Urban Bank v. Pena

7/21/2019 Urban Bank v. Pena

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Republic of the Philippines

Supreme CourtManila

SECOND DIVISION

URBAN BANK, INC, G.R. No. 145817

Petitioner,

- versus -

MAGDALENO M. E!A,

Respondent.

x---------------------------------------------x

DEL"IN C. GON#ALE#, $R., BEN$AMIN L. DELEON, %&' ERIC L. LEE,

G. R. No. 1458((

Petitioners,

- versus -

MAGDALENO M. E!A,

Respondent.

x---------------------------------------------x

MAGDALENO M. E!A, G. R. No. 1)(5)(

Petitioner,

- versus -

URBAN BANK, INC., *EODOROBORLONGAN, DEL"IN C. GON#ALE#, $R.,BEN$AMIN L. DE LEON, . SIERVO +. DI#ON,ERIC L. LEE, BEN *. LIM, $R., CORA#ONBE$ASA, %&' AR*URO MANUEL, $R.,

Respondents.

Present:BRION,J.,

Actin !hairperson,

"I##ARAMA,$

M%N&O'A,$$

(%R%NO, and

P%R#A(-B%RNAB%,$$$JJ.

Pro)ulated:

Oto-er 1, (/11

0 0

D E C I S I O N

SERENO,J.2

*hese consolidated petitions bean as a si)ple case for pa+)ent of services

rendered and for rei)burse)ent of costs. *he case spun a eb of suits and counter-

suits because of: / the si0e of the aard for aent1s fee rendered in favor of Att+.

Madaleno Pe2a Pe2a/ 3 PhP45,666,666 3 rendered b+ the trial court7 4/ the

controversial execution of the full 8ud)ent aard of PhP49,66,666 aent1s fee

plus rei)burse)ent for costs and other da)aes/ pendin appeal7 and ;/ the

findin of solidar+ liabilit+ aainst ?ere levied or sold on execution pendin appeal to satisf+ the PhP49.

Million aard in favor of Att+. Pe2a. Incidentall+, to supersedeas bonds orth

PhP96 Million 4.9 ti)es the a)ount of the 8ud)ent/ ere filed b+


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)ini)u) euitable principle aainst un8ust enrich)ent ould have easil+ affir)ed

the rant of fair reco)pense to Att+. Pe2a for services he rendered for


3/39

At core, these petitions can be resolved if e anser the folloin

uestions:

. hat is the leal basis for an aard in favor of

Pe2a for the services he rendered to


4/39

or %:%; Ct; mme'%te; upo& t3e e0pr%to& o t3eo&tr%t o e%:e o9er t3e :%' propert; o& ( No9em-er 14.or this purpose +ou are authori0ed to enae the services of

securit+ uards to protect the propert+ aainst intruders. Lou )a+

also enae the services of a la+er in case there is a need to o to

court to protect the said propert+ of the corporation. In addition+ou )a+ ta=e hatever steps or )easures are necessar+ to ensure

our continued possession of the propert+.

sd./ %NRI45?

On 4E Nove)ber EE5, the da+ the lease contract as to expire, I(!I and

4?over the Pasa+ propert+ for the

a)ount areed upon in the !ontract to (ell, but sub8ect to the above escro

provision.>4G?*he title to the land as eventuall+ transferred to the na)e of 4F?

On ;6 Nove)ber EE5, the lessee dul+ surrendered possession of the Pasa+

propert+ to I(!I,>49?but the unauthori0ed sub-tenants refused to leave the area.>4E?Pursuant to his authorit+ fro) I(!I, Pe2a had the ates of the propert+ closed to

=eep the sub-tenants out.>;6?@e also posted securit+ uards at the propert+,>;?services for hich he advanced pa+)ents.>;4?&espite the closure of the ates and

the postin of the uards, the sub-tenants ould co)e bac= in the evenin, force

open the ates, and proceed to carr+ on ith their businesses. >;;?

On three separate

occasions, the sub-tenants tried to brea= don the ates of the propert+, thre

stones, and even threatened to return and inflict reater har) on those uardin it.>;5?

In the )eanti)e, a certain Maril+n H. On, as representative of I(!I, faxed

a letter to


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oin to retain his services, and that the latter should not ive up possession of the

sub8ect land. Nevertheless, petitioner-respondent Pe2a de)anded a ritten letter of

authorit+ fro) the ban=. Respondent Borlonan acceded and instructed hi) to see

respondent Be8asa for the letter.>6?

In the sa)e telephone conversation, respondent Borlonan alleedl+ as=edPe2a to )aintain possession of the Pasa+ propert+ and to represent G6?Pe2a advanced the pa+)ent for the full

and final settle)ent of their clai)s aainst G?

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Pe2a clai)s to have borroed PhP;,666,666 fro) one of his friends in

order to )aintain possession thereof on behalf of G4?Accordin to hi),

althouh his creditor-friend ranted hi) several extensions, he failed to pa+ his loan

hen it beca)e due, and it later on beca)e the sub8ect of a separate collection suit

for pa+)ent ith interest and attorne+1s fees.

>G;?

*his collection suit beca)e thebasis for Att+. Pe2a1s reuest for discretionar+ execution pendin appeal later on.

On 6F ebruar+ EE, ithin the four-)onth period alleedl+ areed upon

in the telephone conversation, Pe2a for)all+ infor)ed G5?*here as hoever no )ention of

the co)pensation due and oed to hi) for the services he had rendered.

On ; March EE, the ban= subseuentl+ too= actual possession of the

propert+ and installed its on uards at the pre)ises.>G?

Pe2a thereafter )ade several atte)pts to contact respondents Borlonan

and Be8asa b+ telephone, but the ban= officers ould not ta=e an+ of his calls. On45 Januar+ EEG, or nearl+ a +ear after he turned over possession of the Pasa+

propert+, Pe2a for)all+ de)anded fro) GG?

roee'&: o& t3e Comp%&t or Compe&:%to&

On 49 Januar+ EEG, hen GF?for recover+ of aent1s

co)pensation and expenses, da)aes and attorne+1s fees in R*!-Bao !it+ in the

province of Neros Occidental.>G9?Interestinl+, Pe2a sued onl+ six out of the eleven

)e)bers of the Board of the &irectors of GE?No reason as iven h+

the six directors ere selected and the others excluded fro) Pe2a1s co)plaint. In

fact, as pointed out, Att+. Pe2a )ista=enl+ i)pleaded as a defendant, Ben L. #i),

Jr., ho as never even a )e)ber of the Board of &irectors of F6?

In response to the co)plaint of Att+. Pe2a, F?

On 49 Ma+ EEE, the R*!-Bao !it+>F4?ruled in favor of Pe2a, after findin

that an aenc+ relationship had indeed been created beteen hi) and F?In the appeal, the+

uestioned the factual findin that an aenc+ relationship existed beteen the ban=

and Pe2a.>FG?

Althouh the+ put up a sinle defense in the proceedins in the loer

court, FF?F9?assined as errors the trial court1s reliance on

the purported oral contract of aenc+ and Pe2a1s clai)s for co)pensation durin the

controverted telephone conversation ith Borlonan, hich ere alleedl+

incredible.

Meanhile, Ben8a)in #. de #eon, &elfin Hon0ale0, Jr., and %ric #. #ee

the &e #eon Hroup/,>FE? the petitioners in the instant Petition doc=eted as H. R. No.

5944, arued that, even on the assu)ption that there had been an aenc+ contract

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ith the ban=, the trial court co))itted reversible error in holdin the) 3 as ban=

directors 3 solidaril+ liable ith the corporation.>96?

On the other hand, *eodoro Borlonan, !ora0on M. Be8asa, Arturo

Manuel, Jr., Ben L. #i), Jr., and P. (iervo @. &i0on the Borlonan Hroup/>9?

reiterated si)ilar aru)ents as those of the &e #eon Hroup, addin that theclai)ed co)pensation of 6C of the purchase price of the Pasa+ propert+ as not

reasonable.>94?

Pe2a refuted all of their aru)ents>9;?and pra+ed that the trial court1s

&ecision be affir)ed.>95?

Actin favorabl+ on the appeal, the !ourt of Appeals >9?annulled the &ecision

of the R*!-Bao !it+ and ruled that no aenc+ relationship had been created.

Nevertheless, it ordered sic? and the October E, 4666 >sic?

