G.R. No. L-35253. July 26, 1976.
CITY OF MANILA, petitioner, vs. COURT OF APPEALS and METROPOLITAN THEATER COMPANY, respondents.

FACTS

The City of Manila filed an unlawful detainer case against the Metropolitan Theater Company (MTC) after the latter refused to vacate the Metropolitan Theater premises following the City’s termination of their lease contract, arguing the building was ravaged in WWII and could no longer serve its theatrical purpose. The City Court dismissed the case, prompting the City’s appeal to the Court of First Instance (CFI), docketed as Civil Case No. 78845. Subsequently, upon the CFI judge’s suggestion, the City filed a separate complaint for rescission of contract with receivership, docketed as Civil Case No. 79947. The CFI ordered the consolidation of the two cases. After a joint trial, the CFI rendered a decision in favor of the City, ordering MTC to deliver possession of the property. The City immediately moved for execution pending appeal under Section 8, Rule 70 (forcible entry/unlawful detainer) and, alternatively, under Section 2, Rule 39 (execution pending appeal on good grounds). The CFI granted execution pending appeal under Rule 39, citing good reasons, upon the City’s posting of a bond.
MTC filed a special civil action for certiorari and prohibition with the Court of Appeals (CA) to annul the CFI’s execution order. The CA granted the petition, ruling that the consolidated cases had been transformed into an ordinary action for recovery of possession (accion publiciana), thereby removing the case from the scope of the special provisional remedy of immediate execution under Rule 70. The CA further held that the grounds cited by the CFI for execution under Rule 39 were insufficient. The City elevated the case to the Supreme Court via certiorari.

ISSUE

Whether the Court of Appeals erred in annulling the CFI’s order for execution pending appeal.

RULING

Yes, the Supreme Court reversed the Court of Appeals and reinstated the CFI’s execution order. The legal logic proceeds from the nature of the consolidated actions. The Supreme Court clarified that while the consolidation of the appealed unlawful detainer case (Case No. 78845) with the ordinary action for rescission (Case No. 79947) resulted in the latter’s nature prevailing for trial purposes, this did not automatically strip the court of its authority to order execution pending appeal under Rule 39. The Court emphasized that the power to grant execution pending appeal under Section 2 of Rule 39 is discretionary, exercisable upon good reasons stated in the order. The CFI’s finding of good reasons—including the MTC’s alleged insolvency and dilatory tactics—was a factual determination entitled to respect, absent a clear showing of grave abuse of discretion. The CA overstepped by substituting its own judgment for that of the trial court on the sufficiency of these reasons. The Supreme Court held that the CA’s ruling incorrectly focused on the inapplicability of Rule 70, overlooking that the execution was validly grounded on Rule 39. The trial court did not act with grave abuse of discretion in issuing the order based on its stated grounds and the provision of a bond by the City. Therefore, the CA decision was set aside.