Manacop vs. Equitable PCIBank

A party who has already filed a notice of appeal from a trial court's decision on the merits cannot simultaneously or subsequently file a petition for certiorari under Rule 65 assailing the same decision, as this constitutes forum-shopping; certiorari is available only when there is no appeal or other plain, speedy, and adequate remedy in the ordinary course of law. Separately, execution pending appeal requires good reasons of exceptional urgency stated in a special order, and the mere admission of liability by the losing party, the allegedly dilatory character of the appeal, or the prevailing party's financial distress do not constitute such good reasons.

Lavine Loungewear Manufacturing, Inc. ("Lavine") insured its buildings and supplies against fire with several insurance companies, with most policies stipulating that loss proceeds were payable to Equitable Banking Corporation-Greenhills Branch as its interest may appear. A fire on August 1, 1998 gutted Lavine's properties, giving rise to insurance claims totaling P112,245,324.34 as determined by the Office of the Insurance Commission. Lavine's Board of Directors became divided: Harish C. Ramnani's authority as Lavine's representative was withdrawn on March 17, 2000, and Chandru C. Ramnani was appointed in his stead. This internal corporate dispute produced two factions, each claiming authority to represent Lavine and to collect the insurance proceeds, with Equitable Bank asserting its own right as beneficiary of the policies.

Lavine Loungewear Manufacturing, Inc. ("Lavine") insured its buildings and supplies against fire with several insurance companies — Philippine Fire and Marine Insurance Corporation ("PhilFire"), Rizal Surety and Insurance Company ("Rizal Surety"), Tabacalera Insurance Company ("TICO"), First Lepanto-Taisho Insurance Corporation ("First Lepanto"), Equitable Insurance Corporation, and Reliance Insurance Corporation. Except for First Lepanto's Policy No. 13798, all the policies provided that loss proceeds were payable to Equitable Banking Corporation-Greenhills Branch as its interest may appear. On August 1, 1998, a fire gutted Lavine's buildings and their contents, giving rise to claims totaling P112,245,324.34 as determined by the Office of the Insurance Commission.

At the time of the fire, Lavine was represented by Harish C. Ramnani. On March 17, 2000, Lavine's Board of Directors withdrew Harish's authority due to his alleged failure to account for the insurance proceeds and appointed Chandru C. Ramnani in his stead, designating Chandru together with Atty. Mario A. Aguinaldo as Lavine's representatives in negotiating with the insurance companies. Before releasing the proceeds, the insurance companies required Lavine to sign a Sworn Statement in Proof of Loss and Subrogation Agreement, which would absolve them from liability upon payment to Equitable Bank. Only Harish signed; the rest of Lavine's directors refused.

Notwithstanding Chandru's request that payments be made first to Lavine, which would then pay Equitable Bank as the latter's interest may appear, certain insurance companies released the proceeds directly to Equitable Bank. Chandru thereupon filed, on behalf of Lavine, a Petition for the Issuance of a Writ of Preliminary Injunction with Prayer for a Temporary Restraining Order before the RTC of Pasig City against PhilFire, Rizal Surety, TICO, First Lepanto, and Equitable Bank, docketed as Civil Case No. 68287 and raffled to Branch 71 presided by Judge Celso D. Laviña. Harish, Jose F. Manacop, Chandru P. Pessumal, Maureen M. Ramnani, and Salvador Cortez moved to intervene, claiming they were Lavine's incumbent directors and that Harish was Lavine's authorized representative. They disclaimed Chandru's designation as president and denied having refused to sign the proof of loss and subrogation agreement. The trial court granted the motion for intervention on February 14, 2001.