(pecial Order of the R*! of Bao !it+, Branch G4, >9G?are hereb+

ANN9F?%)phasis supplied/

Pe2a dul+ filed a Motion for Reconsideration of the unfavorable !A

&ecision.>99?*he appellate court, hoever, denied his )otion.>9E?*he !A &ecision

and Resolution ere appealed b+ Pe2a to this !ourt, throuh one of the three

consolidated Rule 5 Petitions before us H. R. No. G4G4/.

E0euto& e&'& Appe%

On 6F June EEE, prior to the filin of the notice of appeal of E6?Pe2a )oved for execution pendin appeal>E?of the

&ecision rendered b+ the R*!-Bao !it+,>E4?hich had aarded hi) a total of

PhP49,66,666 in co)pensation and da)aes.>E;?

In supportin his pra+er for discretionar+ execution, Pe2a cited the pendin

separate civil action for collection filed aainst hi) b+ his creditor-friend, ho as

de)andin pa+)ent of a PhP;,666,666 loan.

>E5?

Accordin to Pe2a, he had used theproceeds of the loan for securin the ban=1s Pasa+ propert+. No ot3er re%:o& ort3e pr%;er or e0euto& pe&'& %ppe% ?%: 9e& -; e% ot3er t3%& t3:oeto& :ut.>E?

In opposition to the )otion, EG?

On 4E October EEE, the R*!-Bao !it+, throuh Jude @enr+ J. *rocino,>EF?favorabl+ ranted Pe2a1s )otion and issued a (pecial Order authori0in

execution pendin appeal.>E9?In accordance ith this (pecial Order, Att+. Josephine

Mutia-@aad, the cler= of court and ex officiosheriff, issued a rit of

%xecution>EE?on the sa)e da+.>66?*he (pecial Order and rit of %xecution ere

directed at the properties oned b+ 64?

On 6E Nove)ber EEE, the appellate court favorabl+ ranted the *RO and

preli)inaril+ prohibited the i)ple)entation of the (pecial Order and rit of

%xecution.>6;?

On 4 Januar+ 4666, the !A eventuall+ ranted 65?

@%R%OR%, the instant petition is HRAN*%&. *he

(pecial Order and rit of execution, both dated October 4E, EEE,

are ANN6?

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On 64 ebruar+ 4666, Pe2a )oved for the reconsideration of the !A1s

&ecision7>6G?hile petitioners filed their correspondin !o))entOpposition

thereto.>6F?

&urin the pendenc+ of Pe2a1s Motion for Reconsideration, 69?

In its A)ended &ecision dated 9 Auust 4666, the !A >6E?favorabl+

ranted Pe2a1s Motion for Reconsideration, and reversed its earlier &ecision to

allo execution pendin appeal.>6?*he appellate court found that the ban= holida+

declared b+ the B(P after the pro)ulation of its earlier &ecision, P&I!1s

receivership of ?

On 4E Auust 4666, 4?*he &e #eon Hroup subseuentl+

filed several (upple)ental Motions for Reconsideration.>;?*hereafter, respondents

*eodoro Borlonan and !ora0on M. Be8asa also filed their separate (upple)ental

Motion for Reconsideration,>5?as did petitioner Ben *. #i), Jr.>?

On E October 4666, the !ourt of Appeals denied the )otion for

reconsideration for lac= of )erit and the other subseuent (upple)ental Motions for

Reconsideration for bein filed out of ti)e.>G?*he appellate court also ordered

Pe2a to post an inde)nit+ bond.>F?*he A)ended &ecision and the Resolution ere

the sub8ects of several Rule 5 Petitions filed b+ 9?

On ; October 4666, the !A >E?ranted the sta+ of the execution upon the

filin b+ the &e #eon Hroup of a PhP56,666,666 bond in favor of Pe2a. >46?Pe2a

)oved for the reconsideration of the sta+ order.>4?

In its Resolution dated 69 &ece)ber 4666,>44? the appellate court denied

Pe2a1s Motion for Reconsideration and a sta+ order over the execution pendin

appeal as issued in favor of the &e #eon Hroup, after the+ had filed their

supersedeas bond.>4;?*he sta+ of execution pendin appeal, hoever, excluded

45?

On 69 &ece)ber 4666, Pe2a posted his inde)nit+ bond as reuired b+ the

!A.>4?

As )entioned earlier, 4E?

(o)eti)e in (epte)ber and October 466, ;6?;?

*he appellate court, hoever, )erel+ noted ;4?

After the denial b+ the !ourt of Appeals of


9/39

pendin appeal and the approxi)ate value of so)e of these properties. *he+ do not

include properties covered b+ the Petition doc=eted as H. R. No. 599.

*ABLE O" LEVIED, GARNIS+ED ANDOR EECU*ED ROER*IESENDING AEAL

O?&erDee&'%&t ropert; De:rpto& E:tm%te' V%ue orre %t u-Auto&

*ot% Amou&t

;;?

As of 6G &ece)ber

EEE, one share as

sellin at P.G

Million.>;5?

5,966,666

*hree !lub (hares in

Ma=ati (ports, !lub,

Inc. M(!I/>!overed

b+ (toc= !ertificate

Nos. A-9E;, A-4;6

and B-FG4?>;?

As of 6G &ece)ber

EEE, M(!I !lub

(hares KA and KB

ere sellin at

PhPG6,666 and

PhPF66,666,respectivel+.>;G?

4,666,666>;F?

9 !ondo)iniu)

;E?

9,666,666

A s).condo)iniu) unit,

Ma=ati !it+ !!* No.

FGEF/>5?

%sti)ates are basedon report of 54?

4,566,666

A 4. s).

condo)iniu) par=in

space Par=in *hree,

5;?

66,666

A G5,GFF s). land in

*aa+ta+ !it+ *!*

No. 465F/>55?

"alue based on

esti)ate of 5?

;,F4,;6

*eodoro

Borlonan

One !lub (hare in

Manila Polo !lub No.

;5;;/>5G?

Borlonan1s club

share as esti)ated

to be valued atP,666,666.>5F?

,666,666 Noti

%xec

Persdate

4666

One !lub (hare in

(ubic Ba+ Lacht

!lub>5E?

One club share as

esti)ated to be valued

at P66,666.>6?

66,666

One !lub (hare in

Bauio !ountr+

!lub>?

As of 6G &ece)ber

EEE, one share as

sellin at P9F6,666.>4?

9F6,666

One !lub (hare in

M(!I>;?As of 6G &ece)ber

EEE, M(!I !lub

(hares KA and KBere sellin at

PhPG6,666 and

PhPF66,666

respectivel+.>5?

G6,666

Real Propert+>? No esti)ate available

on record.

&elfin !.

Hon0ales, Jr.

One !lub (hare in

Manila Polo !lub No.

;99/>G?

Hon0ales1 club share

as esti)ated to be

valued at P5,666,666.>F?

5,666,666 Noti

%xec

Pers

date

4666

One !lub (hare inBauio !ountr+ !lub.>E?

Hon0ales1 club shareas esti)ated to be

valued at P,6FF,666.>G6?

,6FF,666

One !lub (hare in

Alaban !ountr+ !lub

Me)ber No. 6/>G?

Hon0ales1 club share

as esti)ated to be

valued at P4,666,666.>G4?

4,666,666

9
http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn136http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn137http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn137http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn138http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn139http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn139http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn140http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn141http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn142http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn144http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn144http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn145http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn146http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn147http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn148http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn149http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn150http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn150http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn152http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn153http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn153http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn154http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn155http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn156http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn157http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn157http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn158http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn159http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn160http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn162http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn163http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn164http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn165http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn136http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn137http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn138http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn139http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn140http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn141http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn142http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn144http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn145http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn146http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn147http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn148http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn149http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn150http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn152http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn153http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn154http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn155http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn156http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn157http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn158http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn159http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn160http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn162http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn163http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn164http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn165


10/39

;6,9 shares of stoc=

in &. !. Hon0ales, Jr.,

Inc.>G;?

P46.66 per share>G5? G,F66

56 (hares of stoc= in

&. !. Hon0ales, Jr.,

Inc.>G?

P6.66 per share>GG? 4,666

Ben8a)in #.

de #eon

One !lub (hare in

Manila Polo !lub

ith Associate

Me)bership/ >No.

6EF?>GF?

&e #eon1s (hare as

esti)ated at P5 M for

the share and P.6 M

for the associate

)e)bership.>G9?

,66,666

One !lub (hare in

M(!I (toc=

!ertificate No. A-F/>F6?

&e #eon1s share as

esti)ated at

P56,666.>F?

56,666

One !lub (hare in

Bauio !ountr+ !lub

4;/>F4?

