554 SUPREMECOURTREPORTSANNOTATED

CityofIliganvs.PrincipalManagementGroup,Inc.
*
G.R.No.145260.July31,2003.

CITY OF ILIGAN, Represented by Hon. FRANKLIN M.

QUIJANO in His Capacity as City Mayor, petitioner, vs.
PRINCIPALMANAGEMENTGROUP,INC.(PMGI),Represented
by Its President & Chief Executive Officer, FERNANDO M.
SOPOT,respondent.

RemedialLawJudgmentExecutionThreerequisitesfortheexecution
ofajudgmentpendingappeal.Therearethreerequisitesfortheexecution
of a judgment pending appeal: a) a motion must be filed by the prevailing
party with notice to the adverse party b) there must be good reasons for
executionpendingappealandc)thegoodreasonsmustbestatedinaspecial
order.
SameSame Same Requisites for execution of judgment.Execution
pending appeal is, of course, the exception to the general rule. Normally,
execution cannot be obtained until and unless (a) the judgment has become
finalandexecutory(b)therightofappealhasbeenrenouncedorwaived(c)
the period for appeal has lapsed without an appeal having been filed or (d)
having been filed, the appeal has been resolved and the records of the case
have been returned to the court of originin which case, execution shall
issueasamatterofright.
SameSameSameWhatconsistgoodreasons.Goodreasonsconsist
of compelling circumstances that justify the immediate execution of a
judgment,lestitbecomeillusoryortheprevailingpartybeunabletoenjoy
it after the lapse of time, considering the tactics of the adverse party who
mayhavenorecoursebuttodelay.
SameSame Same The ascertainment of good reasons for execution
pending appeal lies within the sound discretion of the trial court, and the
appellate court will not normally disturb such finding.The ascertainment
ofgoodreasonsforexecutionpendingappeallieswithinthesounddiscretion
of the trial court, and the appellate court will not normally disturb such
finding.Interventionbythelattermaybeproper,ifitisshownthattherehas
beenanabuseofdiscretion.

PETITIONforreviewoncertiorariofthedecisionandresolutionof
theCourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
ThomasDeanM.Quijanoforpetitioner.

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*THIRDDIVISION.

555

VOL.407,JULY31,2003 555
CityofIliganvs.PrincipalManagementGroup,Inc.

Padilla&Padillaforrespondent.

PANGANIBAN,J.:

Theascertainmentofgoodreasonsforexecutionpendingappeallies
within the sound discretion of the trial court. Normally, its finding
willnotbedisturbedbyareviewingcourt,intheabsenceofgrave
abuseofdiscretion.

TheCase
1
Before this Court is a Petition for Review under2 Rule 45 of the
RulesofCourt,assailingtheMay4,2000Decision
3
andtheJuly14,
2000Resolution oftheCourtofAppeals(CA)inCAG.R.CVNo.
56952.ThedecretalportionoftheDecisionreadsasfollows:
4
WHEREFORE,thePetitionforCertiorariisherebyDISMISSED.

The assailed Resolution denied petitioners Motion for

Reconsideration.

TheFacts

ThefactsofthecasearesummarizedbytheCAinthiswise:

OnOctober19,1998,MayorFranklinM.Quijano,actingforandinbehalf
of [petitioner] City of Iligan, requested from the Sangguniang Panlungsod
for: (a) Resolution authorizing him to open a domestic Standby Letter of
Credit (SLC) in the amount of P14,000,000.00 in favor of the Land Bank
Realty Development Corporation and/or PNCC with the Principal
Management Group, Inc. (herein private respondent) as the funder/financial
managers in connection with the development of a project on a turnkey
basisand(b)Resolutionauthorizinghimtoopenahighyieldingdepository
account with the Land Bank of the Philippines in the amount of
P14,000,000.00asaholdoutcollateralforthedomesticSLC.
_______________

1Rollo,pp.932.

2 Annex 13 of the Petition Rollo, pp. 3343. Penned by Justice Remedios A.

SalazarFernandoandconcurredinbyJusticesAngelinaSandovalGutierrez(Division
chairmanandnowamemberofthisCourt)andSalvadorJ.Valdez,Jr.(member).
3AnnexCofthePetitionid.,pp.4546.

4CADecision,pp.11&43.

