attorney's fees, and P500,000 as exemplary damages.

On June 8, 1999, Peña moved for execution pending appeal. Lee and his co-defendants filed a notice of appeal on June 15, 1999 and opposed the motion. On October 29, 1999, the trial court issued a Special Order granting execution pending appeal and a corresponding Writ of Execution on the same day. Lee and co-defendants de Leon and Gonzales filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 55667. The appellate court issued a Temporary Restraining Order on November 9, 1999, and on January 12, 2000, rendered a Decision annulling the Special Order and Writ of Execution and directing respondents to desist from further implementation. Peña moved for reconsideration, which was granted. On August 18, 2000, the Court of Appeals issued an Amended Decision setting aside the January 12, 2000 Decision and denying the petition, effectively reinstating the trial court's Special Order. The Court of Appeals also required Peña to post a P15 million indemnity bond. On October 31, 2000, the appellate court issued a Resolution staying execution conditioned upon posting a P40 million supersedeas bond, which was approved on December 8, 2000.

Meanwhile, sometime in 1999 and 2000, Peña, pursuant to the Special Order and Writ of Execution, caused the levy and sale by public auction of properties of Urban Bank and its co-defendants, including Lee's shares of stock in EQL Properties, Inc., Manila Polo Club, Inc., Manila Golf and Country Club, Inc., Sta. Elena Golf and Country Club, and Tagaytay Highlands International Golf Club, Inc. Execution sales were conducted beginning August 31, 2000 and ended on October 30, 2000 — after the Amended Decision reinstating execution but before approval of the supersedeas bond. When Peña sought to transfer Lee's shares in EQLPI, the corporate secretary refused, prompting Peña to file Civil Case No. 1088 on March 28, 2001, to compel the transfer.

Lee moved to dismiss Civil Case No. 1088, claiming it sought to enforce the Special Order and Writ of Execution covered by the stay order, but the trial court denied the motion. Instead of filing an answer, Lee filed with the Court of Appeals a special civil action docketed as CA-G.R. SP No. 65023, charging Peña and the sheriff with indirect contempt for contumacious disobedience to the appellate court's orders in CA-G.R. SP No. 55667, and seeking prohibition and certiorari to annul the proceedings in Civil Case No. 1088 and enjoin the trial court from further implementing the Special Order and Writ of Execution. Prior thereto, on December 7, 2000, Lee and co-defendants had filed a Petition for Review with the Supreme Court, docketed as G.R. No. 145822. Peña moved to dismiss that petition on the ground of forum-shopping, but the Court's Second Division denied the motion on September 24, 2003. On March 19, 2004, the Court of Appeals dismissed Lee's twin petitions in CA-G.R. SP No. 65023 on the ground of forum-shopping and litis pendentia, a disposition now before the Supreme Court on review.

• Forum-Shopping: Petitioner denied engaging in forum-shopping when he filed CA-G.R. SP No. 65023 during the pendency of G.R. No. 145822, citing the Supreme Court's Resolution of September 24, 2003 which denied Peña's motion to dismiss the petition in G.R. No. 145822 on precisely that ground.
• Indirect Contempt: Petitioner argued that the injunction in the January 12, 2000 Decision of the Court of Appeals in CA-G.R. SP No. 55667 — directing respondents to desist from further implementing the Writ of Execution and to lift garnishments and levies — was violated when Peña and the sheriff proceeded with the 1999 and 2000 garnishment, levy, and auction sales, constituting a pattern of contumacious disobedience calculated to defy and circumvent the appellate court's orders.
• Continuing Injunction: Petitioner contended that the October 31, 2000 Stay Order subsisted at the time of the levy and sale on execution, and that under Section 4, Rule 39 of the Rules of Court, the injunction in the January 12, 2000 Decision was immediately executory, enjoining further execution "effective continuously from November 9, 1999 up to the present."
• Non-Finality of Amended Decision: Petitioner insisted that the Amended Decision had not achieved finality on account of the timely filing of his motion for reconsideration, such that the January 12, 2000 Decision remained valid and effective, and the trial court, sheriff, and Peña were enjoined from further implementing the Writ of Execution.
• Nullity of Execution Acts: Petitioner argued that the appellate court committed grave error in failing to annul and prohibit the acts of execution already carried out, and that EQLPI could not be compelled to transfer his shares to Peña due to the nullity of the execution process in Civil Case No. 754.
• Loss of Jurisdiction: Petitioner claimed the trial court had no jurisdiction to issue the Special Order and Writ of Execution since it had already lost jurisdiction over the case upon perfection of his appeal.
• Satisfaction of Judgment: Petitioner asserted that the sheriff's return of November 15, 1999, stating that the Writ of Execution had been "duly implemented," meant the judgment had been satisfied in full, thereby prohibiting further execution.