As of 6G &ece)ber

EEE, one share as

sellin at leastP9F6,666.>F;?

9F6,666

P. (iervo H.

&i0on

%ric #. #ee One !lub (hare in

Manila Polo !lub

46;9/>F5?

#ee1s1 club share as


at P5,666,666.>F?

5,666,666

One !lub (hare in

Manila Holf !lub, Inc.>FF?

#ee1s club share as


at P,F6,666.>F9?

,F6,666

One !lub (hare in (ta.

%lena Holf !lub, Inc.

!lass KA (hare/>FE?

#ee1s club share as


at P4,666,666.>96?

4,666,666

*o !lub (hares in

*aa+ta+ @ihlands

Int1l Holf !lub,

Inc.>9?

#ee1s club shares

ere esti)ated to be

valued at P,666,666.>94?

,666,666 Noti

%xec

Pers

date

4666

One !lub (hare in(ubic Lacht !lub>95?

#ee1s club share asesti)ated to be valued

at P66,666.>9?

66,666

G6,FF (hares of stoc=

in %# Properties, Inc.>9G?

P46.66 per share ,45,56

56 (hares of stoc= in

%# Properties, Inc.>9F?

P6.66 per share 4,666

!ash arnished fro)

BPI Account>99? 66,666

Ben *. #i),

Jr.

No

availprop

arn

exec

appe

!ora0on

Be8asa

Real Propert+>9E? No esti)ated value.

Arturo

Manuel, Jr.,

Real Propert+>E6? No esti)ated value.

*O*AL VALUE 181,1,1/

*he su) of 3181,1,1/does not include )an+ other properties and itis not difficult to believe that the total value covered reached )ore than that. >E?In

su))ar+, the esti)ated values andor purchase prices at the auction sale of the

properties of


11/39

bond>E4?and reuested that the !ourt sta+ the execution pendin appeal.>E;?Pe2a

opposed the )otion on the round that it had alread+ been rendered )oot and

acade)ic b+ the sale of the properties of the ban=.>E5?

On 4; October 4664, or al)ost a +ear after so)e of the condo)iniu) units

ere sold in a public auction, %IB, as the successor of E?*hus,

%IB tendered three )anaer1s chec=s in the total a)ount of PhP44,69,966 >EG?to

redee) the properties that ere previousl+ under the na)e of EF?Althouh the trial court noted the ban=1s Manifestation, >E9?the sheriff returned

the %IB1s )anaer1s chec=s. *hus, on 4E October 4664, %IB, throuh a )otion, as

pro)pted to turn over the chec=s to the trial court itself.>EE?

hen 466?final !ertificates of (ale ere issued in favor of

46?465?but his )otion as

subseuentl+ denied b+ the !ourt.>46?

Proceedings in the Supreme Court (G. R. Nos. !"#$, !"## % !"#&&'

On 4 &ece)ber 4666, 46G?represented b+ its receiver, P&I!,>46F?filed a Rule 5 Petition ith this !ourt doc=eted as H. R. No. 59F/ to assail

the !A1s A)ended &ecision and Resolution rantin execution pendin appeal.>469?In response, Pe2a )oved for the denial of the petition on the rounds of lac=

)erit, violation of the rule aainst foru) shoppin, and non-pa+)ent of doc=et fees,

a)on others.>46E?In a separate !o))ent,>46?Pe2a also arued that the appellate

court had co))itted no error hen it considered the ban=1s Ki))inent insolvenc+

as a ood reason for upholdin the validit+ of the execution pendin appeal.

On the other hand, the Borlonan Hroup>4?filed a separate Rule 5

Petition uestionin the sa)e &ecision and Resolution, doc=eted as H. R. No.

599.>44?*his !ourt initiall+ denied their petition on the round that it failed to

sufficientl+ sho that the !A co))itted reversible order.>4;?*he Borlonan Hroup

tice )oved for the reconsideration of the denial of their petition7 but the !ourt

nonetheless denied both )otions for lac= of )erit. >45?*his denial of the petition in

H. R. No. 599 beca)e final and executor+, ith the issuance of the %ntr+ of

Jud)ent.>4?

Meanhile, another Rule 5 Petition H. R. No. 5944/ >4G?as filed b+

the &e #eon Hroup, assailin the sa)e &ecisions of the appellate court. *he !ourt

also preli)inaril+ denied this petition on the round that the &e #eon Hroup failed

to file the appeal ithin the rele)entar+ period and to pa+ certain fees.>4F?

&espite the denial of the Rule 5 Petition in H. R. No. 5944 filed b+ the

&e #eon Hroup, the !ourt nonetheless ordered that the case be consolidated ith

49?*he !ourt

subseuentl+ ave due course to both of these petitions. >4E? In co)pliance ith the

!ourt1s Order,>446?44?and the &e #eon Hroup >444?filed their respective

Me)oranda.

As detailed earlier, the !ourt ranted and approved 44?Meanhile, one of the innin

bidders in the public auction sale of the M(!I shares rote to the latter to de)and

that the club share previousl+ oned b+ 44G?

On 65 ebruar+ 4664, considerin the conflictin clai)s of 44F?

In its Motion for !larification dated 6G Auust 4664,


12/39

redee) the properties sold at a public auction. >449?*he cop+ of


13/39

On 6E &ece)ber 4664, Pe2a )oved that the !ourt1s Resolution be

recalled, because he as not iven an opportunit+ to be heard on 4;6?Interposin its

ob8ection, the ban= arued that the error in )ista=enl+ sendin the Motion for

clarification to a different counsel as b+ sheer inadvertence,>4;?but Pe2a as

nonetheless aare of the )otion, and that the !ourt1s clarification did not create or

di)inish his rihts in an+ case.>4;4?

*he Motion for !larification filed b+ 4;;?*he !ourt had even called for an executive session>4;5?in

hich Pe2a, a)on others, appeared and as uestioned b+ the then )e)bers of

the !ourt1s irst &ivision, na)el+ retired !hief Justice @ilario &avide, Justices Jose

"itu, Antonio !arpio and Adolfo A0cuna. Althouh the Petitions had earlier been

assined to Justice !arpio, he has since ta=en no part in the proceedins of this case

and this resulted in the re-rafflin of the Petitions. *he transfer and unloadin of the

case b+ the subseuentl+ assined Justices as ell as Pe2a1s nu)erous )otions for

inhibition andor re-raffle has li=eise cause considerable dela+ in the disposition of

the instant Petitions and the Ad)inistrative !ase.

4;E?*hereafter, the ban= adopted its earlier Opposition to

the intervention as its anser to 456?Also in

anser thereto, the &e #eon Hroup adopted its earlier Manifestation and !o))ent.>45?

Intervenor 454?*he

!ourt reuired the parties to file their co))ents on the reuest. >45;?*he #i)>455?and

Borlonan Hroups>45?)anifested separatel+ that the+ ould not be affected b+ a

resolution of the reuest of intervenor 45G?In contrast, 459?Accordinl+,

intervenor 45E?

In su))ar+, the !ourt shall resolve the substantial issues in the folloin:

a/ the Petition of Pe2a H. R. No. G4G4/ assailin the !A1s decision on the

substantive )erits of the case ith respect to his clai)s of co)pensation based on

an aenc+ aree)ent7 and b/ the Petitions of


14/39

authorit+ of the latter.>46?*he basis of the civil la relationship of aenc+ is

representation, >4?the ele)ents of hich include the folloin: a/ the relationship

is established b+ the parties1 consent, express or i)plied7 b/ the ob8ect is the

execution of a 8uridical act in relation to a third person7 c/ aents act as

representatives and not for the)selves7 and d/ aents act ithin the scope of their

authorit+.>44?

hether or not an aenc+ has been created is deter)ined b+ the fact that

one is representin and actin for another. >4;?*he la )a=es no presu)ption of

aenc+7 provin its existence, nature and extent is incu)bent upon the person

allein it.>45?

ith respect to the status of Att+. Pe2a1s relationship ith 4? On the other extre)e, the trial court

heavil+ relied on the sole telephone conversation beteen Pe2a and


15/39

Ban=, as ne oners. !an +ou please issue so)ethin li=e this

toda+ as he needs this.>4G6?

*o da+s later, on E &ece)ber EE5, I(!I sent 4G?

It is clear fro) the above that I(!I as as=in


16/39

(econd, Pe2a alleedl+ told Montilla that he Pe2a/ ould be ithdrain

his uards fro) the propert+ because of the brea=-open order fro) the R*!-Pasa+

!it+.

