G.R. No. 172508 - Heirs of Divinagracia vs. Ruiz

Santiago Divinagracia, in his capacity as a stockholder, filed a derivative suit on February 25, 1999, on behalf of People’s Broadcasting Service Incorporated (PBS).
The suit challenged a management contract between PBS, Bombo Radyo Holdings Incorporated, and Rogelio Florete, Sr., and was docketed as SEC Case No. IEO-99-00084.
In response, Bombo Radyo and Florete filed a counterclaim alleging that Divinagracia’s suit was unfounded and intended merely to harass them.
Pursuant to Section 5.2 of Republic Act No. 8799, the derivative suit was transferred to Branch 39 of the Regional Trial Court (RTC) of Iloilo City, sitting as a special commercial court and re-docketed as Corporate Case No. 00-26557.

During the pendency of the case, Divinagracia died and was substituted by his heirs.
On July 28, 2004, the RTC rendered a decision dismissing the derivative suit and granting the counterclaims of Bombo Radyo and Florete.

The heirs filed a Notice of Appeal on August 11, 2004, while Bombo Radyo and Florete moved for immediate execution, which was granted by the RTC through a resolution on September 8, 2004.
Consequently, on September 15, 2004, a Writ of Execution was issued against the heirs.

The heirs of Divinagracia, aggrieved by the issuance of the writ of execution amidst their pending appeal, filed a petition for certiorari before the Court of Appeals (CA).
Their petition argued two principal contentions:

The RTC improperly executed the award despite the existence of an appeal.
The damages for moral and exemplary claims, as well as attorney’s fees, were part of a counterclaim in an intra-corporate dispute and should not be subject to immediate execution.

The CA dismissed the petition for certiorari on October 5, 2005, affirming the RTC’s resolution on immediate execution.
The heirs subsequently filed a Motion for Reconsideration which was denied by the CA on April 21, 2006.

A similar controversy was previously addressed in G.R. No. 172023, involving Divinagracia as a stockholder in CBS Development Corporation, Inc. (CBSDC), where the issue of immediate execution of awards for moral and exemplary damages was also raised.
In that case, the Supreme Court later clarified the rule concerning the executory character of orders under the Interim Rules of Procedure for Intra-Corporate Controversies.

The primary legal controversy concerns whether the awards for moral damages, exemplary damages, and attorney’s fees—granted as part of a counterclaim in an intra-corporate case—are immediately executory despite the pendency of the appeal.
The issue hinges on the interpretation of Section 4, Rule 1 of the Interim Rules of Procedure for Intra-Corporate Controversies and its subsequent amendment via A.M. No. 01-2-04-SC.

Whether the CA erred in affirming the RTC’s order allowing immediate execution of the award for moral damages, exemplary damages, and attorney’s fees, specifically on the ground that such an order conflicts with the supplemental application of the Rules of Court under Section 2, Rule 1 of the Interim Rules.

Analysis of the immediate executory nature of decisions rendered under the Interim Rules.

Whether the CA committed grave abuse of discretion by not recognizing the alternative remedy of a separate petition for certiorari when the appeal appears inadequate to address irreparable damage or injury.

Consideration of established jurisprudence regarding the appropriateness of filing a separate petition for certiorari.

Whether the present petition for certiorari is proper and justified as a means to prevent:

Irreparable damage to the heirs resulting from what is described as a capricious and arbitrary judicial exercise.
A clear failure of justice in light of the immediate execution of a contested award.
The ineffectiveness of the appeal to mitigate the injurious effects of the trial court’s judgment.

Whether it constitutes grave abuse of discretion—or amounts to lack or excess of jurisdiction—for the trial court to enforce immediate execution of an allegedly unjust or manifestly unsubstantiated award.

Evaluation of potential misapplication of procedural rules concerning awards in counterclaims.

Whether the trial court’s immediate execution of the award disregarded statutory provisions on succession under the Civil Code and the guidelines on payment of debts of the estate as provided by Rule 88 of the Rules of Court.