G.R. No. L-47405 - Santiago vs. Employees' Compensation Commission

On March 22, 2002, Tomas Tan, a stockholder and director/treasurer of CST Enterprises, Inc. (CST), filed a derivative suit in the Makati City Regional Trial Court.
The suit sought declarations of unenforceability of promissory notes and mortgage, nullity of the secretary’s certificate, and injunctive relief against multiple parties including Philippine Business Bank (PBB) and respondent Felipe Chua.
Tan alleged that before his departure for medical treatment in February 2001, he had turned over to respondent Chua, then President of CST, the original copies of transfer certificates of title for CST’s lands.
Subsequently, Tan discovered that CST’s properties had been used as collateral for loans taken out without proper authority from CST’s stockholders or board.

Tan’s amended complaint (dated January 9, 2003) revealed that a Secretary’s Certificate, allegedly issued by Atty. Jaime Soriano, conferred authority upon John Dennis Chua to open a bank account and secure credit facilities in CST’s name.
Using this certificate, John Dennis Chua secured loans with PBB totaling Ninety-One Million One Hundred Thousand Pesos (P91,100,000.00) and pledged CST properties as collateral.
Respondent Chua, acting as a co-maker, executed six promissory notes to PBB. Although he later claimed that his signature was merely an accommodation in a sincere effort to induce John Dennis Chua to settle the loan, his admission established his role in the transaction.

PBB filed a Motion for Partial Summary Judgment under Section 1, Rule 35 of the Rules of Civil Procedure, relying on respondent Chua’s admission in the promissory notes, which amounted to P75,000,000.00.
On July 27, 2005, the RTC rendered a partial summary judgment against respondent Chua on PBB’s cross-claim, holding him liable as a signatory to the promissory notes, irrespective of whether any consideration was received.
On December 16, 2005, the RTC ruled that the partial summary judgment had become final and executory by disallowing respondent Chua’s appeal (as he should have pursued a special civil action for certiorari under Rule 65) and ordered the issuance of a writ of execution.
Following the RTC’s ruling, a writ of execution was implemented through the appointment of Special Sheriff Renato Flora, who subsequently conducted the execution sale of respondent Chua’s 900 shares in CST and five parcels of land.

Respondent Chua challenged three aspects of the RTC’s decisions via a petition for certiorari and mandamus before the Court of Appeals (CA):

On February 8, 2007, the CA sustained the RTC’s ruling on the appeal disallowance but held that the writ of execution was improperly issued.
The CA found that the partial summary judgment was merely interlocutory and did not meet the criteria of a final and executory judgment; thus, respondent Chua’s remedy should have been by appeal in the main case, not by petition for certiorari.
PBB then petitioned the Supreme Court to review the CA’s decision.

Whether the Court of Appeals erred in relying on jurisprudence (e.g., Guevarra, Province of Pangasinan, Government Service Insurance System) not fully corresponding to the specific factual context of the case.

Finality of the Partial Summary Judgment and the Issuance of the Writ of Execution

Whether the Court of Appeals correctly set aside the issuance of the writ of execution and the subsequent proceedings on the premise that the partial summary judgment had not become final and executory.
Whether respondent Chua’s failure to file a certiorari petition should be deemed sufficient to render the partial summary judgment final.