*hird, Montilla reuested Pe2a to suspend the ithdraal of the uards

hile I(!I ets in touch ith


17/39

respondent ban=, the latter did not interpose an+ ob8ection or )ove to dis)iss the

co)plaint on the basis of his lac= of authorit+ to represent its interest as the oner

of the propert+. hen he successfull+ neotiated ith the tenants reardin their

departure fro) its Pasa+ propert+, still no protest as heard fro) it. After possession

as turned over to the ban=, the tenants accepted PhP,66,666 fro) Pe2a, in Kfull

and final settle)ent of their clai)s aainst 4G9?

In all these instances, petitioner-respondent ban= did not repudiate the

actions of Pe2a, even if it as full+ aare of his representations to third parties on

its behalf as oner of the Pasa+ propert+. Its tacit acuiescence to his dealins ith

respect to the Pasa+ propert+ and the tenants spo=e of its intent to ratif+ his actions,

as if these ere its on. %ven assu)inarguendothat it issued no ritten authorit+,

and that the oral contract as not substantiall+ established, the ban= dul+ ratified his

acts as its aent b+ its acuiescence and acceptance of the benefits, na)el+, the

peaceful turnover of possession of the propert+ free fro) sub-tenants.

%ven if, hoever, Pe2a as constituted as the aent of


18/39

record except the self-servin testi)on+ of Pe2a that Borlonan areed to pa+ hi)

this a)ount in the controverted telephone conversation.

ourth, hile ordinaril+, uncontradicted testi)on+ ill be accorded its full

eiht, e cannot rant full probative value to the testi)on+ of Pe2a for the

folloin reasons: a/ Pe2a is not a credible itness for testif+in that he onl+

learned of the sale of the propert+ of E &ece)ber EE5 hen the acts of I(!I, of

4FE?

In this instance, no extra-ordinar+ s=ills e)plo+in advanced leal trainin

nor sophisticated leal )aneuverin ere reuired to be e)plo+ed in e8ectin 4;

sub-tenants ho have no lease contract ith the propert+ oner, and hose onl+

authorit+ to enter the pre)ises as unlafull+ iven b+ a for)er tenant hose on

tenanc+ has clearl+ expired. *he 4; sub-tenants operated beer houses and

nihtclubs, ordinar+ retail establish)ents for hich no sophisticated structure

prevented eas+ entr+. After Pe2a succeeded in loc=in the ate of the co)pound, the

sub-tenants ould open the padloc= and resu)e their businesses at niht. Indeed, it

appears that onl+ securit+ uards, chains and padloc=s ere needed to =eep the)

out. It as onl+ the alleed connivance of Pasa+ !it+ police)en that Pe2a1s abilit+

to retain the possession as rendered insecure. And ho )uch did it ta=e Pe2a to

enter into a settle)ent aree)ent ith the) and )a=e all these proble)s o aa+

B+ Pe2a1s on account, PhP,66,666 onl+. *hat )eans that each tenant received an

averae of PhPG,4F.56 onl+. (urel+, the leal services of Pe2a cannot be )uch

)ore than hat the sub-tenants ere illin to settle for in the first place. e

therefore aard hi) the euivalent a)ount of PhP,66,666 for the leal and other

related services he rendered to e8ect the illeall+ sta+in tenants of 496?or the loer court to

have latched on to the self-servin clai)s of a telephone aree)ent as sufficient

support for extendin a )ulti-)illion peso aard is hihl+ irreular. Absent an+

clear basis for the a)ount of the la+er1s co)pensation, the trial court should have

instinctivel+ resorted to uantum meruit, instead of insistin on a fiure ith

circu)stantial and spurious 8ustification.

18
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e cannot also aree ith the &ecision penned b+ Jude %dardo #. !atilo

characteri0in Pena1s 6C fee as believable because it is nearl+ conruent to the

PhP4 Million retention )one+ held in escro for I(!I until a clean ph+sical and

leal turn-over of the propert+ is effected:

e no co)e to the reasonableness of the co)pensation

pra+ed for b+ the plaintiff hich is 6C of the current )ar=et

value hich defendants clai) to be preposterous and larinl+

excessive. Plaintiff >Pe2a? testified that defendant Borlonan

areed to such an a)ount and this has not been denied b+ *ed

Borlonan. *he ter) Kcurrent )ar=et value of the propert+ is

hereb+ interpreted b+ the court to )ean the current )ar=et value

of the propert+ at the ti)e the contract as entered into. *o

interpret it in accordance ith the sub)ission of the plaintiff that

it is the current )ar=et value of the propert+ at the ti)e pa+)ent

is )ade ould be preposterous. *he onl+ evidence on record

here the court can deter)ine the )ar=et value of the propert+ at

the ti)e the contract of aenc+ as entered into beteen plaintiff

and defendant is the consideration stated in the sales aree)ent

beteen Isabela (uar !o)pan+, Inc. and 49?

In the first place, the &ecision of Jude !atilo )a=es Pe2a1s de)and of an

aenc+ fee of PhP45 Million, an additional burden on


20/39

of the corporation the+ represent. >49F?*o hold a director or an officer personall+

liable for corporate obliations, to reuisites )ust concur: / the co)plainant

)ust allee in the co)plaint that the director or officer assented to patentl+ unlaful

acts of the corporation, or that the officer as uilt+ of ross nelience or bad

faith7 and 4/ the co)plainant )ust clearl+ and convincinl+ prove such unlaful

acts, nelience or bad faith.>499?K*o hold a director, a trustee or an officer

personall+ liable for the debts of the corporation and, thus, pierce the veil of

corporate fiction, bad faith or ross nelience b+ the director, trustee or officer in

directin the corporate affairs )ust be established clearl+ and convincinl+.>49E?

Pe2a failed to allee and convincinl+ sho that individual defendant ban=

directors and officers assented to patentl+ unlaful acts of the ban=, or that the+

ere uilt+ of ross nelience or bad faith. !ontrar+ to his clai), the

!o)plaint>4E6?in the loer court never alleed that individual defendants acuiesced

to an unlaful act or ere rossl+ nelient or acted in bad faith.>4E?Neither is there

an+ specific alleation of ross nelience or action in bad faith that is attributable

to the individual defendants in perfor)ance of their official duties.

In an+ event, Pe2a did not adduce an+ proof that the eiht individual

defendants perfor)ed unlaful acts or ere rossl+ nelient or in bad faith. Aside

fro) the eneral alleation that the+ ere corporate officers or )e)bers of the

board of directors of


21/39

As the co)plainant on the trial court level, Pe2a carried the burden of

provin that the eiht individual defendants perfor)ed specific acts that ould

)a=e the) personall+ liable for the obliations of the corporation. *his he failed to

do. @e cannot capitali0e on their alleed failure to offer a defense, hen he had not

dischared his responsibilit+ of establishin their personal liabilities in the first

place. *his !ourt cannot sustain the individual liabilities of the ban= officers hen

Pe2a, at the onset, has not persuasivel+ de)onstrated their assent to patentl+

unlaful acts of the ban=, or that the+ ere uilt+ of ross nelience or bad faith,

reardless of the ea=nesses of the defenses raised. *his is too basic a reuire)ent

that this !ourt )ust de)and sufficient proof before e can disreard the separate

leal personalit+ of the corporation fro) its offices.

@ence, onl+ 4EF?of the

&ecision,>4E9?hich had aarded hi) a total of PhP49,66,666 in co)pensation and

da)aes.>4EE?In supportin his pra+er for discretionar+ execution, e% te' &oot3er re%:o& t3%& t3e pe&'& :ep%r%te 9 %to& or oeto& e' %%&:t3m -; % re'tor, ho as de)andin pa+)ent of a PhP;,666,666 loan.>;66?Accordin to hi), he had used the proceeds of the loan for securin the ban=1s

Pasa+ propert+.>;6?In opposition to the )otion, ;64?

avorabl+ actin on Pe2a1s )otion, the R*!-Bao !it+, throuh Jude @enr+

J. *rocino,>;6;?issued a (pecial Order authori0in execution pendin appeal on the

basis of Pe2a1s indebtedness to his creditor-friend.>;65?In accordance ith this

(pecial Order, Att+. Josephine Mutia-@aad, the cler= of court and ex officiosheriff,

expeditiousl+ issued a rit of %xecution on the sa)e da+.>;6?*he trial court1s

(pecial Order and rit of %xecution ere the sub8ects of a Rule G Petition filed b+

;6G?

