G.R. No. L-5717 and L-5751 to L-5756; August 30, 1952
SCOTTISH UNION AND NATIONAL INSURANCE COMPANY; LONDON AND SCOTTISH ASSURANCE CORPORATION, LTD.; AND ST. PAUL FIRE AND MARINE INSURANCE COMPANY, petitioners, vs. HIGINIO B. MACADAEG, Judge of the Court of First Instance of Manila and YU HUN AND COMPANY, respondents.

FACTS

The petitioners are three of seven defendant foreign insurance corporations in separate civil cases filed by respondent Yu Hun & Co. in the Manila Court of First Instance. The suits sought to recover a total sum of P240,000 for losses from a fire that destroyed Yu Hun & Co.’s warehouse and goods in May 1949. On December 28, 1951, the respondent Judge rendered judgments against the petitioners, ordering them to pay specific amounts plus interest. After the defendants filed a motion for reconsideration and/or new trial (denied on February 18, 1952), Yu Hun & Co. filed an urgent petition for execution pending appeal on January 28, 1952. The respondent Judge granted the petition and directed the issuance of writs of execution against the petitioners. The order was based on the finding that the petitioners had ceased business operations in the Philippines under Republic Act No. 447 , with the approval of the Insurance Commissioner, and had their outstanding risks assumed by other companies. The Judge reasoned that there was “good cause” for execution because there was danger the judgment would be ineffective if it became final, as the petitioners, being foreign corporations that had withdrawn, might have no leviable assets in the country. The petitioners challenged this order through a petition for prohibition and certiorari, alleging grave abuse of discretion.

ISSUE

Whether the respondent Judge committed grave abuse of discretion in granting execution pending appeal on the ground that the petitioners’ withdrawal from business in the Philippines constituted a “good cause” under Section 2, Rule 39 of the Rules of Court, due to the danger of the judgment becoming ineffective.

RULING

The Supreme Court held that the respondent Judge did not commit grave abuse of discretion. The withdrawal of the petitioners from business in the Philippines, with the approval of the Insurance Commissioner under Republic Act No. 447 , constituted a sufficiently good reason for granting execution pending appeal. The Court found that the respondent Judge correctly apprehended a danger that the judgment would be ineffective if it became final, as the petitioners’ withdrawal and the probable return of their deposited securities could leave no leviable assets in the country to satisfy a final judgment. The Court emphasized that one condition for withdrawal under the law is the discharge of liabilities to policyholders and creditors, which the petitioners had failed to do regarding Yu Hun & Co. The findings of the Insurance Commissioner regarding outstanding liabilities were not conclusive upon the courts. The procedure under Republic Act No. 447 governs the Insurance Commissioner’s conduct but does not regulate the liquidation of liabilities or the rights of claimants against the insurers. The petitioners had the remedy of filing a bond to stay execution. The motion for reconsideration was denied.