• Forum-Shopping: Whether petitioner engaged in forum-shopping by filing CA-G.R. SP No. 65023 during the pendency of G.R. No. 145822.
• Indirect Contempt: Whether private respondent Peña and the sheriff committed indirect contempt by proceeding with the levy, garnishment, and auction sale of petitioner's properties in alleged violation of the Court of Appeals' injunction in CA-G.R. SP No. 55667.
• Validity of the Injunction: Whether the January 12, 2000 Decision of the Court of Appeals remained valid and effective notwithstanding the August 18, 2000 Amended Decision that set it aside.
• Validity of Execution Acts: Whether the levy and sale on execution of petitioner's personal properties were valid, or whether they should be annulled and set aside for having been conducted in violation of stay or injunctive orders.
• Jurisdiction for Execution Pending Appeal: Whether the trial court had jurisdiction to issue the Special Order allowing execution pending appeal and the corresponding Writ of Execution.
• Propriety of Civil Case No. 1088: Whether Civil Case No. 1088, filed by Peña to compel the transfer of Lee's shares, should be dismissed or allowed to proceed.

• Forum-Shopping: No. The Court had already ruled on this issue in G.R. No. 145822, where Peña's motion to dismiss on the ground of forum-shopping was denied by the Second Division on September 24, 2003, and the matter should now be considered settled.
• Indirect Contempt: No. The January 12, 2000 Decision was vacated by the August 18, 2000 Amended Decision, such that no injunction or order to desist subsisted at the time the levies and auction sales were conducted.
• Validity of the Injunction: No. When the appellate court promulgated the Amended Decision reversing the January 12, 2000 Decision, the latter was automatically deemed vacated and ceased to exist in contemplation of law; the filing of a motion for reconsideration did not reinstate the vacated injunction.
• Validity of Execution Acts: Yes, the execution acts were valid. Stay of execution proceeded only from December 8, 2000, upon approval of the P40 million supersedeas bond; prior thereto, all executions, garnishments, and levies were presumed regular, except for a brief period during which the TRO was in force, during which no execution was shown to have been effected.
• Jurisdiction for Execution Pending Appeal: Yes, the trial court had jurisdiction. Under the Rules of Court, the court loses jurisdiction over the case upon perfection of the appeals filed by all parties and the expiration of the time to appeal of the other parties; Peña filed the motion for execution pending appeal on June 8, 1999, within the reglementary period to appeal.
• Propriety of Civil Case No. 1088: Yes, Civil Case No. 1088 should proceed. Barring any irregularity in the execution process in Civil Case No. 754, there was no cogent reason to dismiss Civil Case No. 1088; upon sale of personal property on execution, all ownership and proprietary rights vest in the purchaser, and the judgment debtor has no right of redemption.

• Forum-Shopping: The appellate court disregarded the Supreme Court's ruling in G.R. No. 145822, where Peña's motion to dismiss on the ground of forum-shopping had already been denied by the Second Division on September 24, 2003. Since the Court had previously ruled on this precise issue, it was considered settled, and the appellate court's contrary finding could not stand.

• Indirect Contempt: The January 12, 2000 Decision of the Court of Appeals annulling the Special Order and Writ of Execution was set aside by the August 18, 2000 Amended Decision, which granted Peña's motion for reconsideration and denied the petition. When the Amended Decision was promulgated, it necessarily vacated the January 12, 2000 Decision in its entirety — the latter "ceased to exist in contemplation of law." As such, there was no subsisting injunction or order to desist from further execution that could have been violated. Lee's argument that the pendency of his motion for reconsideration of the Amended Decision reinstated the injunction was rejected, as it would produce the absurd result of enforcing an injunction from a judgment already set aside in its entirety by the mere expedient of filing a motion for reconsideration.

