G.R. No. 189358 - Centennial Guarantee Assurance Corp. vs. Universal Motors Corp.

A Complaint for Breach of Contract with Damages and a Prayer for Preliminary Injunction and Temporary Restraining Order was filed by Nissan Specialist Sales Corporation (NSSC) and its President and General Manager, Reynaldo A. Orimaco.
Respondents include Universal Motors Corporation (UMC), Rodrigo T. Janeo, Jr., Gerardo Gelle, Nissan Cagayan de Oro Distributors, Inc. (NCOD), Jefferson U. Rolida, and Peter Yap.
The case was raffled to the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 39 with docket number Civil Case No. 2002-058.

The RTC issued a temporary restraining order (TRO) upon the posting of a P1,000,000.00 injunction bond by NSSC and Orimaco, which was issued by Centennial Guarantee Assurance Corporation (CGAC).
The TRO enjoined respondents from selling, dealing, or marketing Nissan vehicles and spare parts, from unsanctioned business transactions, and from interfering with the existing dealer agreement between UMC and NSSC.
The TRO was later converted to a writ of preliminary injunction on April 2, 2002.
Respondents subsequently filed a petition for certiorari and prohibition before the Court of Appeals (CA), challenging the issuance of the injunctive writ. The CA eventually ruled that the RTC committed grave abuse of discretion in issuing the writ and ordered its dissolution.

On May 27, 2004, respondents advanced an application for damages against the injunction bond, arguing that the bond should cover the losses incurred from the wrongful issuance of the injunction.
On October 31, 2007, the RTC rendered a Decision dismissing the breach of contract complaint for lack of merit, while at the same time ruling that respondents were entitled to recover damages against the injunction bond.
The RTC held NSSC, Orimaco, and CGAC jointly and severally liable for damages, which included:

Actual damages and lost sales opportunities incurred by UMC.
Additional damages, attorney’s fees, and lost income awarded in favor of NCOD, Rolida, and Yap.
Exemplary damages for each respondent.

The RTC granted Execution Pending Appeal of its October 31, 2007 Decision by issuing an Order on January 16, 2008, citing several compelling reasons including:

NSSC’s imminent danger of insolvency while under rehabilitation supervision.
The cessation of NSSC’s business operations as the authorized dealer for Nissan Motor Philippines, Inc.
The permanent departure abroad of NSSC’s President and General Manager, Orimaco.
NSSC’s failure to file the supersedeas bond timely.

CGAC, though a mere bondsman, assailed the RTC’s Order by filing a petition for certiorari before the CA (docketed as CA-G.R. SP No. 02459-MIN), questioning both the existence of good reasons for execution pending appeal against a surety and the limitation of its liability.
On February 25, 2009, the CA affirmed, in part, the RTC’s Order by allowing the execution pending appeal but limiting CGAC’s liability to the amount of the bond, i.e., P1,000,000.00.
CGAC’s motion for reconsideration was denied by the CA in a Resolution dated August 14, 2009, leading to the present petition before the Supreme Court.

Whether good reasons exist to justify the execution pending appeal against CGAC, given that it is merely a surety and not the losing party in the case.
Whether CGAC’s liability under the injunction bond should be limited to P1,000,000.00 or further restricted to a lesser amount such as P500,000.00.