556

556 SUPREMECOURTREPORTSANNOTATED
CityofIliganvs.PrincipalManagementGroup,Inc.

The City Council approved Mayor Quijanos requests and passed

ResolutionsNos.1050and1051seriesof1998onOctober20,1998.
On December 29, 1998, a Memorandum of Agreement (MOA) on a
turnkeyarrangementwasdrawnbyMayorQuijano,representingtheCity
of Iligan, with Land Bank Realty Development Corporation (LBRDC) as
General Contractor and Principal Management Group, Inc. (PMGI) as
DeveloperFinancing Manager. The project to be undertaken was the
construction of a Sports Complex which upon completion shall be turned
over to Iligan City for acceptance and the issuance of Certificate of
Acceptance and Authority to Pay to enable Land Bank RealtyPMGI to call
ontheSLC
The project started on November 26, 1998 despite the fact that some
drawings had not yet been completed, since the MOA provides for a
constructionperiodofonehundredtwentydaysfromthedateofthesigning.
TheconstructionsiteoftheSportsComplexwasdonatedbySanMiguel
(Iligan) Enterprises, Inc. wherein the City of Iligan as donee was bound to
provideforallexpensesforthetransferoftheoccupantstherein.
On or about January 1999, the work on the project stopped due to the
refusal of some of the occupants to vacate the premises claiming that they
havenotbeenpaidxxxtheirdisturbancecompensation.Bythen,PMGIhad
already accomplished 78.27% of the contracted project equivalent to
P10,957,800.00ofthetotalprojectcostofP14,000,000.00.
On February 24, 1999, PMGI requested from the City of Iligan for a
deductivechangeordertoenableittocollecttheabovestatedamountbased
onthe78.27%accomplishmentoftheproject.TheCityofIligan,however,
claimedthatPMGIsaccomplishmentwasonly52.89%orequivalentonlyto
P6,958,861.59basedontheAccomplishmentReportasofFebruary9,1999.
TheCityofIliganrefusedtopayforthereasonthatthemutuallyagreed
price of P14 Million shall only be paid after the completion of the project
and acceptance by it and since the project is not yet complete, no payment
canbepaid.
The problem on the payment of the affected occupant, which was the
cause of the work stoppage, was accordingly brought to the attention of the
SangguniangPanlungsodwhichfavorablyactedonitthroughResolutionNo.
99765datedJune8,1999authorizingthepaymentoftheaffectedoccupants
intheprojectsite.
On November 8, 1999, PMGI filed a complaint against the City of
Iligan for rescission of the MOA and damages. After the filing of City of
Iligans Answer, a Motion for Partial Summary Judgment was filed by
PMGI which claimed that there was no genuine issue as to the fact of the
obligation of the City of Iligan since it admitted the accomplishment of
52.89%orequivalenttoP6,958,861.59ofPMGIandthattheCityofIligan

557

VOL.407,JULY31,2003 557
CityofIliganvs.PrincipalManagementGroup,Inc.

hadnotspecificallydeniedunderoaththegenuinenessoftheLetterofCredit
andMemorandumofAgreement.
An Opposition to the Motion for Partial Summary Judgment was filed
by the City of Iligan on December 7, 1999 which stated that: it never
admitted that PMGI made any accomplishment at all but merely stated that
with respect to the work accomplishment, it was only 52.89% based on the
reportofEngr.MaatasteamtheMOAorthecontractfortheconstruction
ofthesportscomplexisbetweentheCityofIligan,asowner,andtheLand
Bank Realty Development Corporation as General Contractor, PMGI only
entered into the picture to support LBRDC in accordance with their own
separate agreement the grounds of lack of cause of action and jurisdiction
raisedintheAnswershouldbesetforhearingLBRDCasanindispensable
partyshouldbeimpleadedandthecourtdoesnothavejurisdictionoverthe
case in view of Sec. 4 of Executive Order No. 1008 which vests exclusive
jurisdiction over construction disputes to Construction Industry Arbitration
Commission(CIAC).
In private respondents Rejoinder to Opposition, it was alleged that
PMGI and LBRDC are solidary creditors, hence, there was no need to
implead the latter since the suit redounds to the benefit of LBRDC, there
was no disagreement or dispute as to the accomplishment of 52.89% or
equivalent to P6,958,861.59, hence, there was no need to resort to
arbitrationandtheturnkeyprovisionintheMOAisnotapplicablesince
the120dayconstructionperiodlapsedduetothefailureoftheCityofIligan
toperformitsobligation.
IntheOrderdatedDecember20,1999,thetrialcourtgrantedtheMotion
forPartialSummaryJudgmentandrenderedthefollowingjudgment/order:

WHEREFORE,foregoingpremisesconsidered,[respondents]motionisGRANTED.
Partialsummaryjudgmentisherebyissuedinfavorof[respondent]intheamount
ofSixMillionNineHundredFiftyeightThousandEightHundredSixtyOne&59/100
(P6,958,861.59)PesosOnly.
TheManageroftheLANDBANKOFTHEPHILIPPINES(IliganCityBranch),
or his authorized representative, or any competent officer of said bank is hereby
ORDERED to pay the amount of P6,958,861.59 out of LC NO. 98003/D to Mr.
FernandoM.Sopot,PresidentandCEOof[respondent].
In the event said LC NO. 98003/D is insufficient or has expired, the Manager
and/or any competent officer of said LAND BANK OF THE PHILIPPINES (Iligan
CityBranch)isherebyORDEREDtopaytosaidMr.FernandoM.Sopottheamount
ofP6,958,861.59outofanyaccountsormoneysof[petitioner].

558

558 SUPREMECOURTREPORTSANNOTATED
CityofIliganvs.PrincipalManagementGroup,Inc.

SOORDERED.

TheMotionforReconsiderationfiledbytheCityofIligantotheDecember
20,1999OrderwasdeniedintheResolutiondatedJanuary17,2000.
ANoticeofAppealwasfiledbytheCityofIliganonJanuary26,2000.
AMotionforExecutionPendingAppealxxxfiledonJanuary18,2000
by PMGI which alleged that when the appeal is clearly dilatory, order for
executionupongoodreasonsmaybeissuedwiththediscretionofthecourt,
wasgrantedonJanuary24,2000overtheoppositionoftheCityofIligan,to
justify the same, the dispositive portion of which was earlier quoted. The
trialcourtfurtherstatedthat:

TheCourtisconvincedthattherearegoodreasonstoallowtheimmediateexecution
pendingappeal.Itsadjudicationisbasedon[petitioners]ownadmissionhence,any
appealwouldbeunmeritoriousandwouldonlyservetodelayexecutionofthefinal
order subject of the instant motion. The fact that an appeal in this case if taken by
[petitioner]willbeamerelydilatorytactichasbeendeclaredbytheSupremeCourt
as a good and sufficient reason upon which to issue execution of the order under
Section2,Rule39oftheRevisedRulesofCourt.

A Demand Letter and Notice of Garnishment, both dated January 26,

2000, were5 served on even date by Sheriff Montoy B. Lomondot to herein
petitioner. (Citationsomitted)

RulingoftheCourtofAppeals

The CA held that the trial court did not commit grave abuse of
discretioningrantingtheexecutionpendingappealsincetheappeal
filedbypetitionerwasadilatorytacticandisnotallowedinthefirst
6
place. Ruling that the trial court could grant executions pending
appeal,providedthatagoodreasonthereforwasstatedinaspecial
order,theappellatecourtuphelddilatorytacticasonesuchgood
reason.
The appellate court also ruled that certiorari would not be
allowed in this case, because there were other remedies still
availabletopetitioner,likethefilingofasupersedeasbondtostay
theexecutionorthefilingofamotionforreconsideration.

_______________

5CADecision,pp.26&3438.

6Id.,pp.10&42.

559

VOL.407,JULY31,2003 559
CityofIliganvs.PrincipalManagementGroup,Inc.
7
Hence,thisPetition.

TheIssues

Petitionerraisesthefollowingissuesforourconsideration:

WhetherornottheHonorableCourtofAppealserredinaffirmingtheOrder
ofthetrialcourtgrantingaWritofExecutionPendingAppealtoimplement
itspreviousOrderdatedDecember20,1999approvingrespondentsMotion
forPartialSummaryJudgment

Whether or not the Honorable Court of Appeals erred in affirming the

Orderofthetrialcourtthatthereweregoodreasonstoallowtheimmediate
executionpendingappealand

Whether or not the Honorable Court of Appeals erred in affirming the

Order of the trial court in spite of the latters failure to take into
consideration the provision in paragraph 8 8 of the Memorandum of
Agreemententeredintobythehereinparties. (Citationsomitted)

Simplyput,themainissueiswhethertheOrdergrantingexecution
pendingappealwasproper.