The intervenors alleged in their pleadings that Lavine's obligations to Equitable Bank as of August 1, 1998 amounted to P71,000,000.00, and since Equitable Insurance and Reliance Insurance had already paid the bank more than this amount, the remaining insurance proceeds should be delivered to Lavine through the intervenors. They later claimed that Lavine's liabilities to the bank were fully extinguished, warranting release of the real estate mortgages and return of any excess. Equitable Bank countered that Lavine's obligations were not fully paid, that the loans were secured not only by the insurance policies and real estate mortgages but also by surety agreements executed by Harish and Maureen Ramnani, and prayed for delivery of the proceeds, solidary liability of the spouses, and foreclosure of the mortgaged properties in case of default.

On April 2, 2002, the trial court rendered a decision dismissing Lavine's complaint but ordering Equitable Bank to refund P65,819,936.05 as overpayment to Lavine through the intervenors, directing the insurance companies to pay unpaid proceeds through the intervenors with 29% interest per annum from October 1, 1998, awarding 10% attorney's fees, and cancelling the loan mortgage annotations. The intervenors immediately filed a motion for execution pending appeal on the grounds that TICO was on the brink of insolvency, Lavine was in imminent danger of extinction, and any appeal would be merely dilatory. Meanwhile, Rizal Surety, First Lepanto, Equitable Bank, Lavine, and PhilFire filed notices of appeal. Without filing a motion for reconsideration, Equitable Bank and Lavine separately filed petitions for certiorari before the Court of Appeals, claiming appeal was not a plain, speedy, and adequate remedy. Judge Laviña granted the motion for execution pending appeal on May 17, 2002, and the writ was issued on May 20, 2002 and implemented the following day, resulting in seizure of PhilFire and First Lepanto properties, garnishment of First Lepanto's bank deposits, and levy on Equitable Bank's real properties. First Lepanto and PhilFire separately filed petitions for certiorari before the Court of Appeals assailing the order granting execution pending appeal and the writ of execution.

The Court of Appeals consolidated the certiorari petitions and, on May 29, 2003, set aside the trial court's decision, declared null and void the special order and writ of execution, remanded the case for pre-trial on the Second Amended Answer-in-Intervention, and directed that payment of insurance proceeds be withheld subject to the outcome of the intra-corporate dispute. On March 17, 2004, the appellate court amended its decision to clarify that the case was remanded to the exclusion of the intervenors, lifted the levies and garnishments on Equitable Bank and PhilFire, and denied Equitable Bank's motion to disqualify Judge Laviña. The intervenors then elevated the matter to the Supreme Court via Rule 45.

• Improper Resort to Certiorari: Petitioners argued that the Court of Appeals erred in giving due course to the certiorari petitions of Equitable Bank and Lavine, notwithstanding that both had already availed of the ordinary mode of appeal under Section 2, Rule 41 of the Revised Rules of Court.
• Voiding of Trial Court Decision: Petitioners maintained that the Court of Appeals erred in voiding the trial court's decision for lack of pre-trial on the amended answer-in-intervention, since pre-trial had already been concluded and the parties had already adduced their evidence.
• Right to Intervene: Petitioners contended that as Lavine's rightful board members, they should be allowed to intervene to prosecute the action filed by Lavine through a minority stockholder who lacked authority.
• Bank's Entitlement to Proceeds: Petitioners asserted that the Court of Appeals erred in setting aside the trial court's findings that Equitable Bank was not entitled to the insurance proceeds since Lavine's loan had already been fully paid, with an overpayment that must be returned.
• Validity of Execution Pending Appeal: Petitioners argued that the writ of execution pending appeal should not have been voided, since the judgment liability was admitted and the appeals were merely dilatory.

• Availability of Certiorari in Exceptional Cases: Equitable Bank argued that certiorari may be allowed even with the availability of appeal where valid and compelling considerations warrant it or where rigid application of the rules would result in a manifest failure or miscarriage of justice, relying on Estate of Salud Jimenez vs. Philippine Export Processing Zone.
• Bank's Entitlement to Proceeds: Equitable Bank alleged that it had sufficiently established the amount of its claim and, as beneficiary of the insurance policies, was entitled to collect the proceeds; it further averred that Lavine's loans were secured by surety agreements executed by Harish and Maureen Ramnani and prayed for solidary liability and foreclosure.
• Withholding of Balance: First Lepanto and PhilFire admitted liability but withheld payment of the balance because they could not determine the rightful claimant, and alleged that the intervenors had no personality to intervene.

