G.R. No. 174256-57 March 25, 2009
GEOLOGISTICS, INC., (formerly LEP International Philippines, Inc.), Petitioner, vs. GATEWAY ELECTRONICS CORPORATION and FIRST LEPANTO TAISHO INSURANCE, CORPORATION, Respondents.

FACTS

Petitioner Geologistics, Inc. filed an action for sum of money against respondent Gateway Electronics Corporation before the RTC of Parañaque to recover fees for customs brokerage and freight forwarding services. The RTC issued a writ of preliminary attachment on Gateway’s properties. To dissolve the attachment, respondent First Lepanto-Taisho Insurance Corporation filed a counter-bond. The RTC rendered a decision ordering Gateway to pay petitioner the principal amount plus interest, exemplary damages, attorney’s fees, and costs. Petitioner filed a motion for execution pending appeal, which the RTC granted, citing that the case had been pending since 1997 and that Gateway had admitted its principal obligation. The RTC issued a writ of execution directing the sheriff to execute on the counter-bond. The sheriff garnished the amount from the surety’s bank account and turned it over to petitioner. Both respondents filed separate petitions for certiorari before the Court of Appeals. The Court of Appeals granted the petitions, annulled the RTC’s order for execution pending appeal and the writ of execution, and ordered petitioner to return the garnished amount to the surety, with interest. Petitioner’s motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals erred in annulling the RTC’s order granting execution pending appeal, thereby holding that no good reasons existed to warrant discretionary execution.

RULING

The Supreme Court DENIED the petition and AFFIRMED the amended decision of the Court of Appeals. The Court held that the RTC’s grant of execution pending appeal was not justified. The reasons given by the RTC—that the case had been pending since 1997 and that Gateway admitted its obligation—were insufficient. The pendency of the case since 1997 did not, by itself, constitute a good reason for execution pending appeal. Furthermore, the alleged admission of liability by Gateway was not supported by the evidence on record; Gateway had consistently disputed the amount of its liability. Execution pending appeal is an exception to the general rule that a judgment cannot be executed until it becomes final and executory. It may only be granted upon good reasons to be stated in a special order. The reasons must constitute superior circumstances demanding urgency that outweigh the injury or damage that the losing party may suffer. The RTC’s cited reasons did not meet this standard. The Court also noted that the counter-bond posted to discharge the preliminary attachment was intended to secure the payment of any judgment that may be recovered, but its execution is proper only upon the finality of the judgment. Since the judgment was not yet final due to the pending appeal, execution on the counter-bond was premature.