Both the (pecial Order and rit of %xecution are nullified for to reasons:

/ (ince the &ecision of the R*!-Bao !it+ is

co)pletel+ vacated, all its issuances pursuant to the &ecision,

includin the (pecial Order and the rit of %xecution are li=eise

vacated7 and

4/ *he (pecial Order authori0in execution

pendin appeal based on the collection suit filed aainst Att+.

Pe2a had no basis under the Rules of !ourt, and the sa)e

infir)it+ thus afflicts the rit of %xecution issued pursuant

thereto.

Since the )ecision of the R*C+Bago Cit is

-acated, all orders and rits pursuant thereto

are likeise -acated.

!onsiderin that the (pecial Order and rit of %xecution as a result of

the trial court1s earlier aard of PhP49,66,666, the nullification or co)plete

reversal of the said aard necessaril+ translates to the vacation as ell of the

processes arisin therefro), includin all the proceedins for the execution pendin

appeal.

!onsiderin the unconscionable aard iven b+ the trial court and the

un8ustified i)position of solidar+ liabilit+ aainst the eiht ban= officers, the !ourt

is vacatin the &ecision of the R*!-Bao !it+ &ecision. *he trial court erroneousl+)ade solidaril+ liable


22/39

A void 8ud)ent never acuires finalit+.>;6F?In conte)plation of la, that

void decision is dee)ed non-existent.>;69?/uod nullum est, nullum producit

effectum.>;6E?@ence, the validit+ of the execution pendin appeal ill ulti)atel+

hine on the court1s findins ith respect to the decision in hich the execution is

based.

Althouh discretionar+ execution can proceed independentl+ hile the

appeal on the )erits is pendin, the outco)e of the )ain case ill reatl+ i)pact

the execution pendin appeal, especiall+ in instances here as in this case, there is a

co)plete reversal of the trial court1s decision. *hus, if the decision on the )erits is

co)pletel+ nullified, then the conco)itant execution pendin appeal is li=eise

ithout an+ effect. In fact, the Rules of !ourt expressl+ provide for the possibilit+

of reversal, co)plete or partial, of a final 8ud)ent hich has been executed on

appeal.>;6?Precisel+, the execution pendin appeal does not bar the continuance of

the appeal on the )erits, for the Rules of !ourt explicitl+ provide for restitution

accordin to euit+ and 8ustice in case the executed 8ud)ent is reversed on appeal.>;?

!onsiderin that the &ecision of the R*!-Bao !it+ has been co)pletel+vacated and declared null and void, it produces no effect hatsoever. *hus, the

(pecial Order and its conco)itant rit of %xecution pendin appeal is li=eise

annulled and is also ithout effect. !onseuentl+, all levies, arnish)ent and sales

executed pendin appeal are declared null and void, ith the conco)itant dut+ of

restitution under the Rules of !ourt, as ill be discussed later on.

0n an case, the trial court1s grant of execution

pending appeal lacks sufficient 2asis under the

la and 3urisprudence.

e rule that the pendenc+ of a collection suit b+ a third part+ creditor

hich credit as obtained b+ the innin 8ud)ent creditor in another case, is not asufficientl+ ood reason to allo execution pendin appeal as the Rules of !ourt

provide. %xecution pendin appeal is an extraordinar+ re)ed+ alloed onl+ hen

there are reasons to believe that the 8ud)ent debtor ill not be able to satisf+ the

8ud)ent debt if the appeals process ill still have to be aaited. It reuires proof

of circu)stances such as insolvenc+ or atte)pts to escape, abscond or evade a 8ust

debt.

In4lorendo -. Paramount 0nsurance, Corp.,>;4?the !ourt explained that the

execution pendin appeal is an exception to the eneral rule that execution issues as

a )atter of riht, hen a 8ud)ent has beco)e final and executor+:

As such exception, the court1s discretion in alloin it

)ust be :trt; o&:true'and fir)l+ rounded on the existenceof ood reasons. HGoo' re%:o&:, t 3%: -ee& 3e', o&::t oompe& rum:t%&e: t3%t =u:t; mme'%te e0euto& e:tt3e =u'me&t -eome: u:or;. *he circu)stances )ust besuperior, outeihin the in8ur+ or da)aes that )iht result

should the losin part+ secure a reversal of the 8ud)ent. #esser

reasons ould )a=e of execution pendin appeal, instead of an

instru)ent of solicitude and 8ustice, a tool of oppression and

ineuit+. %)phasis supplied/

Indeed, the presence or the absence of ood reasons re)ains the +ardstic=

in alloin the re)ed+ of execution pendin appeal, hich should consist of

exceptional circu)stances of such urenc+ as to outeih the in8ur+ or da)ae that

the losin part+ )a+ suffer, should the appealed 8ud)ent be reversed later.>;;?*hus, the !ourt held that even the financial distress of the prevailin co)pan+ is

not sufficient reason to call for execution pendin appeal:

In addressin this issue, the !ourt )ust stress that the

execution of a 8ud)ent before its finalit+ )ust be founded upon

ood reasons. *he +ardstic= re)ains the presence or the absence

of ood reasons consistin of exceptional circu)stances of such

urenc+ as to outeih the in8ur+ or da)ae that the losin part+

)a+ suffer, should the appealed 8ud)ent be reversed later. Hood

reason i)ports a superior circu)stance that ill outeih in8ur+

or da)ae to the adverse part+. In the case at bar, petitioner failed

to sho Kpara)ount and co)pellin reasons of urenc+ and8ustice. Petitioner cites as ood reason )erel+ the fact that Kit is a

s)all-ti)e buildin contractor that could ill-afford the protracted

dela+ in the rei)burse)ent of the advances it )ade for the

aforesaid increased costs of . . . construction of the >respondents?

buildins.

etto&erJ: %ee'; pre%rou: &%&% o&'to&,3o?e9er, : &ot -; t:e % =ur:pru'e&t%; ompe&rum:t%&e ?%rr%&t& mme'%te e0euto&. *he financialdistress of a 8uridical entit+ is not co)parable to a case involvin

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23/39

a natural person S such as a ver+ old and sic=l+ one ithout an+

)eans of livelihood, an heir see=in an order for support and

)onthl+ alloance for subsistence, or one ho dies.

Indeed, the alleed financial distress of a corporation

does not outeih the lon standin eneral polic+ of enforcin

onl+ final and executor+ 8ud)ents. !ertainl+, a 8uridical entit+

li=e petitioner corporation has, other than extraordinar+ execution,

alternative re)edies li=e loans, advances, internal cash eneration

and the li=e to address its precarious financial condition.

%)phasis supplied/

InPhilippine Bank of Communications -. Court of 5ppeals,>;5?the !ourt

denied execution pendin appeal to a 8uridical entit+ hich alleedl+ as in

financial distress and as facin civil and cri)inal suits ith respect to the

collection of a su) of )one+. It ruled that the financial distress of the prevailin

part+ in a final 8ud)ent hich as still pendin appeal )a+ not be li=ened to the

situation of a natural person ho is ill, of advanced ae or d+in as to 8ustif+

execution pendin appeal:

It is sinificant to stress that private respondent alcon isa 8uridical entit+ and not a natural person. E9e& %::um& t3%t t?%: &'ee' & &%&% ':tre:: %&' o& t3e 9ere o %& 9or e9e& rm&% :ut:, t3e mme'%te e0euto& o % =u'me&t& t: %9or pe&'& %ppe% %&&ot -e =u:te' %: "%o&F::tu%to& m%; &ot -e 6e&e' to % %:e o % &%tur% per:o& ?3om%; -e or m%; -e o %'9%&e' %e . E9e& t3e '%&er oe0t&to& o t3e orpor%to& ? &otper se=u:t; %':reto&%r; e0euto&unless there are shoins of other oodreasons, such as for instance, i)pendin insolvenc+ of the adverse

part+ or the appeal bein patentl+ dilator+. But even as to the latter

reason, it as noted in5uino -s. SantiagoG (!RA F6

>E99?/, that it is not for the trial 8ude to deter)ine the )erit of adecision he rendered as this is the role of the appellate court.

@ence, it is not ithin co)petence of the trial court, in resolvin a

)otion for execution pendin appeal, to rule that the appeal is

patentl+ dilator+ and rel+ on the sa)e as its basis for findin ood

reason to rant the )otion. Onl+ an appellate court can appreciate

the dilator+ intent of an appeal as an additional ood reason in

upholdin an order for execution pendin appeal hich )a+ have

been issued b+ the trial court for other ood reasons, or in cases

here the )otion for execution pendin appeal is filed ith the

appellate court in accordance ith (ection 4, pararaph a/, Rule

;E of the EEF Rules of !ourt.

hat is orse, onl+ one case as actuall+ filed aainst

alcon and this is the co)plaint for collection filed b+ (olidban=.