• Propriety of Certiorari: Whether the Court of Appeals erred in giving due course to the certiorari petitions of Equitable Bank and Lavine despite their having availed of the ordinary mode of appeal.
• Forum-Shopping: Whether the simultaneous filing of certiorari petitions and notices of appeal by Equitable Bank and Lavine constituted forum-shopping.
• Validity of Execution Pending Appeal: Whether the Court of Appeals erred in voiding the writ of execution pending appeal issued by the trial court.
• Good Reasons for Execution Pending Appeal: Whether the grounds cited by the intervenors — admission of liability by the insurance companies, allegedly dilatory appeals, and Lavine's financial distress — constituted good reasons warranting execution pending appeal.

• Propriety of Certiorari: No. The Court of Appeals should have dismissed CA-G.R. SP Nos. 70292 and 70298, as Equitable Bank and Lavine had already filed notices of appeal from the trial court's decision and could not resort to certiorari under Rule 65, which is available only when there is no appeal or other plain, speedy, and adequate remedy.
• Forum-Shopping: Yes. The simultaneous filing of certiorari petitions and notices of appeal by Equitable Bank and Lavine constituted forum-shopping, as both sought the reversal of the same decision through two different remedies, which could result in contradictory appellate decisions.
• Validity of Execution Pending Appeal: No. The Court of Appeals correctly declared null and void the special order and writ of execution pending appeal, as the trial court failed to state good reasons justifying such execution.
• Good Reasons for Execution Pending Appeal: No. Admission of liability by the insurance companies, the allegedly dilatory nature of the appeals, and Lavine's financial distress as a juridical entity did not constitute good reasons for execution pending appeal.

• Propriety of Certiorari: The existence and availability of the right of appeal proscribes resort to certiorari, one of whose requisites is precisely that there should be no appeal. Equitable Bank and Lavine both filed notices of appeal from the trial court's April 2, 2002 decision, thereby recognizing ordinary appeal as the proper remedy. They could not be allowed to question the same decision on the merits through certiorari simultaneously. Even if the trial court committed grave abuse of discretion, the proper remedy remained appeal, since errors ascribed to a court with jurisdiction over the subject matter and the person — including grave abuse of discretion in findings of fact or law — may be corrected only by appeal from the final decision. Equitable Bank's reliance on Estate of Salud Jimenez was misplaced because in that case the trial court acted beyond jurisdiction by modifying a final and executory order, rendering the questioned order a patent nullity, whereas here no such extraordinary circumstance was shown.

• Forum-Shopping: The parallelism with Chemphil Export & Import Corp. vs. CA was clear: in that case, PCIBank filed a special civil action for certiorari against final orders of the trial court even as its co-parties brought an ordinary appeal from the same orders, and the Court found this to constitute forum-shopping. Similarly, allowing the certiorari petitions of Equitable Bank and Lavine to prosper would produce two appellate decisions on the same subject matter, issues, and parties — precisely the pernicious effect the rules against forum-shopping seek to avoid. Forum-shopping is condemned as trifling with the courts and abusing their processes, degrading the administration of justice and adding to docket congestion.

• Validity of Execution Pending Appeal: The proper recourse from an order granting execution pending appeal is a special civil action for certiorari under Rule 65, pursuant to Section 1, Rule 41, which provides that no appeal may be taken from an order of execution and that the aggrieved party may file an appropriate special civil action under Rule 65. The fact that the losing party had also appealed from the judgment does not bar certiorari proceedings, as the appeal could not be an adequate remedy from premature execution. There is no forum-shopping where one petition questions the order granting execution pending appeal while a regular appeal questions the decision on the merits, since the merits of the main case are not determined in a petition questioning execution pending appeal and vice versa.

