Case Summary (G.R. No. 189358)
Background of the Case
The Regional Trial Court (RTC) in Cagayan de Oro City issued a temporary restraining order (TRO) against the respondents, preventing them from conducting various transactions related to Nissan vehicles pending the resolution of NSSC’s breach of contract claim. After the TRO was later dissolved by the Court of Appeals (CA) on grounds that NSSC lacked a clear legal right, respondents pursued damages against the injunction bond posted by CGAC, which was set at P1,000,000.00.
RTC's Ruling and Execution Pending Appeal
On October 31, 2007, the RTC dismissed NSSC's complaint, ruling that the respondents were entitled to damages resulting from the improperly issued injunctive relief. Subsequently, the RTC granted the respondents’ motion for execution pending appeal on January 16, 2008, citing good reasons including NSSC's imminent danger of insolvency and cessation of business operations. These reasons provided the requisite circumstances to justify immediate execution against NSSC and, consequently, CGAC, as the surety behind the bond.
Court of Appeals' Decision
The CA, in its ruling on February 25, 2009, partially affirmed the RTC’s order, allowing execution of the judgment pending appeal but limited CGAC’s liability to P1,000,000.00—the total bond amount. The CA supported the RTC’s conclusions that urgent circumstances existed, compelling the need for immediate execution to ensure the respondents had the opportunity to recover their damages adequately.
Supreme Court's Analysis and Conclusion
The Supreme Court, in evaluating the petition, upheld the CA's and RTC's determinations regarding the justification for execution pending appeal based on NSSC's financial instability, which posed a risk of the judgment being non-satisfied if allowed to linger until appeal resolution. The Court elaborated that CGAC, as the surety, bore the same obligations as NSSC concerning execution, allowing enforcement of the judgment pending appeal against CGAC as well.
Additionally, the liability amount for CGAC was clarified to be limited to the bond's face value of P1,000,000.00, reflecting the damages anticipated from the wrongful issuance of the injunction as determined by the RTC. Thus, CGAC was held accounta
...continue readingCase Syllabus (G.R. No. 189358)
Case Background
- The case centers on a petition for review on certiorari filed by Centennial Guarantee Assurance Corporation (CGAC) against Universal Motors Corporation (UMC) and several other respondents, regarding the execution of a judgment pending appeal.
- The origins of the case trace back to a complaint for breach of contract filed by Nissan Specialist Sales Corporation (NSSC) and its President, Reynaldo A. Orimaco, against the respondents, which led to the issuance of a temporary restraining order (TRO) by the Regional Trial Court (RTC).
Initial Court Proceedings
- The RTC issued a TRO that restrained the respondents from selling Nissan products and terminated the dealer agreement between NSSC and UMC after NSSC posted a P1,000,000.00 injunction bond from CGAC.
- The TRO was later converted into a writ of preliminary injunction on April 2, 2002.
- Respondents filed a petition before the Court of Appeals (CA), which ruled that the RTC had abused its discretion in issuing the injunction due to NSSC's lack of a clear legal right.
RTC Ruling on Breach of Contract
- On October 31, 2007, the RTC dismissed NSSC's complaint for breach of contract, ci