*he other cases are Ki)pendin, so it is said. Ot3er t3%& :%'So'-%&6 %:e, "%o&F: :ur99% %: % -o'; orpor%te %&&ot-e t3re%te&e' -; %&tp%te' t%to&. *his notithstandin,and even assu)in that there as a serious threat to alcon1s

continued corporate existence, e hold that it is not tanta)ount

nor even si)ilar to an i)pendin death of a natural person. *he

)aterial existence of a 8uridical person is not on the sa)e plane as

that of hu)an life. *he survival of a 8uridical personalit+ is clearl+

outeihed b+ the lon standin eneral polic+ of enforcin onl+

final and executor+ 8ud)ents. %)phasis supplied/

In this case, the trial court supported its discretionar+ rant of execution

based on the alleed collection suit filed aainst Pe2a b+ his creditor friend for

PhP;,666,666:

It has been established that the plaintiff secured the loan

for the purpose of usin the )one+ to co)pl+ ith the )andate of

defendant ban= to hold and )aintain possession of the parcel of

land in Pasa+ !it+ and to prevent intruders and for)er tenants

fro) occup+in the said propert+. *he purpose of the loan as

ver+ specific and the sa)e as )ade =non to defendant ban=

throuh defendant *eodoro Borlonan. *he loan as not secured

for so)e other purpose. *ruth to tell, the plaintiff acco)plished

his )ission in clearin the propert+ of tenants, intruders and

suatters, lon before the deadline iven hi) b+ the defendant

ban=. *he plaintiff as assured b+ no less than the President of

defendant ban= of the availabilit+ of funds for his co)pensationand rei)burse)ent of his expenses. @ad he been paid b+

defendant ban= soon after he had fulfilled his obliation, he could

have settled his loan obliation ith his creditor.

&efendants ere benefitted b+ the services rendered b+

the plaintiff. hile plaintiff has co)plied ith the underta=in,

the defendants, hoever, failed to perfor) their obliation to the

plaintiff.

*3e p%&t :t%&': to :uer re%t; t3e oeto&%:e %%&:t 3m : &ot %''re::e'. "r:t;, %: :3o?& & E03-t

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HC, p%&tF: tot% o-%to& ?t3 Ro-erto I&%o %: oM%; 1 : 3(4,1(,///.//. *3: %mou&t, et u&p%',? o&t&ue to &re%:e 'ue to &tere:t 3%re: -e& mpo:e'-; t3e re'tor to t3e pre=u'e o p%&t.(econdl+, apreli)inar+ attach)ent has alread+ been issued and this ould

restrict the plaintiff fro) freel+ exercisin his rihts over his

propert+ durin the pendenc+ of the case.

In their opposition, defendants clai) that plaintiff1s

indebtedness is a ruse, hoever, defendants failed to adduce

evidence to support its clai).

*he court finds that the pendenc+ of the case for

collection of )one+ aainst plaintiff is a ood reason for

i))ediate execution.>;?

*he )ere fact that Att+. Pe2a as alread+ sub8ected to a collection suit for

pa+)ent of the loan proceeds he used to perfor) his services for ;E?

@ence, to rule that a pendin collection suit aainst Att+. Pe2a, hich has

not been shon to result in his insolvenc+, ould be to encourae 8ud)ent

creditors to indirectl+ and indiscri)inatel+ instiate collection suits or cite pendin

actions, related or not, as a Kood reason to routinel+ avail of the re)ed+ of

discretionar+ execution.>;46?As an exception to the eneral rule on execution after

final and executor+ 8ud)ent, the reasons offered b+ Att+. Pe2a to 8ustif+ execution

pendin appeal )ust be strictl+ construed.

Neither ill the !ourt accept the trial court1s unfounded assu)ption that


25/39

receivership of ;45?In accordance ith the subseuent Resolution of the

!ourt in above)entioned case of6ee -. *rocino,>;4?e directl+ resolve the issue of

the insufficienc+ of the reasons that led to the rant of execution pendin appeal.

In cases here the to or )ore defendants are )ade subsidiaril+ or

solidaril+ liable b+ the final 8ud)ent of the trial court, discretionar+ execution can

be alloed if % t3e 'ee&'%&t:have been found to be insolvent. !onsiderin thatonl+ ;4G?both !olu)bus ood, Inc., !olu)bus ood/ and Pacific Meat

!o)pan+, Inc., Pacific Meat/ ere found b+ the trial court therein to be solidaril+

liable to lexo Manufacturin, Inc., lexo Manufacturin/ for the principal

obliation of PhP4,EF,4F6.66. *he loer court also ranted execution pendinappeal on the basis of the insolvenc+ of !olu)bus ood, e9e& % Me%t ?%:&ot ou&' to -e &:o9e&t. Affir)in the reversal ordered b+ the !ourt of Appeals,this !ourt ruled that since there as another part+ ho as solidaril+ liable to pa+

for the 8ud)ent debt, aside fro) the insolvent !olu)bus ood, there as no ood

reason to allo the execution pendin appeal:

Reardin the state of insolvenc+ of !olu)bus, the case

ofPhilippine National Bank -. Puno, held:

Khile this !ourt in several cases has

held that insolvenc+ of the 8ud)ent debtor or

i))inent daner thereof is a ood reason for

discretionar+ execution, otherise to aait a

final and executor+ 8ud)ent )a+ not onl+di)inish but )a+ nullif+ all chances for

recover+ on execution fro) said 8ud)ent

debtor, e are constrained to rule otherise in

this particular case. I& t3e %orete' %:e:,t3ere ?%: et3er o&; o&e 'ee%te' p%rt; or=u'me&t 'e-tor ?3o ?%:, 3o?e9er, &:o9e&tor t3ere ?ere :e9er% :u3 p%rte: -ut %?ere &:o9e&t, 3e&e t3e %ore:%' r%to&%eor ':reto&%r; e0euto& ?%: pre:e&t. In

the case at bar, it is undisputed that, assu)in

MMI! is insolvent, its co-defendant PNB is

not. It %&&ot, t3ereore, -e p%u:-;%::ume' t3%t t3e =u'me&t m3t -eomeu:or; MMIC %&&ot :%t:; t3e=u'me&t, NB ? %&:?er or t.It ill beobserved that, under the dispositive portion of

the 8ud)ent hereinbefore uoted, the liabilit+

of PNB is either subsidiar+ or solidar+.

*3u:, ?3e& t3ere %re t?o or more 'ee&'%&t: %&' o&e: &ot &:o9e&t, t3e &:o9e&; o % o'ee&'%&t : &ot % oo're%:o& to =u:t; e0euto& pe&'& %ppe% t3er %-t;u&'er t3e =u'me&t : et3er :u-:'%r; or :o'%r; . In thiscase, Pacific as ad8uded to be solidaril+ liable ith !olu)bus.

*herefore, the latter is not the onl+ part+ that )a+ be anserable

to lexo. It: &:o9e&; 'oe: &ot %mou&t to % oo' re%:o& tor%&t e0euto& pe&'& %ppe%. %)phasis supplied/

(i)ilarl+, the trial court in this case found


26/39

In addition, a 8ud)ent creditor of a ban=, hich has been ordered b+ the

B(P to be sub8ect of receivership, has to fall in line li=e ever+ other creditor of the

ban= and file its clai) under the proper procedures for ban=s that have been ta=en

over b+ the P&I!. ;4F?In the Minute

Resolution of the Monetar+ Board of the B(P, ;49? In fact, even Pe2a hi)self

assured the P&I!, as receiver of ;4E?t?o execute the 8ud)ent ould undul+ deplete the

assets of respondent ban= to the obvious pre8udice of other

creditors. After the Monetar+ Board has declared that a ban= is

insolvent and has ordered it to cease operations, the Board

beco)es the trustee of its assets for the eual benefit of all the

depositors and creditors. After its insolvenc+, one creditor cannot

obtain an advantae or preference over another b+ an attach)ent,

execution or otherise. U&t t3ere : %& %ppro9e're3%-t%to& or t3e &t%to& o t3e >u'%to& proee'&:,re'tor: o t3e -%&6 :t%&' o& e>u% oot& ?t3 re:pet to'em%&'& :%t:%to& o t3er 'e-t:, %&' %&&ot -e %or'e'

:pe% tre%tme&t -; %& e0euto& pe&'& %ppe% ?t3 re:petto t3e -%&6F: %::et:.>;;6?%)phasis supplied/

Moreover, assu)in that the !A as correct in findin a reason to 8ustif+

the execution pendin appeal because of the supervenin event of ;;?hich can anser for the 8ud)ent debt. *hus, Pe2a1s interest as a

8ud)ent creditor is alread+ ell-protected.

hile there is a eneral rule that a final and executor+ 8ud)ent in the)ain case ill render )oot and acade)ic a petition uestionin the exercise of the

trial court1s discretion in alloin execution pendin appeal, e find it necessar+ to

rule cateoricall+ on this uestion because of the )anitude of the aberrations that

attended the execution pendin appeal in the &ecision of the R*!-Bao !it+.

