G.R. No. 198627 - DST Movers Corp. vs. People's General Insurance Corp.

Lavine Loungewear Mfg. Inc. is engaged in the manufacture and export of loungewear.
The corporation secured six fire insurance policies from various insurers: Philippine Fire and Marine Insurance Corporation (PhilFire), Rizal Surety and Insurance Company (Rizal Surety), Tabacalera Insurance Company (Tabacalera), First Lepanto-Taisho Insurance Corporation (First Lepanto), Equitable Insurance Corporation (Equitable Insurance), and Reliance Insurance Corporation (Reliance Insurance).
All but one policy (First Lepanto) had been previously endorsed to Equitable PCI Bank in connection with loans procured by Lavine through its authorized representative, petitioner Harish Ramnani.

On August 1, 1998, a fire in Pasig City resulted in the partial or total destruction of two Lavine buildings and their stored supplies.
Lavine filed claims with the various insurers. Later, the Office of the Insurance Commission determined that the total amount payable to Lavine amounted to P112,245,324.34.
A controversy arose regarding the proper distribution of the claim proceeds, involving Equitable Bank’s endorsement versus Lavine’s direct entitlement as the insured party.

On March 17, 2000, Lavine’s board of directors, through a resolution, appointed Chandru Ramnani as president while designating him and Atty. Mario Aguinaldo as the representatives to negotiate with the insurance companies.
Chandru demanded that the insurance companies route their payments directly to Lavine (which would then pay Equitable Bank), countering the previous arrangement.
Lavine initiated a complaint on January 22, 2001, in Civil Case No. 68287 before the RTC of Pasig City, seeking to restrain the insurance companies from releasing claim proceeds directly to Equitable Bank.

Petitioners Harish Ramnani, Chandru P. Pessumal, Maureen M. Ramnani, Jose Manacop, and Salvador Cortez moved to intervene in the case, claiming authority as incumbent directors and asserting that Harish retained his status as the authorized representative. They also contended that Lavine’s obligations to Equitable Bank had reached approximately P71 million.
The petitioners sought to have the remaining insurance proceeds paid directly to them; accordingly, the RTC issued a decision on April 2, 2002, dismissing Lavine’s complaint and ordering detailed payments and refunds among the parties.
The RTC decision also ordered the cancellation of certain loan mortgage annotations and provided for attorney’s fees amounting to 10% of the actual damages.

On April 3, 2002, petitioners filed a motion for execution pending appeal, arguing imminent financial distress of Lavine due to alleged insolvency of Tabacalera and uncertainty of payment from the insurance companies.
The RTC granted the motion on May 17, 2002, with petitioners posting a surety bond of P40 million, and on May 20, 2002, a Writ of Execution Pending Appeal was issued.

On May 24, 2002, Sheriff Rabello filed an Urgent Ex-Parte Manifestation/Motion stating that the writ had not been served against Rizal Surety because the company had recently changed its corporate name to QBE Insurance (Phils.) Inc.
The Sheriff noted that despite this, bank deposits of Rizal Surety were garnished, and he sought an order to cancel the garnishment notices at various banks.
The RTC, on May 27, 2002, issued an order authorizing the execution against Rizal Surety under its new name, QBE Insurance (Phils.) Inc.

QBE Insurance (Phils.) Inc., a respondent that claimed to be a distinct corporate entity separate from Rizal Surety, filed an urgent motion with the RTC on May 24, 2002, to lift the May 27, 2002 Order and the subsequent Notice of Garnishment served on its bank deposits.
The RTC denied QBE’s motion on May 15, 2003, leading QBE to petition for certiorari with the Court of Appeals.
The Court of Appeals, in its May 31, 2004 decision, set aside the RTC orders by ruling that Rizal Surety and QBE are distinct entities, emphasizing that QBE, as a non-party to Civil Case No. 68287, could not legally be bound by or have execution enforced against it.
Subsequent petitions, including one for reinstatement of RTC orders, were rendered moot by a final decision on August 25, 2005, where the Supreme Court affirmed the Court of Appeals ruling and declared that execution pending appeal was not warranted.

Separate administrative cases were initiated wherein actions of Sheriff Rabello and Judge LaviAa were scrutinized for their roles in the issuance of the writ of execution.
The Court held that both officials did not exercise due diligence and proper verification procedures when acting upon representations that led to the garnishment of QBE’s bank deposits.
The decisions in QBE Insurance v. Sheriff Rabello and QBE Insurance v. Judge LaviAa reflect the judiciary’s reprimand of these administrative lapses, although these findings were ancillary to the main judgment.

Whether the RTC and subsequent courts erred in including QBE Insurance (Phils.) Inc. within the ambit of execution pending appeal even though QBE was not a party to Civil Case No. 68287.
Whether QBE’s assertion that it is a distinct corporate entity from Rizal Surety warranted its exclusion from the execution.

Whether the prerequisites for discretionary execution pending appeal under Section 2(a) of Rule 39 (i.e., a formal motion, good reason, and a special order stating such reason) were satisfied in granting execution pending appeal.
Whether Lavine’s financial distress and the alleged imminent insolvency of one of the insurers constitute “good reasons” justifying immediate execution.

Whether the inclusion of QBE as the target of execution and garnishment violated the due process rights by imposing a judgment against an entity not accorded its day in court.
Whether the actions of the sheriff and the trial court, in relying on unverified representations about Rizal Surety’s name change, failed to observe due process.

Whether the earlier Court of Appeals ruling and the eventual final decision of the Supreme Court, which set aside the RTC orders for execution pending appeal, ultimately preclude petitioners from enforcing such execution.
Whether the trial court’s interpretation of the rules authorizing execution pending appeal was in conformity with established jurisprudence.