• Validity of the Injunction: The Amended Decision effectively reinstated the trial court's Special Order allowing execution pending appeal, superseding and vacating the January 12, 2000 Decision. Lee's contention that the injunction was "immediately executory" and "effective continuously from November 9, 1999 up to the present" was erroneous. Execution was stayed only from December 8, 2000, the date of approval of the P40 million supersedeas bond. Prior to that date, all execution acts were presumed regular, except during the brief period when the TRO was in force (November 9, 1999 to August 30, 2000), during which the record did not demonstrate that any execution, levy, garnishment, or sale was conducted. Execution sales were conducted only from August 31, 2000 to October 30, 2000 — after the Amended Decision but before the supersedeas bond was approved.

• Validity of Execution Acts: Under Section 3, Rule 39 of the Rules of Court, discretionary execution may be stayed only upon approval by the proper court of a sufficient supersedeas bond filed by the party against whom it is directed. Since no supersedeas bond was approved until December 8, 2000, all execution acts prior to that date were valid. Lee's failure to participate in the execution sale or to timely post a supersedeas bond was his own undoing. Furthermore, since there is no right to redeem personal property sold on execution, ownership and proprietary rights vest in the purchaser upon sale and are not subject to any suspensive condition. Lee could no longer recover the personal properties sold, except upon Peña's indemnity bond.

• Jurisdiction for Execution Pending Appeal: Under Rule 41, Section 9 of the Rules of Court, the trial court loses jurisdiction over the case upon the perfection of the appeals filed by all parties and the expiration of the time to appeal of the other parties — not just the plaintiff's or defendant's. Peña filed the motion for execution pending appeal on June 8, 1999, within the reglementary period to appeal, when the trial court still had jurisdiction. Prior to transmittal of the original record or record on appeal, the court may order execution pending appeal. When a motion for execution pending appeal is filed within the reglementary period, the court must hear and resolve the motion, and its jurisdiction continues until the matter is resolved, not lost by the subsequent action of the opposing party. Good grounds for execution pending appeal existed: Urban Bank declared a bank holiday on April 26, 2000, was ordered closed by the BSP, was placed under PDIC receivership, and several of its senior officials were placed on the hold-departure list pending investigation for anomalous transactions and bank fraud. Impending insolvency of the adverse party constitutes good ground for execution pending appeal.

• Propriety of Civil Case No. 1088: Since the execution process in Civil Case No. 754 was valid, there was no basis to dismiss Civil Case No. 1088 or to find respondents guilty of indirect contempt. Upon sale of personal property on execution, all ownership and proprietary rights leave the judgment debtor and become vested in the purchaser, and the judgment debtor may no longer recover the same by redemption. As the new owners of the shares of stock in EQLPI and the various clubs, Peña, his assignees, and the other purchasers were entitled without delay to transfer said shares in their names and exercise ownership over the same. The sheriff's return stating that the Writ of Execution had been "duly implemented" simply meant the writ had been implemented, not that the judgment had been satisfied in full.

• Vacation of judgment by amended decision — When an appellate court promulgates an amended decision reversing its earlier decision, the earlier verdict is automatically deemed vacated and ceases to exist in contemplation of law. The filing of a motion for reconsideration of the amended decision does not reinstate the injunction or orders contained in the vacated decision. The Court relied on Imperial vs. De la Cruz, 153 Phil. 697 (1973).

• Stay of discretionary execution upon supersedeas bond — Under Section 3, Rule 39 of the Rules of Court, discretionary execution, including execution pending appeal, may be stayed only upon approval by the proper court of a sufficient supersedeas bond filed by the party against whom it is directed, conditioned upon the performance of the judgment or order in case it is finally sustained. Until such approval, all execution acts are presumed regular.

• Jurisdiction for execution pending appeal — Under Rule 41, Section 9 of the Rules of Court, the trial court loses jurisdiction over the case upon the perfection of the appeals filed by all parties and the expiration of the time to appeal of the other parties. A motion for execution pending appeal filed within the reglementary period may be heard and resolved by the trial court, and its jurisdiction to act on the motion continues until the matter is resolved, not lost by the subsequent perfection of appeal by the opposing party.

• Vesting of ownership upon execution sale of personal property — Upon sale of personal property on execution, all ownership and proprietary rights leave the judgment debtor and become vested in the purchaser. There is no right to redeem personal property sold on execution; the rights of the purchaser are not entangled in any suspensive condition implicit in a redemptive period. The Court relied on Paray vs. Rodriguez, G.R. No. 132287, January 24, 2006, 479 SCRA 571.