0rregularities in the 6e- and Sale on 8xecution

Pending 5ppeal

Assu)in that the (pecial Order rantin execution pendin appeal ere

valid, issues have been raised on alleed irreularities that )ar the lev+ and sale on

execution of the properties of


27/39

opportunit+. Instead of arnishin personal properties of the ban=, the sheriff

inexplicabl+ proceeded to lev+ substantial real properties of the ban= and its officers

at the onset.

(econd, assu)in that ;;9?No

sufficient reason as raised h+ the ban=1s chosen properties ere re8ected or

inadeuate for purposes of securin the 8ud)ent debt pendin appeal. orse, the

(heriff proceeded ith arnishin and lev+in on as )an+ properties of ;5?for re8ectin the rede)ption price tendered b+ %IB in order

to recover the properties executed and sold in public auction pendin appeal.

inall+, the !ourt cannot turn a blind e+e to the fact that there as alread+

a sufficient supersedeas bond iven to anser for hatever )onetar+ aard ill be

iven in the end. *o recall, the &e #eon Hroup had alread+ tendered a supersedeas

bond of PhP56,666,666 in the !ourt of Appeals to prevent execution pendin appeal

over their properties. In fact, even ;54?is nullified, inas)uch as an euall+-i)portant leal doctrine 3 the i))utabilit+

of (upre)e !ourt final decisions 3 is also to be considered. In an+ case, the factual

circu)stances and the rulin on that case ere li)ited to the actions of (heriff Allan

(illador ith respect to properties levied under the sa)e (pecial Order and rit of

%xecution, hich ere sub8ect of third part+ clai)s )ade b+ the spouses of *eodoro

Borlonan, !ora0on Be8asa and Arturo Manuel, Jr. >;5;?It does not enco)pass other

specific events and acts co))itted in the course of the execution pendin appeal

that )a+ arrant ad)inistrative or disciplinar+ actions. @avin said that, this !ourt

leaves it to the parties to explore avenues for redress in such a situation.

*he observation on the irreularities above-enu)erated are )ade for the

purpose of correctin the in8ustice that has been co))itted herein, b+ alloin the

!ourt to pursue the uestion of ho as responsible for such ross violation of the

rules on execution, and for the !ourt to find )easures to i)prove the safeuards

aainst abuse of court processes. It is for this reason that the Office of the !ourt

Ad)inistrator ill be iven a special tas= b+ the !ourt on this )atter. Jude @enr+

*rocino of R*!-Bao !it+, ho issued the (pecial Order and had supervisor+

authorit+ over the proceedins of the execution pendin appeal, ould have been

included under such ad)inistrative investiation b+ the Office of the !ourt

Ad)inistrator, ere it not for his retire)ent fro) the 8udicial service.

*he Court1s Suspension 9rder of 8xecutionPending 5ppeal

Actin on Att+. Pe2a1s O)nibus Motion dated 6E &ece)ber 4664 >;55?and

;5?ith respect to

the !ourt1s Order dated ; Nove)ber 4664 >;5G? that clarified the earlier sta+ order

aainst the execution pendin appeal,>;5F?the !ourt hereb+ denies both )otions. *he

!ourt is full+ correct in suspendin the period for the runnin of the rede)ption

period of the properties of


28/39

!ourt havin conclusivel+ deter)ined that the supersedeas bond filed as sufficient

and considerin the subseuent findin that the said execution pendin appeal lac=s

an+ sufficient round for the rant thereof.

As to the theor+ of Att+. Pe2a that the actuations of Justice !arpio, the

thenponenteof this case, in draftin the uestioned Order should positivel+ i)pact

his )otion for reconsideration of the sa)e, the !ourt finds this aru)ent utterl+devoid of )erit.

In the first place, that uestioned Order as not the decision of onl+ a sinle

)e)ber of the !ourt, Justice !arpio, but of the entire division to hich he

beloned, then co)posed of retired !hief Justice @ilario &avide, Justices Jose

"itu, !onsuelo Lnares-(antiao and Adolfo A0cuna. *his Order as affir)ed b+

the sa)e &ivision as its dul+-pro)ulated order. In relation to this, the affir)ation

b+ the &ivision of this Order de)onstrates that there is no truth to Att+. Pe2a1s clai)

that Justice !arpio fabricated the Order.

In the second place, Att+. Pe2a1s clai) of undue interest aainst Justice

!arpio specificall+ ith respect to the latter havin the instant case transferred to hisne &ivision, is based on inorance of the s+ste) of assin)ent of cases in the

(upre)e !ourt. hen a reorani0ation of the !ourt ta=es place in the for) of a

chane in the co)position of &ivisions, due to the retire)ent or loss of a )e)ber,

the Justices do not thereb+ lose their case assin)ents but brin the latter ith the)

to their ne &ivisions.>;59?*he cases are then transferred to the Justices1 ne

&ivisions, b+ a+ of the correspondin reuest fro) each 8ustice. %ach 8ustice is in

fact, reuired to )a=e this reuest, otherise the rolloof the cases of hich he is

Me)ber-in-!hare ill be retained b+ a &ivision in hich he is no loner a

)e)ber. Indeed, Att+. Pe2a1s i)aination has otten the better of hi).

*hirdl+, his insinuation hich he denies/ that Justice !arpio )a+ have been

bribed because the latter has a ne Mercedes Ben0>;5E?is hihl+ offensive and has noplace here his points should have been confined to leal reasons and aru)ents.

Incidentall+, Att+. Pe2a has voiced the fear in the #etter of !o)plaint filed in

the !ourt1s !o))ittee on %thics and %thical (tandards,>;6?hich he brouht

aainst theponenteof this &ecision, that she ill suppress )aterial infor)ation

reardin the issuance of the Order suspendin the rede)ption period because of

her close relationship to Justice !arpio. !ontrar+ to this fear, this &ecision is

frontall+ disposin of this clai) b+ statin that there is no basis to believe that the

uestioned Order as an+thin than the 8oint decision of the five )e)bers of the

then irst &ivision, and that his aru)ents in his )otion to reconsider does not

persuade this !ourt to var+ in an+ for) the uestioned order. Moreover, our

disposition of this case renders )oot his )otion to reconsider the order.

It )ust be e)phasi0ed that the proloned resolution of the procedural issue

in the Petitions in H. R. Nos. 59F and 5944 on the execution pendin appeal is

due in no s)all part to the dela+s arisin fro) Pe2a1s peculiar penchant for filinsuccessive )otions for inhibition and re-raffle.>;?*he !ourt cannot sanction Pe2a1s

repeated reuests for voluntar+ inhibition of )e)bers of the !ourt based on the sole

round of his on self-servin alleations of lac= of faith and trust, and ould li=e

to reiterate, at this point, the polic+ of the !ourt not to tolerate acts of litiants ho,

for 8ust about an+ conceivable reason, see= to disualif+ a 8ude or 8ustice/ for their

on purpose, under a plea of bias, hostilit+, pre8udice or pre8ud)ent. >;4?*he !ourt

cannot allo the unnecessar+ and successive reuests for inhibition, lest it opens the

floodates to foru)-shoppin here litiants loo= for a 8ude )ore friendl+ and

s+)pathetic to their cause than previous ones.>;;?

Restitution of the Bank1s 8xecuted Properties

*he !ourt is still confronted ith the supervenin acts related to theexecution pendin appeal and the reversal of the aard of da)aes, hich affect the

rihts of the parties as ell as of the intervenors to the case, specificall+, intervenor

;5?*he Rules of !ourt precisel+ provides for restitution

accordin to euit+, in case the executed 8ud)ent is reversed on appeal. >;?KIn an

execution pendin appeal, funds are advanced b+ the losin part+ to the prevailin

28
http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn351http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn352http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn353http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn354http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn354http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn355http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn356http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn357http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn357http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn358http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn358http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn351http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn352http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn353http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn354http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn355http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn356http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn357http://sc.judiciary.gov.ph/jurisprudence/2011/october2011/145817.htm#_ftn358


29/39

part+ ith t3e mpe' o-%to& o t3e %tter to rep%; t3e ormer, & %:e t3e%ppe%te ourt %&e: or re'ue: t3e mo&et%r; %?%r'.>;G?

