G.R. No. 128941 January 28, 1999
CAPITOL COLLEGE OF ILIGAN, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS and SPOUSES GERARDO AND FELINA ARANAS, respondents.

FACTS

On August 7, 1975, the Court of First Instance (CFI) of Iligan City rendered judgment in Civil Case No. II-73 (1276) ordering petitioner Capitol College of Iligan, Inc. (CCII) to deliver to private respondents Spouses Gerardo and Felina Aranas their share of profits/dividends from their investment, and to pay moral damages and attorney’s fees. This judgment was affirmed by the Court of Appeals but later modified by eliminating the award of moral damages. The Supreme Court remanded the case for execution. During execution, the RTC issued orders for the examination of petitioner’s property and income and for a physical inventory of its assets. These orders were challenged. The Court of Appeals, in CA-G.R. SP No. 04028, affirmed the examination order but limited it to determining if dividends were declared from 1964 and private respondents’ share. In CA-G.R. SP No. 18317, the appellate court nullified the inventory order and ruled that execution should be under the Securities and Exchange Commission (SEC) due to P.D. 902-A. This was elevated to the Supreme Court in G.R. No. 95067 , which resolved that execution and subsequent incidents must be transferred to the SEC. The SEC then took cognizance and issued a writ of execution ordering an examination of petitioner’s books to determine if dividends were declared since 1964. Private respondents filed a petition for mandamus with the Court of Appeals (CA-G.R. SP No. 39876) praying for, among others, the issuance of stock certificates, submission of books for inspection from 1964 to determine profits, payment of their share in profits, and damages. The Court of Appeals granted the petition, ordering the SEC to amend the writ of execution to conform to the final judgment as affirmed with modification by the Supreme Court, specifically to: 1) cause issuance of stock certificates for the cash investment of P5,730.00; 2) submit records/books from 1964 for inspection to determine if profits were earned and if private respondents were deprived; 3) deliver unrealized profits/dividends from 1964; and 4) pay P5,000.00 moral damages. Petitioner filed the instant petition assigning errors on these orders.

ISSUE

The issues revolve around the propriety of the Court of Appeals’ orders: 1) to cause issuance of stock certificates; 2) to pay P5,000.00 moral damages; 3) to submit books of account from 1964 for inspection to determine profits and deprivation; and 4) to deliver unrealized profits/dividends.

RULING

The Supreme Court modified the decision of the Court of Appeals. It held:
1. The order for the issuance of stock certificates corresponding to the P5,730.00 investment is proper as it was part of the final and executory judgment of the CFI, as affirmed by the Supreme Court in G.R. No. 95067 .
2. The award of P5,000.00 as moral damages was deleted by the Court of Appeals in its modified decision of November 21, 1983, which became final. Therefore, the Court of Appeals erred in reinstating it.
3. The inspection of petitioner’s books of account from 1964 to the present is proper. The purpose, as clarified by the Supreme Court in G.R. No. 95067 , is not only to determine if dividends were declared but also to ascertain whether profits were earned and whether private respondents were unjustly deprived of their share. This determination is a necessary precursor for private respondents to avail of proper legal remedies for the declaration of dividends.
4. The order for petitioner to deliver unrealized profits and/or dividends is premature. The inspection must first be conducted to determine the existence of profits. After such determination, private respondents may then avail of the proper legal remedies for the declaration of dividends and demand their share.
The dispositive portion of the Supreme Court’s decision modified the Court of Appeals’ judgment accordingly.