GR 172023; (July, 2010) (Digest)
G.R. No. 172023; July 7, 2010
HEIRS OF SANTIAGO C. DIVINAGRACIA, Petitioners, vs. HONORABLE J. CEDRICK O. RUIZ, Presiding Judge, Branch 39, Regional Trial Court, Iloilo City; GERRY D. SUMACULUB, as Clerk of Court of the Regional Trial Court; CBS DEVELOPMENT CORPORATION, INC. (CBSDC) represented by its President and Chief Executive Officer, ROGELIO M. FLORETE, SR., and DIAMEL INC., represented by ROGELIO M. FLORETE, SR., Respondents.
FACTS
The case originated from an intra-corporate dispute. Santiago Divinagracia, a stockholder of CBS Development Corporation, Inc. (CBSDC), filed a Petition for Mandamus and Nullification of Delinquency Call after opposing a corporate action to mortgage company assets. His shares were subsequently declared delinquent and sold at auction. The Regional Trial Court (RTC) dismissed Santiago’s petition and, on a compulsory counterclaim, ordered his heirs (petitioners) to pay exemplary damages and attorney’s fees to the corporate respondents. Petitioners filed a notice of appeal.
While the appeal was pending, the corporate respondents moved for immediate execution of the monetary award for damages and attorney’s fees. The RTC granted the motion, citing Section 4, Rule 1 of the Interim Rules of Procedure for Intra-Corporate Controversies, which states that all decisions in such cases are immediately executory. The Court of Appeals upheld the RTC’s order, finding no grave abuse of discretion.
ISSUE
Whether the award of exemplary damages and attorney’s fees in an intra-corporate case can be subject to immediate execution pending appeal.
RULING
No. The Supreme Court granted the petition and set aside the Court of Appeals’ decision. The Court clarified the scope of the immediate execution rule under the Interim Rules. While the rule generally mandates that decisions in intra-corporate controversies are immediately executory, this principle applies to the main relief or subject of the litigation. Awards for damages and attorney’s fees are considered incidental or contingent liabilities.
The legal logic is that the execution of such monetary awards for damages is dependent on the final outcome of the main case on appeal. Their factual bases and the precise amounts remain uncertain and indefinite until the appellate process is concluded. It is possible that the appellate court may modify or even delete these awards. Therefore, to allow their immediate execution would be premature and could lead to an unjust situation if the awards are later reversed or reduced. The Court distinguished the execution of the main corporate relief from the execution of incidental monetary claims, holding that the latter are not covered by the rule on immediate executability pending appeal.