In disposin of the )ain case sub8ect of these Petitions, the !ourt totall+

reversed the staerin a)ount of da)aes iven b+ the trial court, and li)ited on

a uantum meruitbasis the aent1s co)pensation to PhP5,66,666 onl+. @oever,

properties of ;F?

Appl+in the foreoin rules, petitioner-respondent ban= is entitled to

co)plete and full restitution of its levied properties, sub8ect to the pa+)ent of the

PhP5,66,666. Meanhile, petitioners ban= officers, all of ho) have not been

found individuall+ or solidaril+ liable, are entitled to full restitution of all their

properties levied upon and arnished, since the+ have been exonerated fro)

corporate liabilit+ ith respect to the ban=1s aenc+ relationship ith Pe2a.

!onsiderin the )onetar+ aard to Pe2a and the lev+ on and execution of

so)e of its properties pendin appeal, ;9?

&ue to the co)plete reversal of the trial court1s aard for da)aes, hich

as the basis of the (pecial Order and rit of %xecution alloin execution

pendin appeal, intervenor ;E?As a )atter of principle, courts are authori0ed at an+ ti)e to order the return of

propert+ erroneousl+ ordered to be delivered to one part+, if the order is found to

have been issued ithout 8urisdiction.>;G6?

As a purchaser of properties under an execution sale, ith an appeal on the

)ain case still pendin, intervenor


30/39

*herefore, intervenor


31/39

a.


32/39

*@IR& &I"I(ION

G.R. No. 1(4/74. $%&u%r; (7, 17

RESEARC+ %&' SERVICES REAL*?in !ivil !ase No. G4,>4?hich the !ourt of

Appeals affir)ed in its decision>;?

of ; March EE in !A-H.R. !" No. 559;E.

*he undisputed facts are as follos:

On ; Nove)ber EGE, the petto&er entered into a Joint "enture Aree)entith Jose, idel, and Antonia !arreon.


33/39

After hearin the )otion, the trial court issued an order dated October EE;

directin the petitioner to pa+ the private respondent the su) of PG66,666.66 as

attorne+s fees on the basis ofuantum meruit.

*he tr% ourt8ustified the aard in this )anner:

Insofar as )aterial to the resolution of this Motion the records of this case sho that

)ovant Att+. onacier beca)e the counsel of defendant Research in Ma+ E9

hile this case has been in proress. Records, p.FF6/. B+ this ti)e also, the

defendant Research has been en8oined b+ the !ourt fro) executin !ontracts *o

(ell involvin (arana+ @o)es (ubdivision . . . . Order dated &ece)ber ;, E95,

Records pp. G4-G4G/. @oever, the said counsel for defendant Research prepared

for the latter various pleadins and represented it in !ourt (ee Records after Ma+

E9/. sic?, the pertinent portion of hich is

reproduced belo, as follos . . .

x x x

(oon after said letter, cases ere referred to hi) includin this case. In accordance

ith their aree)ent, there ere instances that Research ave Att+. onacier ten

6C/ percent of the a)ount received as the latters attorne+s fees pursuant to their

aree)ent.

*he instant case in hich 'ee&'%&tis pra+in to be aarded attorne+s fees, is an

action for rescission of the Joint "enture Aree)ent beteen plaintiffs, Patricio

(arile, et al., as oners of a parcel of land and defendant Research V (ervice Realt+,

Inc., as developer of the land. At the ti)e Att+. onacier entered his appearance as

counsel for defendant Research, the !ourt has issued a preli)inar+ in8unction

aainst Research. *hus all develop)ental and co))ercial activities of defendant

had to stop. In this reard, Att+. onacier did spade or= toards persuadin the

plaintiffs to aree to the relaxation of the effects of the in8unction to pave the a+ to

a neotiation ith a third-part+, the ilstrea). Att+. onanciers efforts ere

co)ple)ented b+ the efforts of his counterpart in the plaintiffs side. *he third-

part+ ilstrea) Inc., beca)e the assinee of defendant Research. In this connection,

a )e)orandu) of aree)ent as entered into beteen the). B+ the ter)s of

aree)ent, defendant Research ill be receivin fro) the third part+ ilstrea)

International, Inc. ilstrea)/ the folloin a)ount. . . .

x x x

*he ter)ination of the leal services of Att+. onacier as )ade definite on March

;, EE; at hich ti)e the Me)orandu) of Aree)ent hich Research entered into

ith ilstrea), Inc., has alread+ been effective. B+ this ti)e also, defendant

Research has alread+ received the first to stipulated consideration of the aree)ent

in the total su) of (ix Million PG,666,666.66/. *he necessar+ and leal

conseuence of said UMe)orandu) of Aree)entU is the ter)ination of the case

insofar as plaintiff Patricio (arile, et al. and defendant Research is concerned. *he

conclusion of the Me)orandu) of Aree)ent insofar as the cause of Research is

concerned, is a leal victor+ for defendant Research. hat could have been a loss

in invest)ent has been turned to a leal victor+. Att+. onanciers effort contributed

to defendants victor+, albeit outside the !ourt hich ould not have been possible

ithout the leal )aneuverin of a la+er.

*he dis)issal of the case before this !ourt ill co)e in a )atter of ti)e considerin

that plaintiffs, ith the assu)ption b+ the third part+, ilstrea) Inc., of hat ere

supposed to be the obliations to the) of defendant Research pursuant to their Joint

"enture Aree)ent, is no loner interested in pursuin the rescission.

It is a )atter of record that Att+. onacier is the last of the three la+ers ho

handled this case. Moreover it is Att+. onacier ho contributed to the forin of

the )e)orandu) of aree)ent as testified to b+ Att+. Roel Atien0a one of the to

retained counsels of plaintiffs.

!onsiderin the i)portance hich is attached to this case, certainl+ it ould not be

fair for Att+. onacier if his attorne+s fees in this case ould be euated onl+ to the

)easl+ )onthl+ alloance of P966.66/ Pesos and office space and other office

facilities provided b+ defendant Research. *en 6C/ per cent of the a)ount hich

Research had received fro) ilstrea) at the ti)e of the ter)ination of a la+er-

33


34/39

client relationship beteen Att+. onacier and Research or PG66,666.66 ill be a

8ust and euitable co)pensation for Att+. onanciers leal services, b+ a+

of uantum meruit(ee !abildo v. Provincial *reasurer, Ilocos Norte, et al., 5

(!RA 4G/.>F?

In its Order>9?of 4 Januar+ EE5, the trial court denied the petitioners )otionfor reconsideration of the above order.

*he petitioner appealed to the Court o Appe%:. In its Appellants Brief,>E?thepetitioner alleed that the private respondent as not entitled to attorne+s fees

under the retainer contract. Moreover, the private respondent did not exert an+

effort to a)icabl+ settle the case, nor as he even present durin the neotiations

for the settle)ent of the sa)e. *here as, therefore, no leal and factual

8ustification for the private respondents Ufantastic and unreasonable clai) for

attorne+s fees of PG66,666.66.U

On the other hand, the private respondent asserted that he as assured b+ the

petitioner that non-collection cases ere included in the continent fee arrane)ent

specified in the retainer contract herein there as to be continent co)pensation

for an+ aard arisin fro) an+ lasuit handled b+ hi). Accordin to hi), !ivil

!ase No. G4 as not the onl+ Unon-collectionU case he handled for the

petitioner. *here as a Uriht of a+U dispute here the petitioner as

aarded P6,666.66, and the latter paid hi) P,666.66, or 6C of the aard as

attorne+s fees. @e thus stressed that since under the )e)orandu) of aree)ent the

petitioner as to receive P49 )illion, he should be entitled to 6C thereof or P4.9

)illion as attorne+s fees.

In its decision>6?of ; March EE, the !ourt of Appeals affir)ed the

challened order of the trial court. It ratiocinated as follos:

Movant-appellee, on the other hand, correctl+ arues that it as the clear intention

of appellant and counsel to co)pensate the latter for an+ leal services rendered b+

hi) to the for)er. (tated otherise, it as never the intention of the parties in the

instant appeal that counsels services shall be free or to be rendered ex gratia.

x

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