• Impending insolvency as good ground for execution pending appeal — Impending insolvency of the adverse party constitutes good ground for ordering execution pending appeal. The Court cited Philippine Nails and Wires Corporation vs. Malayan Insurance Company, Inc., G.R. No. 143933, February 14, 2003, 397 SCRA 431.

• "When the appellate court promulgated the August 18, 2000 Amended Decision reversing the January 12, 2000 decision, it necessarily follows that the latter verdict was automatically deemed vacated. It ceased to exist in contemplation of law." — This passage articulates the ratio decidendi on the effect of an amended decision on a prior judgment: the prior judgment is vacated in its entirety, and any injunction it contained ceases to have force.

• "Stay of execution proceeds only from December 8, 2000, which is the date of the appellate court's approval of the P40 million supersedeas bond posted by Lee and his co-petitioners. Prior thereto, all executions, garnishments and levies of Lee's properties proceeding from the Special Order and the Writ of Execution are presumed regular, for they have not been legally stayed." — This passage defines the operative point from which execution is stayed and establishes the presumption of regularity of execution acts conducted before approval of a supersedeas bond.

• "Upon the sale of personal property on execution, all ownership and proprietary rights leave the judgment debtor and become vested in the purchaser, and the judgment debtor may no longer recover the same by redemption, to which he has no right." — This passage states the rule on vesting of ownership in execution sales of personal property, frequently cited in subsequent jurisprudence on execution and redemption.

• Imperial vs. De la Cruz, 153 Phil. 697 (1973) — Followed for the proposition that when an amended decision reverses an earlier decision, the earlier verdict is automatically deemed vacated and ceases to exist in contemplation of law.

• Cebu Contractors Consortium Company vs. Court of Appeals, G.R. No. 98046, December 14, 1992, 216 SCRA 597 — Followed for the rule that when a motion for execution pending appeal is filed within the reglementary period, the court's jurisdiction to act on the motion continues until it is resolved and is not lost by the subsequent action of the opposing party.

• Philippine Nails and Wires Corporation vs. Malayan Insurance Company, Inc., G.R. No. 143933, February 14, 2003, 397 SCRA 431 — Followed for the doctrine that impending insolvency of the adverse party constitutes good ground for execution pending appeal.

• Paray vs. Rodriguez, G.R. No. 132287, January 24, 2006, 479 SCRA 571 — Followed for the rule that upon sale of personal property on execution, all ownership and proprietary rights vest in the purchaser, and the judgment debtor has no right of redemption.

• Urban Bank, Inc. vs. Peña, A.C. No. 4863, September 7, 2001, 364 SCRA 597 — Referenced as the prior disbarment case in which the Court found the existence of an attorney-client relationship between Urban Bank and Peña, providing the factual and legal basis for Peña's collection suit in Civil Case No. 754.

• Section 3, Rule 39, Rules of Court — Governs stay of discretionary execution; provides that discretionary execution may be stayed only upon approval by the proper court of a sufficient supersedeas bond filed by the party against whom it is directed. Applied to hold that execution was stayed only from December 8, 2000, upon approval of the P40 million supersedeas bond, and that all execution acts prior thereto were presumed regular.

• Section 2, Rule 39, Rules of Court — Provides that execution of a judgment may issue upon good reasons. Applied to uphold the trial court's grant of execution pending appeal, given Urban Bank's impending insolvency and the closure and receivership proceedings against it.

• Section 9, Rule 41, Rules of Court — Governs the loss of jurisdiction by the trial court upon perfection of appeals; provides that the court loses jurisdiction over the case upon the perfection of the appeals filed in due time and the expiration of the time to appeal of the other parties. Applied to hold that the trial court retained jurisdiction when Peña filed his motion for execution pending appeal on June 8, 1999, within the reglementary period.

• Section 27, Rule 138, Revised Rules of Court — Enumerates the grounds for suspension and disbarment of lawyers, including deceit, malpractice, or gross misconduct. Referenced in the context of the prior disbarment case filed by Urban Bank against Peña, which was dismissed for failure of the complainant to meet the required burden of proof.

Ma. Alicia Austria-Martinez, Minita V. Chico-Nazario, Antonio Eduardo B. Nachura, and Ruben T. Reyes concurred in the decision. No separate concurring opinions were written.