G.R. No. 132655 August 11, 1998
BF CORPORATION, petitioner, vs. EDSA SHANGRI-LA HOTEL and RESORT, INC., RUFO B. COLAYCO, RUFINO T. SAMANIEGO, CYNTHIA DEL CASTILLO, KUOK KHOON CHEN, and KUOK KHOON TSEN, respondents.

FACTS

Petitioner BF Corporation filed a collection suit against respondents to recover P31,791,284.72 for construction work on the EDSA Shangri-La Hotel. The Regional Trial Court ruled in favor of BF Corporation, ordering respondents to pay various sums. Respondents appealed. Pending appeal, BF Corporation moved for execution of the judgment, which the trial court granted. Respondents challenged the order of execution pending appeal via a petition for certiorari in the Court of Appeals. The Court of Appeals issued a writ of preliminary injunction to stop the execution and a writ of preliminary mandatory injunction to lift the garnishments and levies, and to return any garnished deposits. The appellate court later rendered a decision setting aside the trial court’s order of execution pending appeal, holding that the reason given—that BF Corporation’s viability was threatened by non-payment—did not justify such an order, and that the order was not in the form of a special order as required. BF Corporation’s motion for reconsideration was denied, prompting this petition for review.

ISSUE

Whether the Court of Appeals erred in setting aside the trial court’s order granting execution pending appeal.

RULING

The Supreme Court held that the Court of Appeals did not err. Execution pending appeal is an exception and requires good reasons stated in a special order. The trial court’s reason—that BF Corporation’s viability as a contractor was threatened—was insufficient. The Supreme Court cited precedent stating that a corporation’s financial distress or danger of extinction does not per se justify execution pending appeal, unlike circumstances such as a natural person’s illness or advanced age. The posting of a bond by the judgment creditor is also not alone a sufficient reason. The Court of Appeals properly issued the writs of injunction. However, the Supreme Court modified the appellate court’s decision regarding restitution. It ruled that recovery of the garnished deposits delivered to BF Corporation should be against the bond it posted, applying the procedure for recovery of damages against a bond in case of irregular attachment, which requires notice and a hearing for the surety. The Supreme Court also held that certiorari was the proper remedy against the improvident order of execution pending appeal, as appeal was not a speedy and adequate remedy.