Albay Electric Coop. v. Security Pacific Assurance
REITERATIONFacts
The Antecedents: This case originated from a complaint filed by Albay Electric Cooperative, Inc. (ALECO) against Roberto D. Tuazon and/or R.D. Tuazon Construction (Tuazon) for a sum of money and breach of contract, stemming from Tuazon's alleged failure to fulfill obligations related to the construction of a power station project despite receiving a cash advance. ALECO sought P9,000,000.00 in damages. To secure ALECO's claim, a writ of preliminary attachment was issued against Tuazon's properties. Tuazon subsequently posted a counter-bond, issued by Security Pacific Assurance Corporation (SPAC) as surety, to lift the attachment. Procedural History: The Regional Trial Court (RTC) initially issued a writ of preliminary attachment against Tuazon's properties. Tuazon posted a counter-bond from SPAC to dissolve the attachment. After various procedural maneuvers, including a dispute over the validity of the counter-bond and a manifestation by SPAC to cancel it, the RTC eventually granted Tuazon's motion to lift the attachment. Following an arbitration, the RTC rendered a judgment on August 26, 2003, ordering Tuazon to pay ALECO P9,000,000.00 plus damages and costs. ALECO moved for execution of this judgment. Despite initial denial, the RTC, through a subsequent order on February 16, 2004, granted ALECO's motion for execution against both Tuazon and SPAC, leading to the issuance of a writ of execution and a supplemental writ of execution against SPAC's counter-bond. SPAC's motion for reconsideration was denied, and its notice of appeal was denied due course by the RTC. Aggrieved, SPAC filed a petition for certiorari with the Court of Appeals (CA). The Petition: The Court of Appeals granted SPAC's petition for certiorari, annulling the RTC's orders allowing execution against the counter-bond, the supplemental writ of execution, and the notices of garnishment. The CA found that the execution was premature because the judgment against Tuazon had not yet become final and executory due to pending motions for reconsideration. Furthermore, the CA noted that SPAC was not afforded due process, as it was not properly notified of the proceedings that led to the execution order against its counter-bond. ALECO, in turn, filed the present petition for review under Rule 45 of the Rules of Court, assailing the CA's decision and resolution, primarily arguing that the CA erred in finding no forum shopping and in holding that the execution was premature, contending that the motions for reconsideration were pro forma and did not toll the reglementary period for appeal.
Issue(s)
Whether respondent SPAC committed forum shopping. Whether the trial court's order of execution against the counter-bond was premature. Whether the issuance of the writ of execution against the counter-bond was done with grave abuse of discretion.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that SPAC did not commit forum shopping and that the trial court gravely abused its discretion in issuing the writ of execution against the counter-bond prematurely and without the required notice and hearing.
Ratio Decidendi
On the issue of forum shopping: The Court held that SPAC did not commit forum shopping. The initial resort to an appeal, which was deemed erroneous by the trial court, was followed by a timely petition for certiorari. The Court clarified that forum shopping involves the simultaneous availment of multiple remedies or the filing of successive remedies in different forums, neither of which occurred here. SPAC was merely correcting its procedural misstep by availing itself of the proper remedy, certiorari, after its appeal was denied due course. The remedies of appeal and certiorari are mutually exclusive, and resorting to the correct remedy after an erroneous one does not constitute forum shopping, especially when both were directed to the same appellate court. On the issue of prematurity of execution: The Court affirmed the CA's finding that the execution was premature. The trial court's decision dated August 26, 2003, was not yet final and executory when ALECO filed its motion for execution on September 13, 2003. This was because Tuazon's motion for reconsideration, initially denied pro forma, was subsequently given due course by the trial court's Order of October 3, 2003. This Order tolled the reglementary period for appeal, rendering the decision not yet final. Therefore, the subsequent order granting execution on February 16, 2004, was ill-timed and premature. On the issue of grave abuse of discretion and lack of notice and hearing: The Court found that the trial court gravely abused its discretion in issuing the order of execution against the counter-bond without complying with Section 17, Rule 57 of the Rules of Court. This provision requires demand and a summary hearing after the judgment has become executory. Crucially, SPAC, as the surety, was not furnished with a copy of ALECO's motion for reconsideration of the October 3, 2003 order. This lack of notice deprived SPAC of its right to due process and to be heard before its liability on the counter-bond was enforced. A writ of execution against a surety's counter-bond issued without notice and hearing is invalid.
Main Doctrine
A writ of execution against a surety's counter-bond issued without prior demand, notice, and summary hearing, and when the principal judgment is not yet final and executory, is issued with grave abuse of discretion and is therefore invalid.