TheCourtsRuling

ThePetitionhasnomerit.

_______________
 7 The case was deemed submitted for decision on August 16, 2001, upon this
Courts receipt of Petitioners Memorandum, signed by Asst. City Legal Officer
RafaelA.Benedictos,Jr.andCityLegalConsultantWilsonC.NamocotoftheCity
of Iligan. Respondents Memorandum, received on August 13, 2001, was signed by
Attys.GerardoB.Padilla,RobertoC.PadillaandEduardoD.UlindangofPadillaand
Padilla.
8PetitionersMemorandum,pp.67Rollo,pp.224225.Originalinuppercase.

560

560 SUPREMECOURTREPORTSANNOTATED
CityofIliganvs.PrincipalManagementGroup,Inc.

MainIssue:
ProprietyofExecutionPendingAppeal

ExecutionspendingappealaregovernedbySection2ofRule39of
theRulesofCourt,whichreads:

SEC.2.Discretionaryexecution.
(a)Executionofajudgmentorafinalorderpendingappeal.Onmotion
oftheprevailingpartywithnoticetotheadversepartyfiledinthetrialcourt
while it has jurisdiction over the case and is in possession of either the
originalrecordortherecordonappeal,asthecasemaybe,atthetimeofthe
filingofsuchmotion,saidcourtmay,initsdiscretion,orderexecutionofa
judgmentorfinalorderevenbeforetheexpirationoftheperiodtoappeal.
After the trial court has lost jurisdiction, the motion for execution
pendingappealmaybefiledintheappellatecourt.
Discretionary execution may only issue upon good reasons to be stated
inaspecialorderafterduehearing.

There are three requisites for the execution of a judgment pending

appeal:a)amotionmustbefiledbytheprevailingpartywithnotice
to the adverse party b) there must be good reasons for execution
pendingappealandc)thegoodreasonsmustbestatedinaspecial
9
order.
Execution10 pending appeal is, of course, the exception to the
general rule. Normally, execution cannot be obtained until and
unless(a)thejudgmenthasbecomefinalandexecutory(b)theright
of appeal has been renounced or waived (c) the period for appeal
haslapsedwithoutanappealhavingbeenfiledor(d)havingbeen
filed,theappealhasbeenresolvedandtherecordsofthecasehave

_______________

9 Maceda v. Development Bank of the Philippines, 313 SCRA 233, August 26,
1999Provident International Resources Corporation v. Court of Appeals,328 Phil.
871259SCRA510,July26,1996.
10 Philippine Bank of Communications v. Court of Appeals, 344 Phil. 777 279
SCRA364,September23,1997Davidv.CourtofAppeals,342Phil.387276SCRA
424,July28,1997Roxasv.CourtofAppeals,157SCRA370,January28,1988.

561

VOL.407,JULY31,2003 561
CityofIliganvs.PrincipalManagementGroup,Inc.

beenreturnedtothecourtoforigininwhichcase,executionshall
11
issueasamatterofright.
Ontheotherhand,whentheperiodofappealhasnotyetexpired,
theexecutionofajudgmentshouldnotbeallowedexceptif,inthe
12
courtsdiscretion,therearegoodreasonstherefor.
Sincetheexecutionofajudgmentpendingappealisanexception
to the general rule, the existence of good reasons is essential.
Thesereasonsmustbestatedinaspecialorder,becauseunlessthese
are divulged, it will be difficult to determine on appeal whether 13
judicialdiscretionhasbeenproperlyexercisedbythelowercourt.
Goodreasonsconsistofcompellingcircumstancesthatjustifythe
immediate execution of a judgment, lest it become illusory or the
prevailing party be unable to enjoy it after the lapse of time,
considering the tactics
14
of the adverse party who may have no
recoursebuttodelay.
Inthepresentcase,thegoodreasonrelieduponbyboththetrial
andtheappellatecourtswasthatthepartialadjudicationofthecase
was based on petitioners own admission hence, any appeal based
on that point would be unmeritorious and merely dilatory. Indeed,
bothcourtsruledthatanappealbypetitionerwouldonlyserveasa 15
goodandsufficientreasonuponwhichtoissueexecution.
Theascertainmentofgoodreasonsforexecutionpendingappeal
lies within the sound discretion of the trial court, and the appellate
courtwillnotnormallydisturbsuchfinding.Interventionbythe