• Good Reasons for Execution Pending Appeal: Discretionary execution of appealed judgments requires the concurrence of three requisites: (a) a motion by the prevailing party with notice to the adverse party; (b) a good reason for execution pending appeal; and (c) the good reason must be stated in a special order. The yardstick is the presence of exceptional circumstances of such urgency as to outweigh the injury the losing party may suffer if the appealed judgment is later reversed. The intervenors' reliance on the insurance companies' admission of liability was unavailing, because admission of liability and willingness to pay the proper party militate against execution pending appeal since there is little danger the judgment will become illusory. The contention that the appeals were merely dilatory was also without merit, because the amounts owed and the rightful claimant remained unsettled, and it is not for the trial judge to determine the merit of his own decision or the dilatory intent of an appeal — that is the role of the appellate court. Finally, Lavine's financial distress was not a good reason: Borja vs. Court of Appeals, which allowed execution pending appeal for a 76-year-old natural person who might not live to enjoy the judgment, was inapplicable because Lavine is a juridical entity whose precarious financial condition does not outweigh the longstanding policy of enforcing only final and executory judgments.

• Certiorari vs. Appeal — Certiorari under Rule 65 is available only when there is no appeal or other plain, speedy, and adequate remedy in the ordinary course of law. The existence and availability of the right of appeal proscribes resort to certiorari. Even if the trial court committed grave abuse of discretion in its findings of fact or law, the proper remedy is appeal, not certiorari, provided the court had jurisdiction over the subject matter and the person. The Court applied this by dismissing the certiorari petitions of Equitable Bank and Lavine, who had already filed notices of appeal.

• Forum-Shopping — Forum-shopping is the act of a party against whom an adverse judgment has been rendered in one forum of seeking another favorable opinion in another forum, or the institution of two or more actions grounded on the same cause on the supposition that one court might make a favorable disposition. It is prohibited as trifling with the courts and abusing their processes. The Court found that Equitable Bank and Lavine engaged in forum-shopping by simultaneously pursuing certiorari and ordinary appeal from the same trial court decision, citing Chemphil Export & Import Corp. vs. CA.

• Execution Pending Appeal — Discretionary execution of appealed judgments may be allowed under Section 2(a), Rule 39 upon concurrence of three requisites: (a) a motion by the prevailing party with notice to the adverse party; (b) a good reason for execution pending appeal; and (c) the good reason must be stated in a special order. Good reasons consist of exceptional circumstances of such urgency as to outweigh the injury or damage the losing party may suffer if the appealed judgment is reversed. The Court held that admission of liability by the losing party, allegedly dilatory appeals, and the financial distress of a juridical entity do not constitute good reasons.

• Remedy from Order of Execution — Under Section 1, Rule 41, no appeal may be taken from an order of execution; the aggrieved party may file an appropriate special civil action under Rule 65. Certiorari lies against an order granting execution pending appeal where the same is not founded upon good reasons. The fact that the losing party also appealed from the judgment does not bar certiorari, as the appeal cannot be an adequate remedy from premature execution. There is no forum-shopping where one petition questions the execution order while a regular appeal questions the merits.

• "Simultaneous filing of a petition for certiorari under Rule 65 and an ordinary appeal under Rule 41 of the Revised Rules of Civil Procedure cannot be allowed since one remedy would necessarily cancel out the other." — This passage articulates the fundamental incompatibility of certiorari and appeal as concurrent remedies, forming the ratio decidendi for dismissing the certiorari petitions of Equitable Bank and Lavine.

• "It is well-settled that the remedy to obtain reversal or modification of the judgment on the merits is appeal. This is true even if the error, or one of the errors, ascribed to the trial court rendering the judgment is its lack of jurisdiction over the subject matter, or the exercise of power in excess thereof, or grave abuse of discretion in the findings of fact or of law set out in the decision." — This formulation defines the scope and limits of appeal as the exclusive remedy for correcting errors in a decision on the merits, including jurisdictional errors, and is frequently cited in subsequent jurisprudence on the certiorari-vs-appeal distinction.

