Pioneer Insurance & Surety Corp. v. De Dios Transportation Co., Inc.
REITERATIONFacts
1. The Antecedents: Respondents De Dios Transportation Co. (DDTC) and De Dios Marikina Transit Corporation (DMTC), as vendors, executed a Deed of Conditional Sale for fifty-eight buses and their franchise with Willy Choa Coyukiat and/or Goldfinger Transport Corporation (Goldfinger) as vendees. The agreed price was P12,000,000.00, payable via a P1,000,000.00 downpayment and P11,000,000.00 in postdated checks. The respondents warranted that the franchise and routes were valid and operational, requiring only registration with the Land Transportation Office (LTO). Upon delivery of the buses, the vendees stopped payment, alleging the buses were not in good running condition and that the necessary permits for operation were lacking, preventing them from using the buses and causing them significant losses. 2. Procedural History: The vendees filed a complaint for rescission of contract with a plea for injunctive relief against the respondents and Philbanking Corporation. The Regional Trial Court (RTC) issued a temporary restraining order and later a writ of preliminary injunction, for which petitioner Pioneer Insurance and Surety Corporation posted a P11,000,000.00 injunction bond. The RTC later dismissed the case for failure to prosecute and, on counterclaim, ordered the plaintiffs to pay the defendants P11,000,000.00 for the unpaid balance, P12,000,000.00 as liquidated damages, and other damages. The plaintiffs appealed to the Court of Appeals (CA). Subsequently, the plaintiffs withdrew their appeal. The respondents then filed a motion to execute against the injunction bond with the CA. The CA, after initially referring the motion to the RTC, eventually annulled the RTC's orders denying the motion and granted the execution against the bond. 3. The Petition: Petitioner Pioneer Insurance and Surety Corporation seeks review of the CA's decision, arguing that the CA erred in ruling it still had jurisdiction after the appeal was withdrawn, that the respondents were not entitled to execute on the bond due to procedural defects and lack of damages caused by the injunction, and that the damages awarded by the RTC were not by reason of the injunction. The petitioner contends the appeal was effectively withdrawn on September 14, 1999, rendering the RTC decision final and executory before the respondents filed their motion to execute. The respondents counter that the withdrawal of appeal was not effective until their conformity was secured and noted by the CA, which occurred after their motion to execute was filed, thus the CA retained jurisdiction. The Supreme Court denied the petition, affirming the CA's decision and directing the RTC to resolve the motion to execute on the merits.
Issue(s)
Whether the Court of Appeals retained jurisdiction over the case when the motion to execute against the injunction bond was filed. Whether the respondents were entitled to execute against the injunction bond despite the alleged procedural defects in filing the motion and the finality of the trial court's decision. Whether the damages allegedly sustained by the respondents were by reason of the issuance of the writ of preliminary injunction.
Ruling
The petition is denied due course. The decision of the Court of Appeals is affirmed. The RTC Quezon City, Branch 223, is directed to resolve on the merits the Motion to Execute Against Injunction Bond filed by the respondents after the parties shall have adduced their respective evidence in Civil Case No. Q-95-24462 with dispatch.
Ratio Decidendi
On the issue of the Court of Appeals' jurisdiction: The Court held that the notice of withdrawal of appeal filed by the new counsel on September 14, 1999, was a mere scrap of paper because it did not bear the conformity of the appellants (Willy Choa Coyukiat and Goldfinger Transport Corporation). Substitution of counsel requires the written consent of the client, and pleadings that withdraw an appeal must have the client's conformity. The Court of Appeals correctly required the appellants to submit their written conformity, which was only done on September 28, 1999. Therefore, the appeal was not effectively withdrawn until that date, and the CA retained jurisdiction when the respondents filed their motion to execute against the injunction bond on September 15, 1999. The petitioner's argument that the appeal was withdrawn as a matter of right on September 14, 1999, is factually and legally inaccurate because the necessary conformity was absent. On the entitlement to execute against the injunction bond: The Court affirmed the CA's ruling that the respondents' motion to execute against the injunction bond was timely filed. The motion was filed on September 15, 1999, which preceded the effective withdrawal of the appeal on September 28, 1999, and thus before the trial court's decision became final and executory. The CA's referral of the motion to the trial court, even after the appeal was withdrawn, indicated it still had jurisdiction. The Court also found that the petitioner was not deprived of its right to be heard, as it was served with copies of the motion and filed its comment. The CA's directive to the RTC to resolve the motion on the merits after presentation of evidence was proper. On whether damages were by reason of the injunction: The Court stated that the determination of whether the damages allegedly sustained by the respondents were by reason of the issuance of the writ of preliminary injunction, and the quantification thereof, should be resolved by the trial court after due hearing and presentation of evidence. The RTC erred in denying the motion solely on the ground of lack of jurisdiction without affording the parties the right to adduce evidence.
Main Doctrine
The withdrawal of an appeal is not effective without the client's conformity. A motion to execute against an injunction bond must be filed before the judgment becomes final and executory, and the surety must be given due notice and an opportunity to be heard.