_______________

11PhilippineBankofCommunicationsv.CourtofAppeals,supraDavidv.Court

ofAppeals, supra Roxas v. Court of Appeals, supra. See also 1 of Rule 39 of the
RevisedRulesofCourt.
12PhilippineBankofCommunicationsv.CourtofAppeals,supraDavidv.Court

ofAppeals,supraRoxasv.CourtofAppeals,supra.
13 Intramuros Tennis Club, Inc. v. Philippine Tourism Authority, 341 SCRA 90,
September26,2000.
14CoronaInternational,Inc.v.CourtofAppeals,343SCRA512,October18,2000

IntramurosTennisClub,Inc.v.PhilippineTourismAuthority,supraYasudav.Courtof
Appeals,330SCRA385,April12,2000.
 15AnnexWofthePetitionOrderoftheRTCdatedJanuary24,2000,p.3Rollo,

p.162.

562

562 SUPREMECOURTREPORTSANNOTATED
CityofIliganvs.PrincipalManagementGroup,Inc.

lattermaybeproper,ifitisshownthattherehasbeenanabuseof
16
discretion.
Like the CA, we find no abuse of discretion in the trial courts
grantofexecutionpendingappeal.Indeed,thisCourthasheldthata
good and sufficient reason upon which to17authorize immediate
executioniswhenanappealisclearlydilatory.
Normally, the trial court is not allowed to assess its own
judgment and to hold that an appeal may not prosper, or that it
would merely be dilatory. In the present case, however, there are
circumstancesthatundisputedlyserveascogentbasesforarrivingat
suchaconclusion.
First, it is not seriously disputed that the judgment is anchored
upon material facts as follows: (1) there is a Memorandum of
Agreement (MOA) for the site development of Sports Complex
Project No. 1 signed by the parties (2) petitioner failed to pay the
occupantsoftheprojectsiteontime,therebypreventingrespondent
from fully complying with its obligation under the MOA (3)
respondentadmittedthattheworkaccomplishedwas52.89percent,
which was equivalent to P6,958,861.59. Obviously, there is no
genuineissueastoanymaterialfactonthispoint.
Second,Article1191oftheCivilCodestates:

Thepowertorescindobligationsisimpliedinreciprocalones,incaseone
oftheobligorsshouldnotcomplywithwhatisincumbentuponhim.
Theinjuredpartymaychoosebetweenthefulfillmentandtherescission
oftheobligation,withthepaymentofdamagesineithercase.xxx.

By failing to pay the occupants of the project site within the time
requiredforthecompletionoftheproject,petitionerdidnotcomply
with what was incumbent upon it. Applying the law to the
undisputedfacts,thetrialcourthadprimafaciebasesforrendering
itspartialsummaryjudgmentholdingthatrespondentwasentitledto
rescissionandtothepaymentofP6,958,861.59.

_______________

16PlantersProducts,Inc.v.CourtofAppeals,317SCRA195,October22,1999.

17DeVerav.Santos,79SCRA72,September22,1977HomeInsuranceCompany

v.CourtofAppeals,184 SCRA 318, April 17, 1990 Rodriguez v. Court of Appeals,

105Phil.777,May23,1959.
 563

VOL.407,JULY31,2003 563
Peoplevs.Mendoza,Jr.

Verily, the trial court committed no abuse of discretion in granting

execution pending appeal. Its conclusion was upheld by the CA,
which found that the appeal filed by the petitioner was a dilatory
tactic and was not allowed in the first place. Consequently, the
appellate court did not err in refusing to attribute grave abuse of
discretion to the trial courts Order granting execution pending
appeal.
WHEREFORE,thePetitionisDENIEDandtheassailedDecision
andResolutionAFFIRMED.Costsagainstpetitioner.
SOORDERED.

Puno(Chairman),CoronaandCarpioMorales,JJ.,concur.
SandovalGutierrez,J.,OnOfficialLeave.

Petitiondenied,judgmentandresolutionaffirmed.

Note.Wherethereasongivenisthatanappealisfrivolousand
dilatoryexecutionpendingappealcannotbejustified.(International
School,Inc.[Manila]vs.CourtofAppeals,309SCRA474[1999])

o0o

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