• "The yardstick remains the presence or the absence of good reasons 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." — This is the canonical formulation of the standard for execution pending appeal, stating the test for what constitutes a "good reason" under Section 2(a), Rule 39.

• "it is not for the trial judge to determine the merit of a decision he rendered as this is the role of the appellate court. Hence, it is not within competence of the trial court, in resolving a motion for execution pending appeal, to rule that the appeal is patently dilatory and rely on the same as basis for finding good reasons to grant the motion." — This passage, quoting BF Corporation vs. EDSA Shangri-la Hotel, defines the limitation on a trial court's authority when ruling on motions for execution pending appeal and is commonly cited on the issue of which court may appreciate dilatory intent.

• Estate of Salud Jimenez vs. Philippine Export Processing Zone, G.R. No. 137285, 16 January 2001, 349 SCRA 240 — Distinguished. Equitable Bank relied on this case to justify resort to certiorari despite availability of appeal, but the Court found it inapplicable because in that case the trial court acted beyond jurisdiction by modifying a final and executory order, whereas here no such patent nullity was shown.

• Chemphil Export & Import Corp. vs. CA, 321 Phil. 619 (1995) — Followed. The Court found direct parallelism between this case and the present one, applying its ruling that filing a separate certiorari petition while co-parties pursue an ordinary appeal from the same orders constitutes forum-shopping.

• BF Corporation vs. EDSA Shangri-la Hotel, 355 Phil. 541 (1998) — Followed. Cited for the proposition that it is not within the competence of the trial court to rule that an appeal is patently dilatory and use that as a good reason for execution pending appeal; only an appellate court can appreciate dilatory intent.

• Borja vs. Court of Appeals, 274 Phil. 258 (1991) — Distinguished. Petitioners cited this case to justify execution pending appeal based on Lavine's financial distress, but the Court held it inapplicable because Borja involved a 76-year-old natural person who might not live to enjoy the judgment, whereas Lavine is a juridical entity whose existence cannot be likened to a natural person.

• Diesel Construction Company, Inc. vs. Jollibee Foods Corp., 380 Phil. 813 (2000) — Followed. Cited for the standard that good reasons for execution pending appeal must consist of exceptional circumstances of urgency outweighing potential injury to the losing party, and that a juridical entity's precarious financial condition is not by itself a compelling circumstance.

• Metropolitan Manila Development Authority vs. Jancom Environmental Corp., 425 Phil. 961 (2002) — Followed. Cited for the rule that the remedy to obtain reversal or modification of a judgment on the merits is appeal, even if the error ascribed is lack of jurisdiction or grave abuse of discretion.

• Section 1, Rule 41, Rules of Court — Provides that no appeal may be taken from an order of execution, and that the aggrieved party may file an appropriate special civil action under Rule 65. Applied to uphold the propriety of PhilFire's and First Lepanto's certiorari petitions against the order granting execution pending appeal.

• Section 2(a), Rule 39, Rules of Court — Governs discretionary execution pending appeal, requiring: (a) a motion by the prevailing party with notice to the adverse party; (b) a good reason for execution pending appeal; and (c) the good reason must be stated in a special order. Applied to test the validity of the trial court's special order and writ of execution, which were found deficient for lack of good reasons.

• Rule 65, Rules of Court — Governs the special civil action of certiorari, available only when there is no appeal or other plain, speedy, and adequate remedy in the ordinary course of law. Applied to dismiss the certiorari petitions of Equitable Bank and Lavine, who had already availed of ordinary appeal.

Chief Justice Hilario G. Davide, Jr., Associate Justice Leonardo A. Quisumbing, Associate Justice Antonio T. Carpio, and Associate Justice Adolfo S. Azcuna concurred. No separate concurring opinions were noted.